Global Market Comments
July 9, 2018
Fiat Lux
Featured Trade:
(DIAMONDS ARE STILL AN INVESTOR'S BEST FRIEND),
(SO, YOU THINK THEY'RE NOT WATCHING YOUR PC?)
If you forgot to buy your loved one a birthday present and spent a week sleeping on the sofa eating canned food, and cleaning out the cat box, you now have a chance to redeem yourself.
A revolutionary new website exists called Mazal Diamond, which promises to turn the online jewelry business upside down. I went to the privately held company's website and found an entertaining assortment of free tools.
You can design your own jewelry, and even order a custom cut, which Mazal will supply out of its massive 100,000 stone inventory. You can also figure out if the jeweler down the street is trying to rip you off.
Just for fun, I appraised the diamond I bought for my late wife, which I bought from a Hasidic Jew in an alley off of Manhattan's West 47th street. He kept his inventory hidden in an envelope in his sock.
How times have changed!
The two carat, VVS1, round cut, yellow diamond that I paid $3,000 for in 1977, would fetch $39,800 today. Great trade!
Mazal Diamond's game-changing advantage is that they cut, design, and manufacture their own jewelry, enabling them to undercut prices offered by established industry leaders.
In fact, the $30-billion-a-year diamond industry is undergoing radical change by moving online, much the same way as the book, music, and travel industries have gone. Your local neighborhood jewelry store is about to get wiped out or become a quaint relic.
Blue Nile (NILE) pioneered the way, and instantly became the 800-pound gorilla. The company cut costs by keeping inventories low, relying instead on a secretive web of anonymous suppliers.
Now, second-generation entrants are snapping at its heels and eating its lunch with polished websites, better service, and lower prices, seducing potential customers with free diamond blogs. Mazal Diamond even offers a year of free insurance.
It is getting a boost from a 50% price gain, a woman's best friend has seen since the March 2009 stock market bottom, taking it back to pre-crash levels.
The U.S. accounts for about half the world market, so the new frugality will be a challenge. That will be offset by flight to safety purchases by inflation wary Americans, and new demand from the emerging market middle class.
Investment grade diamonds have been steady earners, gaining an average 5% a year over the past three decades. To avoid another week on the sofa, you might even think about buying next year's Valentine's surprise early. Now.
Hey! You there, staring at this monitor. This is your PC talking to you. No, not you over there standing in the background. I'm talking to the guy sitting in front of me poking at my keys. Ouch! That one hurt!
So, you thought no one was watching, did you? Let me set you straight. About a month ago you clicked on a certain website, and I installed myself as a cookie on your computer, which is an innocuous little text file that you can't see.
Since then, I have been tracking your every move, recording websites you clicked on, the pages you visited, and the stuff you ordered. I then used this handy little algorithm to build a profile of exactly who you are. I now know you better than your own mother. In fact, I know you better than you know yourself.
For example, I am aware that you make more than $250,000 a year, live in a posh zip code in San Francisco, belong to a fancy country club, and drive a Mercedes. You donate to Republican political causes, send your kids to a prestigious private school, and bill it all to an American Express Platinum Card. Did I leave anything out?
Because I know every detail of your life, down to your inside leg measurement, I am able to harness the power of this machine to more precisely service your every need. That includes directing advertising to you, on which you have a high probability of clicking.
The more you click on my ads, the higher prices I can realize for those ads. The ad campaigns you now see are unique to your own personal computer because they are tied to your IP address. My program, called "behavioral targeting" is the next "big thing" in online advertising. It's all part of the brave new world.
I see you have been shopping for a new car. Check out the new Hyundai, which offers the same quality as your existing ride, at half the price.
Your clicks this morning suggest you're taking your "significant other" out to dinner tonight. Might I suggest Gary Danko's on Bay Street? The rack of lamb is to die for there.
Your visits to Travelocity and Expedia tell me you're planning a vacation. I bet you didn't know you can find incredible deals in Las Vegas. Thinking about buying a condo there? They'll even pay for the trip if you promise to check one out while you're there.
Since we're chatting here mano a mano, I noticed that that last pair of jeans you ordered from Levi's had a 42-inch waist, up from the 40 in your last order. Better lay off those cheeseburgers. Pretty soon, they'll be calling you "tubby" or "fatso." Better visit Weight Watchers soon, or the legs on that chair might buckle out from under you.
Worried about privacy? Privacy, shmivacy. There hasn't been privacy in this country since the first Social Security number was handed out in 1936. And don't expect any relief from Congress. I doubt half those dummies even know how to turn on their own PCs.
Don't even think about trying to delete me. I'm a "flash cookie," an insidious little piece of code that reinstalls every time you try that. Think of me as a toenail fungus. Once you catch me, I'm almost impossible to get rid of.
I hope you don't mind, but I've been passing your personal details around to some of my buddies at other websites. That's why when you clicked on NFL you got deluged with product offers from your local team, the San Francisco 49ers.
I've got friends at Google and Facebook, and pretty much everywhere. Can I help it if I'm a popular guy? I bet the view from those 50-yard seats is great, isn't it?
