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Mad Hedge Fund Trader

November 21, 2014

Diary, Newsletter, Summary

Global Market Comments
November 21, 2014
Fiat Lux

Featured Trade:
(TRADE ALERT DROUGHT EXPLANATION AND MY MARKET TAKE),
(SPY), (BABA), (VIX),
(REPORT FROM AUSTRALIA)

SPDR S&P 500 ETF (SPY)
Alibaba Group Holding Limited (BABA)
VOLATILITY S&P 500 (^VIX)

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 Trader2014-11-21 01:05:322014-11-21 01:05:32November 21, 2014
Mad Hedge Fund Trader

Trade Alert Drought Explanation and My Market Take

Diary, Newsletter, Research

Those of you who recently purchased the Mad Hedge Fund Trader?s mentoring service may have noticed a sudden drop off in Trade Alerts.

During October, I sent out a record 44 Alerts and Updates. As a result, that month was my best of the year, bringing in a gain of 6.69%. This month, only 5 Trade Alerts have gone out.

What gives?

I assure you, I have not been basking in the sun on a yacht in the Caribbean. Nor have I been catching the end of the ski season on New Zealand?s South Island. I have not even taken off on a hundred mile snowshoe across the High Sierras (that is not scheduled until Thanksgiving week).

No, I?m afraid that I have to tell you that the problem has been the market. I like to focus on sending out Trade Alerts that have an overwhelming chance of success. The fundamentals, the technical?s, the sun, moon, and stars all have to line up perfectly.

When they don?t, I don?t trade. It?s called maintaining discipline. The same is true for my friend, Mad Day Trader, Jim Parker. Sometimes, the best trades are the ones you think about, but never do, because your models say ?Stay away!?

When I ran my big hedge fund during the 1990?s I developed a perfect leading indicator. It was based my own clients? cash flows. When money poured in, it reliably signaled a market top. When it flowed out, it presciently indicated a market bottom.

It made absolutely no difference what my own performance was. If I was up 40% on the year, and the stock market dove 10%, investors wanted their money back?and now! No excuses, no explanations.

When investors wanted to redeem, I bought them out with my own money. Eventually, over the years, I ended up owning the entire hedge fund, which I then sold at a big premium at the market top to a group of foreign investors.

The closing date was January 1, 2000, four months before the beginning of the Great Dotcom crash. People told me I was stupid for four months?then I never heard from them again, except to occasionally see their resumes put in front of me by hopeful headhunters.

I am seeing the same sort of behavior in the newsletter business. Market surges bring in large numbers of new subscribers, who then expect immediate gratification in the form of a ton of Trade Alerts. At market bottoms the PayPal account goes completely dormant.

If I met new subscriber expectations, I would create a perfect money destruction machine, one that mechanically buys tops and sells bottoms. That is a great way to buy a spanking brand new mega yacht for your broker, but not for yourself.

So what should you expect from the Mad Hedge Fund Trader? To get buried in Trade Alerts when conditions are ideal, and sit on your hands when they aren?t.

That is when you?re supposed to be reading those deep, insightful research pieces that I send you every day, and drawing up short lists of things to do when the call to action arises. Chance rewards the prepared.

Keeping you out of a high risk/low return market is a far more valuable service that I can provide than tying you to a low risk/high return one.

Hint: Just because you bought a new subscription to the Global Trading Dispatch doesn?t mean that trading conditions have suddenly become ideal.

If you have to wait for an entire market cycle for the sweet spots to start appearing in large numbers, that is the best way to protect and expand your wealth. Market discipline is the most valuable thing I can teach you.

With all that said, let?s talk about the markets.

This is a particularly tricky place for traders. The lowest risk day of the year to buy stocks was October 15. Since then, the risks have increased daily. We are now at the top of one of the extended runs in market history. Should we throw caution to the wind and buy with reckless abandon?

Hell no!

So maybe we should consider flipping to the short side?

We have just entered the six-month period when stocks are traditionally the strongest. You can add to this big upward influence the end of the year run up.

In fact, I think we will close 2014 at the high of the year. Looking at the way the Volatility Index (VIX) is trading, it could be another three years before we see another full 10% correction.

So I don?t think that selling short any risk asset is a good idea here either.

That leaves us the small weekly 1%-2% mini corrections we have been getting to get involved with on the long side. But since we are running into the annual book closing, you have to use tight stop losses to protect your investment.

The high frequency traders all know this, and will program their algorithms to trigger as many stop losses as possible before reversing markets. That?s how I lost my long vertical call spread in Alibaba (BABA) this year, for a -2.38% hickey.

This is why I wrote in the Trade Alert that short term traders should sell, but long-term investors should hold. I think the stock is going to $140 next year.

Long-term investors have no problem. My fundamental economic call remains unchanged. Analysts and investors alike are underestimating the strength of the US economy.

Almost every data point confirms my convictions. Everyone else is shocked, befuddled, and bemused. Not me.

So, this bull market could continue for three or more years, and all they need to do is take an extended cruise when the markets suffer their periodic corrections.

