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Mad Hedge Fund Trader

January 14, 2013

Diary, Summary

Global Market Comments
January 14, 2013
Fiat Lux

Featured Trades:
(THE LAST CRISIS TO GO), (SPX), (IWM), (INDU), (QQQ),
(TESTIMONIAL)

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 Trader2013-01-14 09:49:582013-01-14 09:49:58January 14, 2013
Mad Hedge Fund Trader

The Last Crisis to Go

Diary

Generally, the world does not end. That is my sage observation after spending 45 years in the investment industry. Given the recent market action, it appears that money managers are finally coming around to my point of view.

Remember the great Debt Ceiling Crisis in July of 2011? Congress held out until the last second of the last minute of the last hour before coming to agreement on, what in past years, has been a simple housekeeping matter. Before the ink was even dry on the deal, the stock market started to amputate 25% off the value of your IRA in the following two months.

I always thought that this plunge was due to investors completely losing confidence in the full faith and credit of the United States government. Can you blame them when a Republican House was refusing to pay a largely (65%) Republican debt?

Then we got the ?Fiscal Cliff?. This time, your retirement fund suffered only a 10% hickey. That was the extent of the descent in stock indices in the aftermath of the presidential election. Then, guess what? We made it all back in six weeks and closed the year at the highs. Investors were learning that, generally, the world doesn?t end after all.

In a mere seven weeks we will face the last crisis for the foreseeable future, that of the Debt Ceiling Crisis, Part II. Only this time, it?s different. Stocks are not cratering. Instead, they are grinding sideways on diminishing volume, holding on to the dramatic gains they have wracked up since the end of November. What gives?

I believe that traders are not going to get scared by this impending disaster into dumping all their positions at the bottom, only to buy them back at the top. This time, they are holding tight. What this sets up is asset prices that grind sideways for a month on declining volatility, frustrating every attempt by the underinvested to boost equity weightings.

Then on the eve of a resolution of this donnybrook, stock prices will explode to the upside. To anyone who spent much of their youth pheasant or quail hunting, it is all familiar behavior. Stand still in one spot long enough, and you will eventually flush out a bird, or sometimes an entire covey, which makes an easy shot. That?s what I expect investors to do in February.

How am I positioned for such a market? I have the heaviest equity allocation in over a year. But every position has a short volatility element to it. If the market goes up, my year-to-date performance will hit 20% by February 15. If the market goes sideways, it will still reach 20% by February 15. If it goes down by less than 5%, I should still show a profit of 20% by February 15. To get the inside baseball on how I do this, you have to subscribe to my market beating Trade Alert Service.

It may well turn out that there is no crisis at all on March 31. President Obama could fall back on the 14th amendment, which requires the government to honor its debts in all circumstances. That leaves the House to argue with itself in the obscurity of CSPAN. If the market figures this out, it will go ballistic.

The rally that ensues will set up the high for the year for assets, and a new 14 year high in the stock market. Whether the S&P 500 (SPX) reaches 1,500, 1,550, or 1,600, is anybody?s guess. The top, no doubt, will be made by capitulation buying by those who, until now, idly watched the appreciation on TV, as they always do.

Then we are in for some tough sledding. Q1, 2013 will be dominated by better than expected data from superior business performance at the end of 2012. In Q2, 2013, the story will be about a torrent of worse than expected data that the bitter fruit of the fiscal cliff resolution come to harvest in the form of less spending by a newly impoverished government and consumers. That sets up nicely for a 15%-20% summer correction.

By the way, the California hunting grounds of my youth are long gone, turned into suburbs or factories. To hunt these days, you have to join an exclusive club which stocks limited grounds with as many as 20,000 birds a year. But you know what? They still behave just the same, and taste just as good.

SPX 1-11-12

IWM 1-11-13

QQQ 1-11-13

QUAIL

https://www.madhedgefundtrader.com/wp-content/uploads/2013/01/QUAIL.jpg 310 308 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2013-01-14 09:48:382013-01-14 09:48:38The Last Crisis to Go
Mad Hedge Fund Trader

California Ski Cabins are Heating Up

Diary

I though you would be interested in this note I received from my real estate broker in Squaw Valley, California, where I sold my ski cabin in 2005 for $3 million. This is the high beta end of the housing market in the Golden State.

"Here are some stats (from the multiple listing system and other sources) and developing trends:

2012 Summary of Sales info
? 24 cabins and homes sold from $385.5K to $2.9M
*3 over $2M - 6 from $1M to $2M and 9 under $1M
? 4 lots sold from $385K to $750K-
? 9 non- hotel condos sold from $154.9K to $580K
? 11 Resort at Squaw Creek condos from $84K to $745K
? 6 Squaw Valley Lodge condos from $220K to $815K
? 17 Village at Squaw Valley condos from $235K to $825K

Most of the short sales, bank sales and foreclosures are gone from the market and the real estate market is showing signs of recovery. As the market recovers, the biggest problem is for the buyers to grasp that prices are rising and trying to buy a property based on the comparable sales data is now difficult as the comparable sales data may not support the listing prices and ultimate selling prices of the properties selling. Most of you are now aware of the potential development plans for the valley at the base of the ski area. If you have not already checked it out here is a link www.SquawRenaissance.com.

