• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu
Mad Hedge Fund Trader

The Case for Buying Financials

Newsletter, Research

Regular readers of this letter are probably weary of me harping away about the financials as a great place to put your money for the rest of 2014.

Never mind that these names have all jumped 10% in the past month. But this is not an ?I told you so? story. This is more of a ?But wait, there?s more,? story.

The basis for my call is quite simple. I believe that bond prices are peaking, and yields bottoming. As mining the yield curve is a major source of bank profits, borrowing short term and lending long term, a rise in interest rates falls straight to the bottom line. Thus, buying banks is an indirect way of selling short the bond market.

However, there are many more reasons to overweight this long neglected sector. In a market that has gone virtually straight up for the past three years, many large institutions are going to be forced to roll money out of leaders, like my favored technology, energy and health care, into laggards, such as the financials.

Expect this trend to accelerate as we head into yearend institutional book closing, which start as early as October 30.

Look at other important drivers of bank profits, and you?ll find them at multi decade lows.

Trading and investment banking volumes are off 30%-40% from mean historic levels. We options traders already know this all too well, as turnover has cratered and spreads widened due to investor lack of interest.

This is especially true of put options, which are now being given away virtually for free. Volatility that seems to permanently live at the $12 handle is another such indicator of this disinterest.

This will not last. If my ?Golden Age? scenario plays out in the 2020?s (click here for ?Get Ready for the Coming Golden Age?), trading and investment banking volumes will not only double to return to the norms, they will skyrocket tenfold from today?s tedious, moribund levels.

Indeed, I have recently discovered an entire subculture of financial oriented private equity firms currently amassing portfolios that are betting on precisely such an outcome. Think of big, smart, long-term money. The big bets on the coming decade are being made now.

There is another ripple in the case for banks. After passage of the Financial Stability Act of 2010, otherwise known as ?Dodd Frank?, banks became target numero uno of the federal government. The public?s demand for accountability for the 2008-09 crash knew no bounds.

As a result, the fines and settlements with the big banks, most of which were rescued from bankruptcy by the government, now well exceed $100 billion. Four years into the enforcement onslaught, the Feds are running out of scandals to prosecute. There is nothing left for the banks to plead guilty to.

This means that a major portion of the banks? costs are about to disappear, not only new massive fines, but hundreds of millions of dollars in legal fees and diverted management time as well. More money drops to the bottom line.

Dramatically rising income? Substantially falling costs? Sounds like ?Ka-ching? to me, and a ?BUY? for the bank stocks.

The bottom line is that bank stock could double from here in coming years. It is not hard to pick names. Bank of America (BAC) took the big hit on fines and settlements, and therefore should enjoy the largest bounce.

So should Citigroup (C), which came the closest to vaporizing. And for good measure, I?ll throw in American Express (AXP) as a play on the burgeoning credit card spending by the growing class of well to do.

BAC 9-2-14

AXP 9-2-14

C 9-2-14

TLT 9-2-14

John Thomas and Barney FrankBarney Frank Had a Few Things to Say

https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/John-Thomas-and-Barney-Frank.jpg 357 577 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-03 09:29:542014-09-03 09:29:54The Case for Buying Financials
Mad Hedge Fund Trader

September 3, 2014 - Quote of the Day

Quote of the Day

?When you hit ?SEND? on a text, you lose ownership of that text. Yet, you retain the responsibility for that text.? said Mark Cuban, a serial entrepreneur who just won a nasty case with the SEC.

Send

https://www.madhedgefundtrader.com/wp-content/uploads/2014/09/Send.jpg 186 323 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-03 09:20:092014-09-03 09:20:09September 3, 2014 - Quote of the Day
Mad Hedge Fund Trader

September 2, 2014 - MDT - Pattern Alert

MDT Alert

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

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-02 13:30:392014-09-02 13:30:39September 2, 2014 - MDT - Pattern Alert
Mad Hedge Fund Trader

September 2, 2014 - MDT - Midday Missive

MDT Alert

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

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-02 11:03:052014-09-02 11:03:05September 2, 2014 - MDT - Midday Missive
Mad Hedge Fund Trader

September 2, 2014 - MDT - IWM Alert

MDT Alert

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

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-02 10:17:482014-09-02 10:17:48September 2, 2014 - MDT - IWM Alert
Mad Hedge Fund Trader

September 2, 2014 - MDT Pro Tips A.M.