This is why those owning the deepest discount Vanguard index funds have outperformed both active and hedge fund mangers for the third year running.

Sometimes it pays to be lazy.

 

SPY 11-20-14

BAC 11-20-14

VIX 11-20-14

BABA 11-20-14

GolferSometimes It Pays to be Lazy

https://www.madhedgefundtrader.com/wp-content/uploads/2014/11/Golfer.jpg 430 320 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-11-21 01:04:592014-11-21 01:04:59Trade Alert Drought Explanation and My Market Take
Mad Hedge Fund Trader

Report from Australia

Diary, Newsletter

The noise was as depressing as it was unmistakable. The front tire on my rental car blew out, leaving me stranded on the side of the road. The problem was that I was in the middle of nowhere in New South Wales, Australia, and it was pouring cats and dogs.

Nothing but eucalyptus trees unfolded across the vast rolling hills. I looked in the trunk. Kookaburras laughed in the foliage. There was a nice new spare, but no jack.

John Thomas - Flat

I picked up my iPhone 5s to call for help. There, was the message that sank a thousand ships, and ended a million relationships: ?No Service,? and no bars. Now you really can?t hear me. My traveling companion shuddered. ?They?ll never find our bodies?.

Then, the distant wail of a chain saw beckoned. Aha, I thought, all I need is a good Australian farmer to come to my aid. They?ll help anyone, even a Yank with a strange accent and decidedly foreign clothing.

Dressed for wine tasting in the Hunter Valley, I now found myself charging out across the Australian bush, up to my ankles in red mud. I was uplifted by the probability that there was at least a 95% chance that I was not walking into the home of a serial killer. Scenes from the cult film Deliverance flashed through my mind.

A frenzied, barking Rottweiler ran out to greet me. Fortunately, I passed the smell test. Minutes later I was speaking with what had to be Crocodile Dundee?s long lost half brother, complete with the broad brimmed leather hat, crocodile teeth, and a sleeveless denim jacket. It seems to be an Aussie thing.

John Thomas - Croc DundeeMeet Crocodile John Thomas

Not only would he lend me a jack, he insisted on driving me out to my car and changing my tire for me. Do I really look that old and infirm now? He did mention casually, ?I?m glad you made it across that field. We have lost four dogs to snakes there in the past year.? Oops, and double oops.

In the end, we took turns while discussing the current state of the dairy cow market, the price of hay (it?s higher), and the uselessness of the current government in Canberra. I drew on my vast knowledge on these topics from the summer I spend on a cattle ranch in Bassano, Alberta a half century ago.

Thus began my trip to the Antipodes, somewhat inauspiciously. However, the highpoints were to follow shortly.

The wines in the Hunter Valley were to die for. They have become a carbon copy of my own Napa Valley, complete with all the tourist rip offs. Their red Shiraz is world class, and I took names of the US distributors of the best ones. It turns out to be easier to ship military grade arms abroad than a case of wine.

Electrical AdaptersNow, Which One of These Works in Australia?

After winning the battle of Guadalcanal in 1942, my dad, along with the rest of the survivors from the First Marine Division, were dumped in Melbourne for some much needed rest and resupply. They were starving, barefoot, and in rags, but their weapons were in perfect operating condition.

The government housed them in the Melbourne Cricket Ground, and provided WWI surplus Australian Army uniforms, all in wool khaki. Dad told me when he walked down the street, families invited him in for dinner almost every night. Their men were all off fighting in North Africa.

At my Melbourne strategy luncheon 72 years later, I thanked the people of Melbourne for their hospitality on behalf of the Marine Corps and the Thomas family. Today, the MCG still stands, and a small memorial there gives tribute to the actions of these brave men, who saved Australia from invasion by the Japanese.

MHFT Luncheon Sign

I never fail to stop by the fabled Sydney Opera House when I breeze through this part of the world, one of the world?s most recognizable architectural icons. Its creation is an epic in its own right. Designed by a young Dane, and union built during a period of revolving governments, planning and construction dragged on for 20 years, seemingly defying the known laws of physics and politics.

It was worth every penny.

Carmen, by Georges Bizet, dragged on, as operas tend to do. Half way through, the Toreador rode in on a horse. From then on, the entire audience wondered if, in front of 3,000 of the Sydney elite, the horse was going to take a dump on the stage. Miraculously, it didn?t.

I soon realized that my French is badly in need of repair. The translators could have used a tune up as well. Eventually I was thinking ?kill her already and get it over with.? In the end, Jos? did the evil deed. On the way out in a drenching rainstorm I saw the horse take the biggest dump I had ever seen, carefully into a trashcan in the parking lot.

John Thomas - Sydney

During a free day in Brisbane, a former colonial outpost that is evolving into an Asian city, I chartered a Cessna Caravan and flew it up to the Great Barrier Reef. I landed it on Lady Elliot Island, a speck of coral 30 miles out into the azure blue South Pacific, careful to warn my passengers of the hard landing that was coming.