I noticed that your spending habits don't exactly match with the income you reported on your last tax return. Do you think the IRS would like to know about that? I bet you didn't know the agency offers a 10% reward for turning in tax cheats.
How about those triple XXX DVD's you bought last week? Whoa! Hot, hot, hot! I hope your employer never finds out about those. It might not go down too well at your next performance review.
I thought it was lovely that you bought your spouse a two-carat, yellow, VVS1, round-cut diamond ring for $26,000 from Blue Nile for your 30th wedding anniversary.
But who is Lolita, the Argentine firecracker, in Miami Beach? Does the old wifey know you sent her a $2,000 pair of diamond stud earrings? What's it worth to you for me to keep mum on this? Maybe you should take a quick peak at 3StepDivorce.com and see what you're in for?
Nah, I'm just pulling your leg. This is all just between friends, right? Think of it as a doctor/patient relationship. I'll tell you what. See that leaderboard ad at the top of the page? Just click on that and we'll call it even. Ooh, that felt good! Click it again. Oh, baby! Not too many times. You'll trigger my anti-click fraud program.
Now you see that wide skyscraper add over on the right? Click on that, too. Oh baby! Click it again! And there's a little button ad at the bottom of the page. No, not that one. A little lower. What was that little cutie's name in Miami again? Ah.
"We are still in the gravitational pull of the Great Recession. I would have to put the likelihood of a double-dip recession now up to 50%," said my old UC Berkeley economics professor, Robert Reich.
Global Market Comments
July 6, 2018
Fiat Lux
Featured Trade:
(BE CAREFUL WHO YOU SNITCH ON),
(COULD YOU QUALIFY TO BECOME A U.S. CITIZEN?)
Buried in the Dodd-Frank financial reform bill are massive financial rewards for turning in your boss. The SEC is hoping that multimillion-dollar rewards amounting to 10% to 30% of sanction amounts will drive a stampede of whistle-blowers to their doors with evidence of malfeasance and fraud by their employers.
If such rules were in place at the time of the settlement with Goldman Sachs (GS), the bonus, in theory, could have been worth up to $500 million. Wall Street firms are bracing themselves for an onslaught of claims, legitimate and otherwise, by droves of hungry gold diggers looking for an early retirement.
Don't count on this as a get-rich-quick scheme. Government hurdles to meet the requirement of a true stoolie can be daunting. The standard of evidence demanded is high and must be matched with the violation of specific federal laws. Idle chitchat at the water cooler won't do. Litigation can stretch out over five years, involve substantial legal costs, and often lead to a non-financial settlement with no reward.
Having "rat" on your resume doesn't exactly look good either. Just ask Sherron Watkins, the in-house CPA who turned in energy giant Enron's Ken Lay, Andy Fastow, and Jeffrey Skilling just before the company crashed in flames. Nearly a decade later, Watkins earns a modest living on the lecture circuit warning of the risks of false accounting, and whistle-blowing.
Global Market Comments
July 5, 2018
Fiat Lux
Featured Trade:
(TRADING FOR THE NON-TRADER),
(ROM), (UXI), (UCC), (UYG)
Global Market Comments
July 3, 2018
Fiat Lux
Featured Trade:
(TAKING OFF FOR EUROPE),
(JOIN ME ON THE QUEEN MARY 2 FOR MY JULY 11, 2018 SEMINAR AT SEA),
(TESTIMONIAL)
Terrorist attacks, trade wars, and crashing airlines all spell one thing to me.
Travel bargains!
Of course, my first choice for a vacation destination this year was the civil war in Syria, so I could find out on the ground what is really happening there. In addition, I could shop for a refugee camp in Jordan for one of my nonprofits to help support.
Unfortunately, my family was not too hot on this idea, not wishing to buy me back from kidnappers at an inflated price, again (the last time was Cambodia in 1976).
The Joint Chiefs were not too thrilled either. At my advanced aged, I simply know too much to fall into the wrong hands. They said I would last a day.
So I compromised. This summer will find me crossing the Atlantic on Cunard's Queen Mary 2 where I will be conducting my Seminar at Sea for a few lucky subscribers.
Then, I'll be camping out at the Hemingway Suite at the Ritz Hotel in Paris for Bastille Day, sailing in a steamboat on the placid waters of Lake Geneva to view the Alps, retreating to my chalet in Zermatt, Switzerland, to climb the Matterhorn for the sixth time, and then passing through Amsterdam to eat some raw herring.
Three tuxes and my white dinner jacket are packed, the five-star hotels are booked, and soon the limo will be waiting outside. The Cessna is fully fueled and the flight plan filed. I am taking off for my 2018 European Strategy Luncheon Tour.
I have worked the hardest in my life the past year, and it is time for a break. I have also put myself through the most grueling training regimen, hiking 2,000 miles and snowshoeing another 600, all with a 60-pound pack.
Every year it seems to get harder to keep the calendar at bay.
Along the way I will be meeting with other hedge fund managers, senior government officials, CEOs at major banks and Fortune 500 companies, large institutional investors, and a Nobel Prize winner or two.