Listing inventory is beginning to decrease and we expect to see this continue into 2013. This makes for tough decisions for buyers who have not already purchased a property as the longer they wait to buy, the more changes that are occurring in the availability of properties."

house winter scene

https://www.madhedgefundtrader.com/wp-content/uploads/2013/01/house-winter-scene.jpg 258 413 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2013-01-10 23:02:262013-01-10 23:02:26California Ski Cabins are Heating Up
Mad Hedge Fund Trader

January 10, 2013

Diary, Summary

Global Market Comments
January 10, 2013
Fiat Lux

Featured Trades:
(BECOME MY FACEBOOK FRIEND),
(ECONOMIST DAVID HALE SAYS THE ACTION WILL BE IN SOUTHEAST ASIA),
(EPHE), (IDX), (IWM, (THD),
(THE LOST DECADE FOR BONDS IS BEGINNING!), (TLT), (TBT),
(TESTIMONIAL)

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 Trader2013-01-10 10:06:582013-01-10 10:06:58January 10, 2013
Mad Hedge Fund Trader

Become My Facebook Friend

Diary

If you would like to get a free headline service from The Diary of the Mad Hedge Fund Trader, then please join my 1,375 friends. Every day we are posting headlines along with summaries of the stories on our Facebook page. As soon as you open your own Facebook page, you will receive our latest headlines as newsfeeds. To ?friend me?, please go to my home page at http://madhedgefundradio.com/ and click on the Facebook box.

BusinessJohnThomasProfileMap2-2

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 Trader2013-01-10 10:05:322013-01-10 10:05:32Become My Facebook Friend
Mad Hedge Fund Trader

The Lost Decade for Bonds is Beginning!

Diary

If you have been negative on bonds as I have, these charts should enable you to sleep much better.

Virtually every fixed income product is peaking now. Let me draw a simple picture for you laymen out there. That means you should sell every major bond market rally for the next ten years. It?s looking like the 1.38% yield we reached in the Treasury bond market will be the absolute nadir.

The technical set up is now so dire, that bonds are going to have a really tough time rallying from here. The momentum players will eventually smell blood in the water, and they'll be jumping in with both feet at every opportunity. The lost decade for bonds has begun!

Of course, you knew this was coming. It doesn?t help that the budget proposals for both political parties going forward will engineer a dramatic increase in the deficit. The bond market is not laughing. It is time to dump that old investment guideline where you own your age in bonds. From here on, the bond/equity ratio should be 0% in bonds and 100% in equities, whatever your age. You now should own your age in high dividend paying equities and the balance in aggressive growth or emerging market equities.

TLT 1-9-13

TBT 1-9-12

Sliding Dollar
Is the Lost Decade for Bonds Beginning?

https://www.madhedgefundtrader.com/wp-content/uploads/2013/01/Sliding-Dollar.jpg 244 289 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2013-01-10 09:56:422013-01-10 09:56:42The Lost Decade for Bonds is Beginning!
Mad Hedge Fund Trader

January 9, 2013

Diary, Summary

Global Market Comments
January 9, 2013
Fiat Lux

Featured Trades: None

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 Trader2013-01-09 09:18:442013-01-09 09:18:44January 9, 2013
Mad Hedge Fund Trader

Running a Few Local Errands

Diary

Returning from my transcontinental rail trip, I had a ton of local errands to run. Pick up the mail, the dry cleaning, and my newly resoled hiking boots, which suffered 1,500 miles of backpacking last year, all of it uphill. The Toyota Highlander was still a disaster from the Lake Tahoe trip, the Christmas tree had to come down, and the Lionel electric train set put away in storage for another year.

So I was in somewhat of a hurry when I turned the corner on to my street. After all, I still had a letter to get out for the day. A black Porsche Boxster reversed right in from of me and I jammed on the brakes. A young man stalled the car in the middle of the road and I nearly t-boned him.

Then I looked to my left. The house was clearly empty and the alarm was wailing. A bell went off in my head. While a lot of young guys in the San Francisco Bay area drive $100,000 cars, there was no way a Porsche owner didn?t know how to drive a stick shift. The car was being stolen.

The thief tried to start the engine again, popped the clutch, and stalled it. He grimaced at me with an expression of absolute guilt, knowing full well he had been caught red handed. I got ready to ram the Porsche with my SUV. If the driver reached for the door, I was going to hit the gas, because it could only mean one thing. He was about to come after me with a gun. I tried to memorize every feature of the miscreant; African American, six feet tall, light build, 28, high cheek bones, and a blue knit cap at 4:00 on a warm afternoon. I tightened my seat belt.

Finally, on the third try, the driver got the car running and tore off down the road. I called 911 to report a car theft in progress. I then called the homeowner, blustering my way past an obdurate secretary with ?an extremely urgent personal call.? A quizzical neighbor came out of an important meeting and picked up the phone.