It was another one of those incredible, once in a lifetime, bucket list type trips. There, I spotted electric blue starfish, snapping moray eels, a pod of dolphins, rode the back of a giant sea turtle, and swam with giant manta rays and reef sharks. Strangely, I felt right at home with the sharks, perhaps a byproduct of my day job?

On the way home, I dipped down to a lower altitude to skim the endless pristine beaches of Queensland, scattering the kangaroos and emus (not the European Monetary Unit.)

Lady Elliot IslandPiece of Cake, But Fasten Your Seatbelt

Given the large number of new subscribers who joined me during the trip, I will no doubt be making more frequents trips to the Land Down Under. To facilitate this, I have extended live customer support, educational resources, and order execution to take place in the Australian time zones through a tie up with a local broker. For more information please click here.

My event organizers had me on my feet up to 16 hours a day, giving speeches, doing interviews on radio and TV, recording webinars, and attending lunches, dinners, and cocktail receptions. Naturally, there was a lot of drinking. It seems to be another Aussie thing.

I even managed to squeeze in a mud wrestling session with my friend, Harry S. Dent, Jr., where we debated the future of the financial markets in front of an awed crowd (me up, him down). As you probably know, I eat this stuff up.

Thanks for all your support and encouragement, which allows me to live this incredible lifestyle. If you have any more bucket list suggestions to replace the adventure just struck off, please send them in.

John Thomas
The Mad Hedge Fund Trader

John Thomas - Pilot

https://www.madhedgefundtrader.com/wp-content/uploads/2014/03/John-Thomas-Croc-Dundee.jpg 329 376 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-11-21 01:03:562014-11-21 01:03:56Report from Australia
Mad Hedge Fund Trader

November 21, 2014 - Quote of the Day

Diary, Newsletter, Quote of the Day

?The private economy is OK here. It is absorbing these body blows from Washington. Housing and energy could offset the shenanigans coming out of there,? said Stephen Wood, CIO with Russell Investments Group.

Boxers-Fight

https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/Boxers-Fight.jpg 223 328 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-11-21 01:02:112014-11-21 01:02:11November 21, 2014 - Quote of the Day
Mad Hedge Fund Trader

November 20, 2014 - MDT - GDX 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 Trader2014-11-20 16:11:332014-11-20 16:11:33November 20, 2014 - MDT - GDX Alert
Mad Hedge Fund Trader

November 20, 2014 - MDT - GDXJ 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 Trader2014-11-20 14:46:452014-11-20 14:46:45November 20, 2014 - MDT - GDXJ Alert
Mad Hedge Fund Trader

November 20, 2014 - MDT - Semi's

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

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 Trader2014-11-20 10:11:392014-11-20 10:11:39November 20, 2014 - MDT - Semi's
Mad Hedge Fund Trader

November 20, 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://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 Trader2014-11-20 10:08:092014-11-20 10:08:09November 20, 2014 - MDT Pro Tips A.M.
Mad Hedge Fund Trader

November 20, 2014

Diary, Newsletter, Summary

Global Market Comments
November 20, 2014
Fiat Lux

SPECIAL GOLDEN ISSUE

Featured Trade:
(LUCKY FIND SPARKS NEW CALIFORNIA GOLD RUSH), (GLD),
(THE DIFFERENCE BETWEEN MAD HEDGE FUND TRADER AND MAD DAY FUND TRADER),
(THE NEW CALIFORNIA GOLD RUSH)

?SPDR Gold Shares (GLD)

 

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 Trader2014-11-20 10:02:072014-11-20 10:02:07November 20, 2014
Mad Hedge Fund Trader

The New California Gold Rush

Diary, Newsletter

On my way back from Lake Tahoe last weekend I saw that every bend of the American river was dotted with hopeful miners, looking to make a windfall fortune.

Weekend hobbyists were there panning away from the banks, while the hardcore pros stood in hip waders balancing portable pumps on truck inner tubes, pouring sand into sluice boxes. Welcome to the new California gold rush.

A sharp-eyed veteran can take in $2,000 worth of gold dust a day. The new 2013'ers were driven by a price of gold at $1,180 and the attendant headlines, but also by unemployment, and heavy rains that flushed new quantities of the yellow metal out of the Sierras.

They were no doubt inspired by the chance discovery of an 8.7 ounce nugget in May near Bakersfield, worth an impressive $10,266.

Local folklore says that The Sierra's have given up only 20% of their gold, and the remaining 80% is still up there awaiting discovery. Out of work construction workers are taking their heavy equipment up to the mountains and using it to reopen mines that have been abandoned since the 19th century.

The US Bureau of Land Management says that mining permits in the Golden State this year have shot up from 15,606 to 23,974. Unfortunately, the big money here is being made by the sellers of supplies and services to the new miners, much as Levi Strauss and Wells Fargo did in the original 1849 gold rush.

 

gold-23

gold2-1

https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/Panning-for-Gold.jpg 165 504 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-11-20 09:37:122014-11-20 09:37:12The New California Gold Rush
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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.

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