Getting out into the real world and soaking up new data and opinions is invaluable in shaping my own global view, and your performance benefits from it.
Since I don't stumble across these people in my living room, I have to travel the world to seek them out. You can soak up all the online data you want, but nothing beats contact with the real world.
In New York I'll board the Cunard Line's Queen Mary 2 at the Brooklyn Cruise Terminal to take residence in the owner's suite. If the ship's satellite link cooperates this year, I will be filing live reports along the way.
As we pass over the wreck of the Titanic on the second day out, we'll throw a bouquet of flowers as a mark of respect.
I'll then board the Orient Express for Venice, where the dinner is black tie only. Hopefully, there won't be any murders this time.
If a new Brioni suit and pair of Gucci shoes throw themselves upon me while I stroll through the Galleria in Milan I may be unable to resist.
In Geneva I'll be consulting with the representatives of several Middle Eastern royal families while they vacation in the Alps.
One afternoon will be devoted to taking the paddle wheel steamer on Lake Geneva to the Chateau de Chillon in Montreux where Lord Byron used to live, sipping fine Swiss white wines along the way.
The grand finale will be my annual assault on the Matterhorn at Zermatt, which at 14,692 feet is higher than anything we have in the continental U.S. After training all year for this, it's now or never.
I spend my evenings there at public steam baths where afterward I roll around in the snow and beat myself with birch branches. It is invigorating, to say the least.
I will be traveling with my laptop and keeping touch with the markets. While 18th century Internet service is passable, the bandwidth can be snail like. So, unless I see something extraordinary, I will cut back on new Trade Alerts.
After running up a 304% return in 8 1/2 years and beating 99.9% of the hedge funds in the industry, I deserve a break. I need to spend some time alone on a mountaintop, communing with the spirits, attempting to discover the new long-term market trends through the mist.
While on the road, I will continue writing my newsletter, giving you my daily dose of market insight. I will also be re-running some of my favorite research pieces from the past when my travel schedule does not allow Internet access.
This is to expose my thousands on new subscribers to the golden oldies, and to remind the legacy readers who have since forgotten them.
I will be back in San Francisco in early August, glued to my screens once again for another year of toil in the salt mines. In the meantime, please feel free to email me.
Mad Hedge Technology Letter author Arthur Henry and Mad Day Trader Bill Davis will be working straight through the summer. No rest for the wicked!
In the meantime, I shall be raising a glass to all of you at dinner, the loyal readers of The Diary of a Mad Hedge Fund Trader. Salute! Prost! Kampai, and Cheers! Thanks for making this letter a huge success!
If you want to take the opportunity to meet me in person, please find my strategy luncheon schedule below. To purchase tickets for the luncheons, please click here http://www.madhedgefundtrader.com/category/luncheons/ and choose the country and city of your choice.
Wednesday, July 11, 2018: Queen Mary 2 Seminar at Sea
Monday, July 16, 2018: Paris, France Global Strategy Luncheon
Friday, July 27, 2018: Zermatt, Switzerland Global Strategy Seminar
Friday, August 3, 2018: Amsterdam, The Netherlands Global Strategy Dinner
I'll Meet You on Top
My Plug Adapters Are Ready to Go
Come join me in the grand appointments of the Cunard Line's flagship, the elegant and spacious Queen Mary 2, on an eastbound transatlantic cruise.
The Ship departs New York at 10:00 AM on July 6, 2018 and arrives at Southampton on July 13. There I will be conducting the Mad Hedge Fund Trader's Strategy Update, a three-hour discussion on the global financial markets.
I'll be giving you my up-to-date view on stocks, bonds, currencies, commodities, precious metals, energy, and real estate. I'll highlight the best long and short opportunities. And to keep you in suspense, I'll be tossing 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 $300 for the seminar only.
Attendees will be responsible for booking their own cabin through Cunard. They offer everything from an inside stateroom from $999 per person to $26,780 for Q1 deluxe two-bedroom apartment with its own gym.
Just visit Cunard's website or call them directly at 800-728-6273 to make your own arrangements.
The weather this time of year can range from balmy to tempestuous, depending on our luck. A brisk walk three times around the boat deck adds up to a mile. Full Internet access will be available, for a price, to follow the markets.
Every dinner during the voyage will be black tie, so you might want to stop at Saks Fifth Avenue in Manhattan to get fitted for a second and third tux. Don't forget to bring your Dramamine and sea legs, although the 151,400 tonne, 1,132-foot-long $900 million ship is so big I doubt you'll need them. The Queen Mary 2 just completed a major refit in Germany so everything is new.
The event will be held at a luxurious penthouse suite on the ship's highest deck, the details of which will be emailed to you with your purchase confirmation. To instill us all with a proper sense of humility, I will conduct the seminar as we sail over the wreck of the Titanic. The ship will give a blast of its horn three times as a salute as we pass the site.
I look forward to meeting you and thank you for supporting my research.
To purchase tickets for the seminar alone, please click here.
