I spent a sad and depressing, but highly instructional evening with Dr. Stephen Greenspan, who lost most of his personal fortune with Bernie Madoff. The University of Connecticut psychology professor had poured the bulk of his savings into Sandra Mansky?s Tremont feeder fund; receiving convincing trade confirms and rock solid custody statements from the Bank of New York.
This is a particularly bitter pill for Dr. Greenspan to take, because he is an internationally known authority on Ponzi schemes, and published a book entitled Annals of Gullibility-Why We Get Duped and How to Avoid It. It is a veritable history of scams, starting with Eve?s subterfuge to get Adam to eat the apple, to the Trojan horse and the Pied Piper, up to more modern day cons in religion, politics, science, medicine, and yes, personal investments.
Madoff?s genius was that the returns he fabricated were small, averaging only 11% a year, making them more believable. In the 1920?s, the original Ponzi promised his Boston area Italian immigrant customers a 50% return every 45 days. My suspicious grandmother wisely passed on an invitation to join the plan.
Madoff also feigned exclusivity, often turning potential investors down, leading them to become even more desirous of joining his club. For a deeper look into Greenspan?s fascinating, but expensively learned observations and analysis, go to his website www.stephen-greenspan.com.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/03/Bernie-Madoff.jpg282354Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-19 01:05:212013-09-19 01:05:21How to Avoid Ponzi Schemes
One of the oldest games in the foreign exchange market is to always buy the currencies of strong countries that are growing, and to sell short the currencies of the weak countries that are shrinking.
Any doubts that China?s Yuan is a huge screaming buy should have been dispelled when news came out that it had displaced Germany as the world?s largest exporter.
The Middle Kingdom shipped $1.2 trillion in goods in 2009, compared to only $1.1 trillion for The Fatherland. The US has not held the top spot since 2003. China?s surging exports of electrical machinery, power generation equipment, clothes, and steel were a major contributor. German exports were mired down by lackluster economic recovery in the EC, which has also been a major factor behind the weak euro. Sales of luxury Mercedes and BMW cars, machinery, and chemicals have plummeted.
Interest rate rises for the Yuan and a constant snugging of bank reserve requirements by the People?s Bank of China, have stiffened the backbone of the Middle Kingdom?s currency even further. That is the price of allowing the Federal Reserve to set China?s monetary policy via a semi fixed Yuan exchange rate. It is certain that Obama?s stimulus programs are reviving China?s economy more than our own.
The last really big currency realignment was a series of devaluations that took the Yuan down from a high of 1.50 to the dollar in 1980. By the mid-nineties, it had depreciated by 84%. The goal was to make exports more competitive. The Chinese succeeded beyond their wildest dreams.
There is absolutely no way that the fixed rate regime can continue, and there are only two possible outcomes. An artificially low Yuan has to eventually cause the country?s inflation rate to explode. Or a future global economic recovery causes Chinese exports to balloon to politically intolerable levels. Either case forces a revaluation.
Of course timing is everything. It?s tough to know how many sticks it takes to break a camel?s back. Talk to senior officials at the People?s Bank of China, and they?ll tell you they still need a weak currency to develop their impoverished economy. Per capita income is still at only $6,000, less than a tenth of that of the US. But that is up a lot from a mere $100 in 1978.
Talk to senior US Treasury officials, and they?ll tell you they are amazed that the Chinese peg has lasted this long. How many exports will it take to break it? $1.5 trillion, $2 trillion, $2.5 trillion? It?s anyone?s guess.
The truly amazing thing is that the Yuan has maintained its strength in the face of a widespread collapse of currencies across the rest of the emerging market (EEM) space. Could this be your big ?BUY? signal?
One thing is certain. A free floating Yuan would be at least 50% higher than it is today, and possibly 100%. In fact, the desire to prevent foreign hedge funds from making a killing in the market is a not a small element in Beijing?s thinking.
The Chinese Central bank governor, Zhou Xiaochuan, says he won?t entertain a revaluation for the foreseeable future. The Americans say they need it tomorrow. To me that means about six months. Buy the Yuan ETF, the (CYB). Just think of it as an ETF with an attached lottery ticket. If the Chinese continue to stonewall, you will get the token 3%-4% annual revaluation they are thought to tolerate. Double that with margin, and your yield rises to 6%-10%, not bad in this low yielding world. Since the chance of the Chinese devaluing is nil, that beats the hell out of the zero interest rates you now get with T-bills.
If they cave, then you could be in for a home run.
Ready for a Long Term Relationship with China?
https://www.madhedgefundtrader.com/wp-content/uploads/2013/09/Girl-Chinese.jpg376284Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-19 01:04:582013-09-19 01:04:58Play China?s Yuan From the Long Side
This has been a real peach of a trade. In just eight days, (FCX) shares have jumped by 8%, taking the Freeport McMoRan October $28-$30 bull call spread from $1.68 to $1.93, a gain of 15%. And we did this by only risking 10% of our capital.
We managed to achieve this profit when the price of copper actually went against us, falling some 3%. Clearly the equity aspect of this position proved more important than the underlying fundamentals.
This is why I endeavor to find trades with multiple reasons to work. Hey, if you can?t skin a cat one way, try another. The dollars are just as good at the bar.
We have harvested 78% of the potential profit on this position, and have a full month to go to capture the rest. On top of that, we have a major market-moving event in two hours. So I am going to keep the gift and take the money and run. The risk/reward ratio has now swung against us. Also, I prefer to have some extra dry powder in case Ben Bernanke shocks us today, whatever the shock may be.
I wish they were all this easy.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/09/Pennies.jpg296523Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-19 01:03:102013-09-19 01:03:10Taking Profits on Freeport McMoRan (FCX)
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.
