While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
August 18, 2014
Fiat Lux
Featured Trade:
(MAD HEDGE FUND TRADER SETS NEW ALL TIME HIGH WITH 27% GAIN IN 2014),
(SPY), (TLT), (TBT), (FXE), (EUO),
(WILL GOLD SUFFER THE FATE OF THE $10,000 BILL?)
(GLD), (GDX)
SPDR S&P 500 (SPY)
iShares 20+ Year Treasury Bond (TLT)
ProShares UltraShort 20+ Year Treasury (TBT)
CurrencyShares Euro ETF (FXE)
ProShares UltraShort Euro (EUO)
SPDR Gold Shares (GLD)
Market Vectors Gold Miners ETF (GDX)
If you think this letter is being written by someone who is stoned, you?d be at least partially right this morning. For that is the after effect of my attending the Paul McCartney concert at Candlestick Park in San Francisco last night.
I was sitting in the infield in the most expensive $1,000 seats, well attended by Silicon Valley royalty. Excuse me Mr. Cook, can I please get by Mr. Ellison, hey, Sergei, love the service. I calculated that there was at least $1 trillion in market capitalization in my row, alone.
All that meant was that the second hand smoke in my section was more expensive, and more potent. And there was always the risk that the gyrating figure in the aisle on LSD might crash into you.
This was not a sit back in your seat and listen to the tunes concert. Some 70,000 people were on their feet for the duration, rocking out, dancing, and tapping their feet. McCartney, who appears immune to ageing, delivered in spades.
While he played, the fog rolled in from the bay, hit the high intensity lights, and vaporized, creating a surreal, magical effect.
Candlestick Park, which Paul pronounced in his drawn out Liverpudlian (scousian) accent, holds a special place in the hearts of Beatles fans. They first played there when the stadium was new in 1966. They last played together there in 1969. After tonight?s concert, it will be torn down.
Candlestick was originally built in 1959 to lure the Giants baseball team from Brooklyn. Structurally, it never recovered from the 1989 Loma Prieta earthquake, which occurred when a World Series was in play. The damp, freezing cold, the lack of mass transit connections, and the terrible parking have been perennial complaints about The Stick.
Last night, loyal fans could be seen digging up tufts of grass, or tearing down signs to take home. The San Francisco Giants moved downtown to play at AT&T Park more than a decade ago, and the 49ers relocated to a new stadium in San Jose this year.
To watch a video of McCartney?s blockbuster opening number, ?Eight Days a Week,? please click here.
This diversion aside, I am happy to report that I have been rocking out in my own way. The total return for my followers so far in 2014 has reached 27.1%, compared to a far more arthritic 2% for the Dow Average during the same period.
In August, followers have earned a welcome 3.2%, making it one of my best months of the year. Did I just hear someone shout at me to ?take more vacations??
The three and a half year return is now at an amazing 149.6%, compared to a far more modest increase for the Dow Average during the same period of only 36%.
That brings my averaged annualized return up to 41%. Not bad in this zero interest rate world. It appears better to reach for capital gains than the paltry yields out there.
This has been the profit since my groundbreaking trade mentoring service was first launched in 2010. Thousands of followers now earn a full time living solely from my Trade Alerts, a development of which I am immensely proud.
This has been a real trader?s market this year, with plenty of volatility in the past month, but little net movement in the overall indexes. I played the S&P 500 from both the long and short side, selling the peak within minutes and buying the bottom 5% lower.
I managed to eke out some small profits shorting the Treasury bond market (TLT), stopping out before the real carnage began.
A short position in the Euro (FXE), (EU) is the gift that keeps on giving. I am on my third roll-down in strikes over the past month. It also helps that I went into Russia?s latest incursions into the Ukraine with a tiny book, and 80% cash. Thus I have plenty of dry powder to act opportunistically going forward.
I am ready to use the next microdip to jump back in. It is just a matter of time before Apple breaks $100 a share and hits a new, split adjusted all time high.
In the meantime, the world is waiting to see whether the US can deliver a second half GDP growth rate of 4% per annum?or not. We might have to settle for 3%, given the new sanctions against Russia.
Quite a few followers were able to move fast enough to cash in on the move. To read the plaudits yourself, please go to my testimonials page by clicking here. They are all real, and new ones come in almost every day.
My esteemed colleague, Mad Day Trader Jim Parker, was no slouch either, dodging in an out of the raindrops to make money on an intra day basis.
What would you expect with a combined 85 years of market experience between the two of us? Followers are laughing all the way to the bank.
Don?t forget that Jim clocked an amazing 2013 with a staggering 374% trading profit. That was just for an eight-month year!
The Opening Bell with Jim Parker, a quickie but insightful webinar giving followers an instant snapshot of the market opening every day, has been an overwhelming success. Many customers have already reported dramatic improvements in their trading results.
Watch this space, because the crack team at Mad Hedge Fund Trader has more new products and services cooking in the oven. You?ll hear about them as soon as they are out of beta testing.
Our business is booming, so I am plowing profits back in to enhance our added value for you. The latest is the Mad Hedge Fund Trader Channel on YouTube that enables me to post videos from my frequent travels around the world.
