Global Market Comments
April 9, 2013
Fiat Lux
Featured Trade:
(APRIL 19 CHICAGO STRATEGY LUNCHEON),
(TRADER ALERT SERVICE POSTS BIGGEST ONE DAY GAIN),
(FXY), (YCS), (BAC), (AAPL), (SPY), (TBT),
(WHAT ABOUT ASSET ALLOCATION?),
(AMERICA?S RAPIDLY CHANGING MIX)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
Bank of America Corporation (BAC)
Apple Inc. (AAPL)
SPDR S&P 500 (SPY)
ProShares UltraShort 20+ Year Treasury (TBT)
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Chicago on Friday, April 19. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $199.
I?ll be arriving an hour early 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 downtown Chicago venue on Monroe Street 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.
Just a quick note to tell you that yesterday, the Trade Alert Service of the Mad Hedge Fund Trader posted its biggest one-day gain ever. From the Friday to the Monday close my trade-mentoring program picked up some 447 basis points. The three day pickup for the service is an eye popping 12.23%. That takes readers? year to date profit to a mind blowing 39.52%. David Tepper, eat your heart out.
The dominant gainer was my short in the Japanese yen (FXY), (YCS), which I doubled up once again on Friday. Today, the beleaguered currency touched a new four year low at ?99.36 to the dollar, and it looks like the fat lady hasn?t yet sung.
I believe that last week?s action by the Bank of Japan was so dramatic, and so desperate, and we have seen only the opening phase of the deprecation of this currency. It sets the stage for the yen to fall, not from ?96 to ?100, but from ?100 to ?125.
The modest gains seen in stocks today boosted my long position in the S&P 500 further towards its maximum point of profitability. It also enabled my losses in long positions in Bank of America (BAC) and Apple (AAPL), to shrink nearly to zero. In the meantime, my short volatility position on the S&P 500 remains profitable, as the gains this month have been so glacial. Finally, a new short in the Treasury bond market through the (TBT) proved immediately profitable.
All told, I am now fully invested, with long positions exactly counterbalancing short ones. If the April options expiration in eight trading days goes well, our year-to-date gain should leap to 46.7%.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service, daily newsletter, real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.
The Fat Lady Has Not Yet Sung for the Japanese Yen
Asset allocation is the one question that I get every day, which I absolutely cannot answer. The reason is simple: no two investors are alike. The answer varies whether you are young or old, have $1,000 in the bank or $1 billion, are a sophisticated investor or an average Joe, in the top or the bottom tax bracket, and so on. This is something you should ask your financial advisor, if you haven?t fired him already, which you probably should.
Having said all that, there is one old hard and fast rule, which you should probably dump. It used to be prudent to own your age in bonds. So if you were 70, you should have had 70% of your assets in fixed income instruments and 30% in equities.
Given the extreme over valuation of all bonds today, and that we are probably on the eave of a 30 year bear market, I would completely ignore this rule and own no bonds. Instead you should substitute high dividend paying stocks for bonds. You can get 4% a year or more in yields these days, and get a great inflation hedge, to boot. You will also own what everyone else in the world is trying to buy right now, high yield US stocks.
Allocation: Are You Him?
Or Him?
Since I am in the long-term forecasting business, it was with some fascination that I caught the Associated Press report that minority children born last year exceeded Caucasian children for the first time. Whites lost their majority in San Francisco many years ago, and will do so in California as a whole in the near future.
The report said that the US will have a ?minority? majority by 2050. Whites now account for 2/3 of the population. While minorities now dominate only 10% of counties, they account for 40% of new births.
Demographers say the trend will be reinforced by a large number of Hispanic women entering their prime child bearing years, who historically have more children than other races. More white women are delaying childbearing, reducing fertility.
As demographics is destiny, this is bound to have huge political and economic ramifications for the country going forward. It is also going to influence the marketing priorities of corporations. Some 16 years ago, Betty Crocker anticipated this trend by using shorter, darker skinned models on the boxes of its cake mix boxes.
Companies that target specific ethnic groups are going to gain a competitive advantage. Furthermore, the rate of interracial mixing is accelerating at a tremendous rate. In California, 50% of all Chinese woman and 60% of Japanese women marry whites. This is amazing, given that this was illegal until the Civil Rights Act was passed as recently as 1962. The young millennial generation are virtually color blind. Talk to them and you?ll see what I mean.
Genetically recessive blonde haired, blue-eyed people, who sprang out of a mutation in the Caucuses 7,000 years ago, may completely disappear in 200 years. Pure Caucasians themselves may eventually go too, as they only account for 15% of the world?s population, and that number is falling quickly.
Global Market Comments
April 8, 2013
Fiat Lux
Featured Trade:
(APRIL 12 SAN FRANCISCO STRATEGY LUNCHEON),
(TRADE ALERT SERVICE CAPTURES 35% GAIN IN 2013),
(SPX), (VIX), (IWM), (BAC), (UAL), (FXE), (YCS), (GLD), (USO), (FCX), (TLT)
(SLV), (AIG), (FXB), (CU)
(DECODING THE GREEBACK),
(THE FUSION IN YOUR FUTURE)
S&P 500 Large Cap Index (SPX)
VOLATILITYS&P500 (VIX)
iShares Russell 2000 Index (IWM)
Bank of America Corporation (BAC)
United Continental Holdings, Inc. (UAL)
CurrencyShares Euro Trust (FXE)
ProShares UltraShort Yen (YCS)
SPDR Gold Shares (GLD)
United States Oil (USO)
Freeport-McMoRan Copper & Gold Inc. (FCX)
iShares Barclays 20+ Year Treas Bond (TLT)
iShares Silver Trust (SLV)
American International Group, Inc. (AIG)
CurrencyShares British Pound Sterling Tr (FXB)
First Trust ISE Global Copper Index (CU)
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, April 12, 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 $189.