I had a chat with Bill Gates, Sr. recently, co-chairman of the Bill and Melinda Gates Foundation, the world?s largest private philanthropic organization. There, a staff of 800 helps him manage $30 billion.
The foundation will give away $3.1 billion this year, a 10% increase over last year. Some $1.5 billion will go to emerging nation health care, and another $750 million to enhance American education.
The foundation?s spending in Africa has been so massive, that it is starting to have a major impact on conditions, and is part of the bull case for investing.
The fund happens to be one of the best managed institutions out there, having sold the bulk of its Microsoft (MSFT) stock just before the dotcom bust and moving the money into Treasury bonds.
Mr. Gates? pet peeve is the precarious state of the US K-12 public education system, where teaching is not as good as it could be, expectations are low, and financial incentives and national standards are needed.
When asked about retirement, he says ?having a son with a billion dollars puts a whole new spin on things.?? Now razor sharp at 87, his favorite treat is the free NetJet miles he gets from his son Bill every year. In his memoir Showing up for Life, he says a major influence on his life was his Scoutmaster 70 years ago.
Being an Eagle Scout myself, I quickly drilled him on some complex knots, and he whipped right through all of them.
The world needs more Bill Gates Srs.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/09/Bill-Gates-Jr-Sr.jpg348463Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-18 09:08:592013-09-18 09:08:59An Evening With Bill Gates, Sr.
Global Market Comments September 17, 2013 Fiat Lux
Featured Trade: (JOIN THE INVEST LIKE A MONSTER SAN FRANCISCO TRADING CONFERENCE), (IT?S ALL ABOUT LARRY), (SPY), (TLT), (FXY), (YCS), (FXA), (MSFT), (LUNCH WITH ROBERT REICH)
SPDR S&P 500 (SPY)
iShares Barclays 20+ Year Treas Bond (TLT)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
CurrencyShares Australian Dollar Trust (FXA)
Microsoft Corporation (MSFT)
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-17 01:06:452013-09-17 01:06:45September 17, 2013
I am pleased to announce that I will be participating in the Invest Like a Monster Trading Conference in San Francisco during October 25-26. The two-day event brings together experts from across the financial landscape who will improve your understanding of markets by a quantum leap and measurably boost your own personal trading performance.
Tickets are available for a bargain $399. If you buy the premium $499 package you will be invited to the Friday 6:00 pm VIP cocktail reception, where you will meet luminaries from the trading world, such as Trademonster?s Jon and Pete Najarian, Guy Adami, Jeff Mackey, and of course, myself, John Thomas, the Mad Hedge Fund Trader. All in all, it is great value for the money, and I?ll personally throw in a ride on the City by the Bay?s storied cable cars for free.
Jon Najarian is the founder of OptionMonster, which offers clients a series of custom crafted computer algorithms that give a crucial edge when trading the market. Called Heat Seeker ?, it monitors no less than 180,000 trades a second to give an early warning of large trades that are about to hit the stock, options, and futures markets.
To give you an idea of how much data this is, think of downloading the entire contents of the Library of Congress, about 20 terabytes of data, every 30 minutes. His firm maintains a 10 gigabyte per second conduit that transfers data at 6,000 times the speed of a T-1 line, the fastest such pipe in the civilian world. Jon?s team then distills this ocean of data on his website into the top movers of the day. ?As with the NFL,? says Jon, ?you can?t defend against speed.?
The system catches big hedge funds, pension funds, and mutual funds shifting large positions, giving subscribers a peek at the bullish or bearish tilt of the market. It also offers accurate predictions of imminent moves in single stock and index volatility.
Jon started his career as a linebacker for the Chicago Bears, and I can personally attest that he still has a handshake that?s like a steel vice grip. Maybe it was his brute strength that enabled him to work as a pit trader on the Chicago Board of Options Exchange for 22 years, where he was known by his floor call letters of ?DRJ.? He formed Mercury Trading in 1989 and then sold it to the mega hedge fund, Citadel, in 2004.
Jon developed his patented algorithms for Heat Seeker? with his brother Pete, another NFL player (Tampa Bay Buccaneers and the Minnesota Vikings), who like Jon, is a regular face in the financial media.
In order to register for the conference, please click here. There you will find the conference agenda, bios of the speakers, and a picture of my own ugly mug. I look forward to seeing you there.
Cling! Cling!
Jon Najarian
https://www.madhedgefundtrader.com/wp-content/uploads/2013/09/Jon-Majarian.jpg317358Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-17 01:05:302013-09-17 01:05:30Join the ?Invest Like a Monster? San Francisco Trading Conference
Global Market Comments September 16, 2013 Fiat Lux
Featured Trade: (NOVEMBER 1 SAN FRANCISCO STRATEGY LUNCHEON), (CATCHING UP WITH ECONOMIST DAVID HALE), (EEM), (GREK), (IWW), (EWJ), (NGE), (EWJ), (FXY), (YCS) (TESTIMONIAL)
iShares MSCI Emerging Markets (EEM)
Global X FTSE Greece 20 ETF (GREK)
iShares Russell 3000 Value Index (IWW)
iShares MSCI Japan Index (EWJ)
Global X Nigeria Index ETF (NGE)
iShares MSCI Japan Index (EWJ)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-16 01:06:592013-09-16 01:06:59September 16, 2013
Come join me for lunch at the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in San Francisco on Friday, November 1, 2013. An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Tickets are available for $191.
I?ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a private club in downtown San Francisco near Union Square that will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/02/San-Francisco-e1410363065903.jpg238359Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-09-16 01:05:152013-09-16 01:05:15November 1 San Francisco Strategy Luncheon
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.