MDT Alert

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

https://www.madhedgefundtrader.com/wp-content/uploads/2014/09/AUDJPY-9-1-14-e1409663112662.jpg 484 580 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-02 09:07:472014-09-02 09:07:47September 2, 2014 - MDT Pro Tips A.M.
Mad Hedge Fund Trader

September 2, 2014

Diary, Newsletter

Global Market Comments
September 2, 2014
Fiat Lux

Featured Trade:
(TACKLING THE INFLATION MYTH),
(AAPL), (GOOG), (TWTR), (FB),
(THE BULL MARKET IN AMERICAN COLLEGE DEGREES)

Apple Inc. (AAPL)
Google Inc. (GOOG)
Twitter, Inc. (TWTR)
Facebook, Inc. (FB)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-02 01:05:542014-09-02 01:05:54September 2, 2014
Mad Hedge Fund Trader

September 1, 2014

Diary, Newsletter

Global Market Comments
September 1, 2014
Fiat Lux

Featured Trade:
(SALUTING THE ?OLD BREED?)
(WHERE THE ECONOMIST ?BIG MAC? INDEX FINDS CURRENCY VALUE), (MCD), (FXE), (YCS), (FXF), (CYB)
(TESTIMONIAL)

McDonald's Corp. (MCD)
CurrencyShares Euro ETF (FXE)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-01 01:06:532014-09-01 01:06:53September 1, 2014
Mad Hedge Fund Trader

Saluting the ?Old Breed?

Diary, Evening VIP, Newsletter

It was with a mixture of nostalgia and awe that I attended the reunion luncheon celebrating the 72nd anniversary of America?s invasion of Guadalcanal. The event was hosted by my former division commander in Desert Storm, Major General Mike Myatt, at the Marines Memorial Association in San Francisco.

I was there to represent the family. My Uncle, Colonel Mitchell Paige, won the first Congressional Medal of Honor of WWII at Guadalcanal; single handedly wiping out 2,000 attacking Japanese in one night with his 30 caliber Brown machine gun (click here for ?Tribute to a True Veteran?).

My dad was there too, as a driver of a Steward light tank. My grandfather served in WWI, and historians tell me that I have a string of military heroes behind me that stretches all the way back to Valley Forge, where the first John Thomas served on George Washington?s staff.

I got plenty of dust under my fingernails myself, but lost a disc in my back from a plane crash, flying support missions for the First Marine Division in the Persian Gulf. Today I have three nephews serving in the Middle East in harm?s way, all in intelligence. So it is safe to say that my family has paid its dues in the defense of our country, and then some.

General Myatt delivered a lecture outlining the desperation and cruel arithmetic of the conflict. The Marines went in with virtually no intelligence and the few primitive maps they could scavenge from National Geographic Magazine against a Japanese army that until then had been undefeated. The US lost 7,000 men, 29 ships, and 600 aircraft. The Japanese lost 30,000 men, 37 ships, and many of their experienced pilots.

Japan never recovered from the blow, and played defense for the rest of the war. It was the single most important battle of the Pacific war. Afterwards, the Marines were sent to Melbourne, Australia for rest, wearing rags, often barefoot, but with weapons in perfect operating condition.

Whenever I give a strategy luncheon in that fair city, I never fail to thank my guests for the hospitality they once extended to my family. Today, a small case at the Melbourne Cricket Ground pays tribute to their sacrifice.

The youngest living Guadalcanal veteran today is 87, and eight of the elderly warriors made it to the reunion. Got to love that Marine health care plan! One 95 year old flew his own plane up from Los Angeles. Once a Marine, always a Marine.

I dined at a table with a van load of veterans from the California Veterans Hospital in Yountville, Napa Valley (click here if you want to, they need you).

One grizzled old sergeant told me that if a friend went missing at night, he was often found tied to a palm tree the next day, tortured to death.? Another time, a surrendering Japanese pulled a hand grenade out of his loincloth and threw it into a sympathetic, but gullible squad, with deadly results. Despite these atrocities, he respected the Japanese today as humble, respectful, and hard working. You don?t find these sentiments among the veterans of other nations at all.

Time has taken a toll on these aging vets more than the enemy ever could. Much of the conversation revolved around the daily aches and pains of living in your late eighties. Pulling out genuine anecdotes was difficult, often resulting in a canned memory dredged from a book or TV documentary produced decades after the event. Some may have been worried that if they did open the door to the past, they would dread what they found.

For a riveting account of the historic battle, please read ?The Pacific? by For a riveting account of the historic battle, please read ?The Pacific? by Hugh Ambrose.? You can purchase the book at Amazon by?clicking here. My uncle Mitch cooperated with Ambrose in the research for the book, which was the basis for the recently released and incredibly realistic HBO series of the same name.

 

The Pacific by Hugh Ambrose

https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/The-Pacific-by-Hugh-Ambrose.jpg 429 290 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-01 01:05:542014-09-01 01:05:54Saluting the ?Old Breed?
Mad Hedge Fund Trader

September 1, 2014 - Quote of the Day

Quote of the Day

?The Fed can print dollars, but it can?t print confidence,? said David Bianco, chief equity strategist at Bank of America Merrill Lynch.

Monopoly money

https://www.madhedgefundtrader.com/wp-content/uploads/2013/08/Monopoly-money.jpg 250 356 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-09-01 01:02:302014-09-01 01:02:30September 1, 2014 - Quote of the Day
Page 12 of 12«‹101112

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Scroll to top