The coming year promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere by the end of 2014.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011, 14.87% in 2012, and 67.45% in 2013.
Our flagship product,?Mad Hedge Fund Trader Pro, costs $4,500 a year. It includesGlobal Trading Dispatch?(my trade alert service and daily newsletter). You get a real-time trading portfolio, an enormous research database and live biweekly strategy webinars. You also get Jim Parker?s?Mad Day Trader?service and?The Opening Bell with Jim Parker.
To subscribe, please go to my website at?www.madhedgefundtrader.com, find the??Mad hedge Fund Trader PRO??or??Global Trading Dispatch??box on the right, and click on the blue??SUBSCRIBE NOW??button.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
August 15, 2014
Fiat Lux
Featured Trade:
(BONDS OR STOCKS: WHO?S RIGHT?),
(TLT), (TBT), (SPY),
(WHO SAYS THERE AREN?T ANY JOBS?),
(TESTIMONIAL)
iShares 20+ Year Treasury Bond (TLT)
ProShares UltraShort 20+ Year Treasury (TBT)
SPDR S&P 500 (SPY)
Treasury bonds spike to new one year highs, closing at a 2.40% yield, and trading as low as a 2.30% yield in the overnight market at one point last week. Clearly, serious deflation is continuing for the indefinite future.
Buy more bonds!
US corporate profits are at all time highs, just closing one of the strongest reporting periods in history. What?s more, the outlook they painted for the rest of the year is rosy. With dividend yields for many shares in excess of interest rates paid by government bonds, the bull market is alive and well.
Buy more stocks!
Stocks! Bonds! Stocks! Bonds! Which group of talking heads is right? The stock bulls or the bond bulls?
Yikes! What is a poor money manager to do?
Here is the certain answer to your plaintive question: They are both right.
So how does one deal with this dilemma? It?s easy. You buy everything, both stocks and bonds. That has been the judgment of the markets, which have sent both bonds and stocks flying in tandem for most of 2014.
How is this possible? Doesn?t this violate Economics 101? Should I take my copies of Paul Samuelson and Graham & Dodd and sell them on Ebay?
Not really.
Here is the explanation for it all. The world is now facing a cash glut unprecedented in history. There is so much money chasing everything these days, it is truly unbelievable for those of us rather long in the tooth. Prices can only go northward, whatever they are for.
Take a look at the U.S. government?s accounts, and you get a partial explanation. Over the past four years, the budget deficit has nearly vaporized, from a stratospheric $1.6 trillion to only $600 billion. Next year, $300 billion is in the cards.
This has caused the Treasury to massively cut back on new issuance. In fact, some recent government bond auctions have faced an outright shortage of bonds, prompting bid prices to spike.
The incredible thing is that this has been happening in the face of the Federal Reserve?s winding down of quantitative easing. By October, it will have removed $80 billion a month in bond buying to zero. Imagine how low rates would be by now if my friend, Fed governor Janet Yellen, had kept it going.
This is why virtually everyone in the world got the bond market wrong this year, calling for a swan dive, except for bond maven and hedge fund guru, Jeffrey Gundlach. I include myself in this category of errant prognosticators.
However, I still have a chance to be right. I expect bonds to give up all of their gains going into yearend, ending dead unchanged on the year with 10 year Treasuries showing a 3.0% yield. Improving US growth prospects is the reason.
In my New Year forecast (click here for my ?2014 Annual Asset Review?)
I expected bonds to be weak, but not fall below a 3.50% yield. I was in a small minority of strategists who called for such a small decline in Treasuries. If I am right, and yields retrace to 3.0%, I will only be 50 basis points off my target, which is better than most.
But that is not to say that 10-year yields won?t first spike to 2.25% first, which happens to be Gundlach?s personal target.
I am a guy who puts his money where his mouth is, who eats his own cooking, and wears his opinions on his sleeve. So, I have been shorting bonds for all of this year.
But my trading approach is so forgiving, using price spikes to buy out of the money-put-spreads, that my followers have had more than adequate room to get profitably in and out.
Every single trade was either a winner, or broke even, except for one, adding an eye popping 10.61% to my 28% profit for 2014. It has been my most profitable trade this year.
While I have been dead wrong with the trend, I have been erring so slowly that we were able to coin it almost every month. Such is the forgiveness of the options spread strategy.
Physicists like ?unified theories? that explain everything, be they the movement of single electrons around nuclei, or galaxies in the universe. Here is a nice unified theory of everything for your investments: technology is curing all.
Hyper accelerating technology means that the price of things is falling faster than anyone believes. That means inflation stays at bay forever, which is great for bonds.
Technology is also reducing the cost, and even the need for labor by business. That is also disinflationary, and helps generate ever rising corporate profits, which is wonderful for stocks.
It all sounds like a ?buy stocks and bonds? explanation to me.
It reinforces the ?Golden Age? scenario for the 2020?s that I have been harping about all year, when the last impediment for growth, demographics, shifts from a headwind to a tailwind. That is when risk assets really go ballistic.
Maybe Google?s Ray Kurzweil is right? (click here for ?Peeking into the Future with Ray Kurzweil).
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more