?Do you own a black Porsche,? I asked?

?Yes.?

?Does anybody have permission to drive it today??

?No.?

?Then someone just stole your car. I already called 911, but you better get on home.?

The police cruiser showed up ten minutes later. The offenders had pried open a back window, ransacked the house, and found the car keys in a drawer. The entire range of Apple products were stolen.

Waiting to make my statement, I noticed that the officer wore a Purple Heart campaign ribbon. He flew Blackhawks, and was wounded by an IED on his way to work. We traded Kuwait stories for a while, and I regaled him with tales of the Persian Gulf in the prewar days, like pages out of Arabian Nights. Then I asked,

?Why don?t you just get the owner?s Apple login and ID and activate the GPS tracker??

?The crooks know about this technology, and they turn them off as soon as they grab them, so we can?t find them.?

?Maybe these are dumb crooks. Perhaps they don?t go to Mac World Expo every year. Why don?t you try??

The thing about the military is that the men honor the chain of command, even after they leave the service. An hour later I got a call from the duty officer.

?We activated the Apple GPS tracker. The phones and laptops had been turned off, but there was one iPad that was in sleep mode with a black screen. It was transmitting its location the whole time. It pinpointed an address in Oakland. We now have the house surrounded and want you to come identify the perpetrator. ?At his home in his neighborhood.? By the way, this is now a vehicular manslaughter case because the suspect hit and killed a female pedestrian while making his escape. You are the only witness.?

The officer was shocked when I said ?Sure thing.? Volunteers for this request are unheard of.

?A cruiser will pick you up in five minutes.?

?Ship it in.?

The same Iraq veteran picked me up. He drove me to the worst neighborhood in the city with the highest per capita murder rate in the United States. Every house had barred windows, cars were up on blocks, and trash was everywhere. It was a real cesspool. Six cop cars surrounded a corner house, and groups of curious neighbors crowded the perimeter.

The police walked the handcuffed suspect into the headlights of our car. My night vision isn?t the greatest these days, so I picked up a pair of spotter?s binoculars I kept from my Marine sniper training days. There were the high cheekbones, with an insolent, disdainful look that you only see on the ghetto. There was absolutely no doubt. I affirmed to the officer that I could make a 100% positive ID.?

I told him of my plan to ram the car. ?We wish you had. You would have saved that lady?s life.? I then told the officer, ?Let?s get out of here. You guys all have second chance vests and I don?t. I don?t want to catch a stray round.

On the way home my driver informed me that all of the stolen property from the crime had been recovered, along with many additional items taken during other robberies. The suspect had an arrest record going back to age 16. They had been trying to bust this gang for years, and I had given them their break. With the manslaughter, grand theft auto, hit and run, and burglary charges, the guy was looking at 30 years. A public defender might plea-bargain this down to 15 years, so there was unlikely to be a trial.

I was overcome by a sense of sadness. What a senseless waste of two lives.

When I returned to my neighborhood I was greeted as a conquering hero. Several reported seeing the same guys casing the area over recent months. The robbers broke in just after the cleaning lady left. The homeowner was effusive in his praise, and said his missing property would be returned the next day. The Porsche was totaled in the crash, but was insured. He asked if I needed anything. I said absolutely not. ?I?m just an old combat veteran always on the lookout for a new fight.? A case of 2006 Silver Oak Cabernet mysteriously showed up on my doorstep the next morning.

By now, the letter for the day was a complete write off. All of my worldwide staff had gone to bed, and there was no one left to email or post it. Besides, they still had yesterdays? 5,000-word magnum opus to digest.

I called my 85-year-old mother with a blow-by-blow description of the events. She said she would have the best story ever to tell her breakfast crowd the next morning at her assisted living facility. At least something good came of this tragedy.

Superman shorts

No, I?m Not Going to Wear Them

https://www.madhedgefundtrader.com/wp-content/uploads/2013/01/Superman-shorts.jpg 469 641 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2013-01-09 09:15:292013-01-09 09:15:29Running a Few Local Errands
Mad Hedge Fund Trader

January 4, 2013

Diary, Summary

Global Market Comments
January 4, 2013

Featured Trades: (LUNCH WITH THE TREASURY SECRETARY)

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 Trader2013-01-03 23:02:462013-01-03 23:02:46January 4, 2013
Mad Hedge Fund Trader

January 3, 2013

Diary, Summary

Global Market Comments
January 3, 2013

SPECIAL FOREIGN CURRENCY ISSUE

Featured Trades:
(LONG TERM DOLLAR TREND),
(FXA), (FXC), (BNZ), (CYB), (FXE)
(THE COMING COLLAPSE OF THE YEN),
(THE BIG MAC INDEX), (MCD

CurrencyShares Australian Dollar Trust

CurrencyShares Canadian Dollar Trust

WisdomTree Dreyfus New Zealand Dollar

WisdomTree Dreyfus Chinese Yuan

CurrencyShares Euro Trust

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 Trader2013-01-02 23:04:012013-01-02 23:04:01January 3, 2013
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