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.
The stunning and unprecedented move by the Bank of Japan last week boosted the Trade Alert Service of the Mad Hedge Fund Trader to a new all time high.
It was an incredible week, with me punching out 14 Trade Alerts to readers, burning up the fiber optic cable of the global broadband network. And I did all of this, sitting in front of the fire at my Lake Tahoe beachfront estate, drinking coffee nonstop. Some retirement!
I bet that the new governor of Japan?s central bank, my friend, Haruhiko Kuroda, would engineer a monetary easing that was so aggressive that it would collapse the country?s beleaguered currency. All those nights playing Scrabble with him have finally paid off. As a result, the 2013 profit for the Trade Alert Service soared to an incredible 35%.
The 28-month total return has punched through to a breathtaking 90%, compared to a modest 18.5% return for the Dow average during the same period. That raises the average annualized return for the Trade Alert Service to 38.6%, elevating it to the pinnacle of the hedge fund ranks.
My careful calculation that the stock markets would continue to grind up to new all time highs in the face of complete disbelief and multiple international shocks paid off big time, as I continued to run long positions in the S&P during January to March.
My substantial short volatility positions are contributing to profits daily, with the closely watched (VIX) Index plummeting at one point to a new five year low at 11%. I booked nice profits from holdings in American International Group (AIG) and copper producer, Freeport McMoRan (FCX), and the Russell 2000 (IWM).
Sensing that the stock market was getting overbought for the short term, I switched from a long only to a balanced long/short trading book at the beginning of April. That really allowed me to coin in on short positions in the S&P 500 (SPY), Bank of America (BAC), and United Continental Group (UAL).
It hasn?t entirely been a rose garden. The rapid market swoon cost me some money on my (UAL) and (BAC) call options. Apple (AAPL) has taken another bite out of me, although I will only lose money on the position if it trades and stays below $420 over the next 9 trading days. But as they taught me at my karate dojo in Tokyo during the early 1970?s, you can?t win a tournament without taking a few hits.
Trade Alerts that I wrote up, but never sent, worked too. That?s because I have been 100% invested for the entire year in long stock/short yen positions. However, followers of my biweekly strategy webinars caught my drift and benefited from the thinking, and many did these trades on their own. These included shorts in the Treasury bond market, (TLT), the Euro (FXE), (EUO), and the British pound (FXB).
Sometimes the best trades are the ones you don?t do. I have been able to dodge the bullets that have been killing off other hedge funds, including those in gold (GLD), silver, (SLV), oil (USO), and commodities (CORN), (DBA), (CU). Oh, and I didn?t have a single penny in a Cyprus bank.
All told, the last 27 out of the last 28 closing recommendations of the Trade Alert Service have been profitable, and I have another six moneymakers still on the books.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service, daily newsletter, real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.
How Low Can She Go?
A Triple Top or a Breakout Launch?
Life is Good
If you want to impress your friends with your vast knowledge of financial matters, then here are the Latin translations of the script on the backside of a US dollar bill.
?ANNUIT COEPTIS? means ?God has favored our undertaking.? ?NOVUS ORDO SECLORUM? translates into ?A new order has begun.? The Roman numerals at the base of the pyramid are ?1776.? The better known ?E PLURIBUS UNUM? is ?One nation from many people.?
The basic design for the cotton and linen currency with red and blue silk fibers, which has been in circulation since 1957, carries enough symbolism to drive conspiracy theorists to distraction. An all seeing eye? The darkened Western face of the pyramid? And of course, the number ?13? abounds.
Thank freemason Benjamin Franklin for these cryptic symbols, and watch Nicholas Cage?s historical adventure movie ?National Treasure.? The balanced scales in the seal are certainly wishful thinking and a bit quaint if they refer to the Federal budget. Study the buck closely, because there are soon going to be a lot more of them around.
What Did You Really Mean, Ben?
Expect to hear a lot about ignition in the next year. No, I don?t mean the rebuilt ignition for the beat up ?68 Cadillac El Dorado up on blocks in your front yard. I?m referring to the inauguration of the National Ignition Facility next door to me at Lawrence Livermore National Labs in Livermore, California.
Mention California to most people, and images of love beads, tie died T-shirts, and Birkenstocks come to mind. But it is also the home of the hydrogen bomb, which was originally designed amid the vineyards and cow pastures of this bucolic suburb. The thinking at the time was that if someone accidently flipped the wrong switch, it wouldn?t blow up San Francisco, or more importantly, Berkeley.
The $5 billion project aims 192 lasers at a BB sized piece of frozen hydrogen, using fusion to convert it to helium and unlimited amounts of clean energy. The heat released by this process reaches 100 million degrees, hotter than the core of the sun, and will be used to fuel conventional steam electric power plants. There is no need for a four foot thick reinforced concrete containment structure that accounts for half the construction cost of conventional nuclear plants. The entire facility is housed in a large warehouse.
The raw material is seawater, and a byproduct is liquid hydrogen, which can be used to fuel cars, trucks, and aircraft. If this all sounds like it is out of Star Trek, you?d be right. I worked with these guys in the early seventies, back when math was used to make things, and before it was used to game financial markets, and I can tell you, there is not a smarter and more dedicated bunch of people on the planet.
If it works, we will get unlimited amounts of clean energy for low cost in about 20 years. Oil will only be used to make plastics and fertilizer, taking the price down to $10 for domestic production only. The crude left in the Middle East will become worthless. Lumps of coal will only be found in museums, or in jewelry, its original use. If it doesn?t work, it will melt the adjacent Mt. Diablo and take me with it. If you don?t get your newsletter tomorrow, you?ll know what happened. Now what is this switch for?
