A collection of the 28 best traders and managers in the world, or eight a day, each giving an educational webinar. Back-to-back one-hour presentations are followed by an interactive Q&A. It will be hosted by John Thomas from 9:00 AM sharp each day. Watch for the Pink Floyd music.
It’s a smorgasbord of trading strategies, so pick the one that is right for you. Covering all stocks, bonds, commodities, foreign exchange, precious metals, energy, and real estate. It’s the best look at the rest of 2023’s money-making opportunities you can get anywhere.
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Many hedge fund traders are unhappy about the current near monopoly enjoyed by the top three ETF issuers, Black Rock, State Street, and Vanguard, which control 80% of the market. At last count, 590 index ETFs alone were capitalized at more than $1.5 trillion.
The result has been grasping management fees, exorbitant expense ratios, and poor structural designs, which create massive tracking errors.
The good news is that new entrants are flooding into the ETF space, and the heightened competition they are bringing will help curtail the worst of these abuses. This development will accelerate the demise of the bloated and arthritic mutual fund industry, whose end has been a long time in coming.
Not only will management fees and expense ratios plunge, there will also be a far broader range of offerings, as new funds are launched from a diverse range of institutions coming from differing areas of expertise. Failure to enter the newly lucrative ETF market by the remaining giants sitting on the sidelines means that their existing mutual fund businesses will be cannibalized.
Look no further than bond giant PIMCO, which came out with a plethora of fixed income related funds, Van Eck’s expanding list of ETFs for commodities, and the even growing list of inverse and leveraged inverse ETFs presented by ProShares. The bottom line will be that lower costs and tighter spreads will leave more profits on the table for the rest of us.
The Mutual Fund Industry is Getting Cannibalized
A few years ago, I went to a charity fundraiser at San Francisco’s priciest jewelry store, Shreve & Co., where the well-heeled men bid for dates with the local high society beauties, dripping in diamonds and Channel No. 5.
Well fueled with champagne, I jumped into a spirited bidding war over one of the Bay Area’s premier hotties, who shall remain nameless. Suffice it to say, she has a sports stadium named after her and is now married to a venture capital titan.
The bids soared to $36,000, $37,000, $38,000. After all, it was for a good cause. But when it hit $39,000, I suddenly developed a lockjaw. Later, the sheepish winner with a severe case of buyer’s remorse came to me and offered his date back to me for $38,000. I said “no thanks.” $37,000, $36,000, $35,000? I passed.
The current altitude of the stock market reminds me of that evening. When people ask me what I do for a living, I answer, “Convincing people not to sell at market bottoms.” This is one of those times.
I realize that many of you are not hedge fund managers and that running a prop desk, mutual fund, 401k, pension fund, or day trading account has its own demands. But let me quote what my favorite Chinese general, Deng Xiaoping, once told me: “There is a time to fish, and a time to hang your nets out to dry.”
At least then, I’ll have plenty of dry powder for when the window of opportunity reopens for business. While I’m mending my nets, I’ll be building new lists of trades for you to strap on when the sun, moon, and stars align once again.
And no, I never did find out how that very expensive date went.
Time to Mend the Nets
Global Market Comments
March 15, 2023
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON MARCH 14-16)
(TAKING A BITE OUT OF STEALTH INFLATION),
(TESTIMONIAL)
CLICK HERE to download today's position sheet.
When I visited the local Safeway over the weekend, I was snared by some green uniformed pre-teens, backed by beaming mothers behind a card table selling Girl Scout cookies. I was a pushover. I walked away with a bag of Thin Mints, Lemon Chalet Creams, Do-Si-Dos, and Tagalongs.
I have to confess a lifetime addiction to Girl Scout cookies. During the early eighties, one of the managing directors at Morgan Stanley's equity trading desk had a daughter in this national youth organization. One day, she pitched to all 200 traders on the floor, going from desk to desk with sheets of paper taking orders.
I used to buy two of everything she offered, as some clients preferred a few boxes of these delectable treats over lunch at the Four Seasons any day. Others ordered hundreds. I later heard that the girl was the top performing scout in the greater New York area two years running.
But this year, when I got home and opened a box, I was shocked. While the price was the same, the number of cookies had shrunk considerably. I knew it was not my waistline the scouts were concerned about. I was seeing the dastardly hand of 'stealth inflation' at work.
In this highly inflationary environment, companies loathe to raise prices. Food companies are especially hard hit, with many commodities like wheat, corn, sugar, soybeans, and coffee up 50%-300% in a year. Any attempt to pass these costs on to consumers is punished severely. So, companies cut costs, quantity, and quality, instead, by shrinking the size.
I think you are seeing stealth inflation breaking out everywhere. It is not just in food. Many products seem to be undergoing a miniaturization process while prices remain unchanged. It also extends to services, where a dollar buys you less and less. This is how the consumer prices index is staying in the high single digits.
Meet the Ugly Face of Stealth Inflation
“Don’t bail away in a sinking boat if you can swim to one that is seaworthy,” said Warren Buffet partner, the 99-year-old Charlie Munger.
Global Market Comments
March 14, 2023
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON MARCH 14-16)
(HOW TO AVOID THE PONZI SCHEME TRAP),
(TESTIMONIAL)
CLICK HERE to download today's position sheet.
I spent a sad and depressing but highly instructional evening with Dr. Stephen Greenspan, who had 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 bite 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 1920s, the original Ponzi promised his Boston area Italian immigrant customers a 50% return every 45 days. My grandmother was tempted, but my grandfather nexed the idea, always the conservative guy.
Madoff also feigned exclusivity, often turning potential investors down, leading them to become even more desirous of joining his club.
We view The Mad Hedge Fund Trader as a vital resource that helps us focus on major market trends that are most likely to make money over time. It is a resource that helps us filter out the daily noise in various markets and the mostly irrelevant commentary of TV's talking heads.
Unlike many newsletters that focus on one strategy or asset class The Mad Hedge Fund Trader's experience stretches across currencies commodities international markets and equities. His writing sews these themes together, painting an investment picture that makes you never want to miss an issue. He is also able to bring a deep network of professionals into his analysis providing a perspective that is hard to match elsewhere.
We find that MHFT is often early in identifying major potential changes in the market. It is not a market timing tool. It sometimes takes patience to see ideas come to fruition, but when they do, the surprise is often to the upside.
It has helped us to identify important trades that really help us add alpha to a portfolio. Whether we are looking for equity ideas in emerging markets or analysis of real-time macro situations nearer to home The Mad Fund Hedge Trader provides great perspective on what is important now.
Lee
Napa, California
My New Exercise Routine
“You can’t go from Wild Turkey to cold turkey overnight,” said former president of the Dallas Fed Richard Fisher.