Come join Mad Day Trader Jim Parker and I for lunch at the Mad Hedge Fund Trader?s Global Strategy Luncheon, which we will be conducting in New York, NY on Tuesday, June 17, 2014. An excellent three-course lunch will be provided. A PowerPoint presentation will be followed by 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 $248.
The formal luncheon will run from 12:00 to 2:00 PM. 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 event will be held at a prestigious private club on Central Park South, the details of which will be emailed to you 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/2013/04/Empire-State-Building.jpg380253Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-05-09 01:05:532014-05-09 01:05:53Meet John Thomas and Jim Parker in New York on June 17
Featured Trade: (JULY 25 ZERMATT, SWITZERLAND GLOBAL STRATEGY SEMINAR), (A SPECIAL OFFER FOR AUSTRALIAN SUBSCRIBERS), (HOW TO TRADE CALL SPREADS IN AUSTRALIA), (WILL THE ABIBABA IPO BLOW UP THE MARKET?) (YHOO), (SFTBY), (MSFT), (AMZN), (EBAY)
Yahoo! Inc. (YHOO)
SoftBank Corp. (SFTBY)
Microsoft Corporation (MSFT)
Amazon.com Inc. (AMZN)
eBay Inc. (EBAY)
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Executing the Mad Hedge Fund Trader?s?Trade Alerts?from the other side of the world can pose some annoying challenges. After speaking with many of my Australian followers on my recent trip down under, I learned of the obstacles presented by distant time zones, dealing in foreign currencies, regulations, and obtaining live customer support.
I want to make my service easy as possible for everyone to follow. Execution of my?Trade Alerts?should never be an issue. The?Mad Hedge Fund Trader?has therefore tied up with?Halifax Investment Services Limited, an established local broker, to provide support and execution services for my Australian followers.
Halifax?possesses an Australian Financial Services (AFS) License from the Australian Securities & Investments Commission to provide brokerage and custody services. It is a member of the Australian Stock Exchange. It has a relationship with the American firm, Interactive Brokers, which gives it access to state of the art online executive at competitive commissions.
Halifax?can open trading accounts, Self-managed superannuation funds, or any other type of account. It also offers a wealth of educational resources you can use to improve your own trading performance.
If you open a brokerage account with?Halifax?they will provide the following for you:
1) Custody of your Australian dollar funds in a safe, segregated account.
2) Personal customer support from a professional financial advisor in your time zone who will explain the fundamentals, the logic, and the risks involved in every?Mad Hedge Fund Trader Trade Alert.?They will invest the time and energy to make sure you can execute these trades online on your own.
3) The ability to hedge out foreign currency risks in your trading.
4)?Halifax?can execute the full range of trades recommended by the?Mad Hedge Fund Trader?with the greatest of ease. These include stocks, bonds, commodities, foreign currencies, precious metals, exchange traded funds (ETF?s), options, and option call and put spreads.
Halifax?is a well-capitalized firm. It does not engage in any trading for its own account. It is the subject of regular audits by its regulator. All cash accounts are insured in value up to AUS$250,000. In other words, it is a financial institution where you can place you life savings and sleep well at night.
To avail yourselves of these services, please open an account with?Halifax Investment Services Ltd. contact Matthew Brown,?financial advisor who has been assigned to provide you assistance (Ph 7 5585 4200/email: brown@halifaxonline.com.au).? Matthew has been in the industry since 1998 and in particular has been involved in the US markets for the last 10 years. He runs the US trading desk for the Queensland office.
Good Luck and good trading!
Did You Say ?Buy? or ?Sell??
https://www.madhedgefundtrader.com/wp-content/uploads/2014/03/kang1.jpg298452Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-05-08 01:05:482014-05-08 01:05:48A Special Offer for Australian Subscribers
There are two types of trading accounts permitted by Australian financial regulators:
Cash Accounts ? opened by individuals Regulation ?T? accounts -? opened by corporations and trusts
Reg ?T? accounts have no problems executing any of my Trade Alerts, including those for stocks, bonds, exchange trade funds, options, call spreads, and put spreads. However, regulators have recently barred Cash Accounts from trading in call spreads and put spreads.
Their logic is that individuals lack the financial sophistication to engage in these types of trades. The reality is the opposite, they are limiting individuals to engage in higher risk positions while banning them from the lower risk ones. Welcome to the world of financial regulation!
The easy way around this is for individuals to set up a paper corporation for the purpose of handling their trading activities. This is far easier than it first appears. My friends at Halifax Investment Services will do this for you for as little at AUS$575. One swipe of your credit card and you are in business.
The benefits of doing this are huge. You can then execute every type of trade under the sun, including all of the Mad Hedge Fund Trader?s Trade Alerts. You can also reduce your tax rate from as high as 47% that hits profits in Cash Accounts to only a mere 30%. I don?t know how people in the Land Down Under view taxation, but here in the US it is absolutely despised.
Every professional trader in Australia operates through a corporate entity, and you would be mad not to do so. If the past is any guide, long-term followers of my service all have one problem in common: they make too much money, creating unforeseen tax headaches.
There is one other way to deal with the Australian regulator?s discrimination against individual investors: wait a couple months. They have been sued by a number of individuals and organizations seeking to block this double standard. My in country tax attorneys tell me that a resolution is expected soon. Once the issue is settled, the only difference between Reg T and Cash Accounts will be the tax rate.
To avail yourselves of these services, please open an account with Halifax Investment Services Ltd. by clicking here at http://madhedgefundradio.com/hisl-australia/. There, you will be asked to complete a form with your basic information. Within a few days, you should receive a phone call from a Halifax financial advisor who has been assigned to provide you assistance.
Good Luck and good trading!
Did You Say Only a 30% Tax Rate?
https://www.madhedgefundtrader.com/wp-content/uploads/2014/03/Kangaroo.jpg263397Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-05-08 01:04:312014-05-08 01:04:31How Australians Can Save on Taxes While Trading
The biggest initial public offering in history is about to be issued by Chinese Internet commerce giant, Alibaba. The floatation, which could raise as much as $18 billion in cash, could value the total company as high as $220 billion, making it the fifth largest company in the US.
The big question now facing equity strategists around the world is whether the Alibaba issue is so big that it will destroy the market?
It certainly is a fair question. Some 44% of the IPO?s that have taken place this year are now underwater. The bloom has clearly gone off the new issue rose, especially for tech issues. If portfolio managers sell $18 billion of other stocks to buy the offering, it could literally suck the life out of an already fragile market.
Alibaba should have done their deal in January, when these deals were still hot. Did they miss the window?? It seems so.
The Chinese Internet juggernaut has another problem, what I call the ?Apple disease.? At $220 billion the company is so big that there is not enough money in the world to get the share price up substantially from the opening print.
Like Apple, it may become one of those behemoths that is permanently cheap, endlessly trolling the bottom of traditional valuation ranges. That frustrates the hell out of value investors. Multiple expansions never happen.
More than eye opening was the 2,300 page registration statement the company filed this week with the SEC. It included financial data for the last nine months of 2013. We learned that revenues were $5.66 billion, net profits were $2.85 billion, and the company is husbanding $7.88 billion in cash. Fair value should come to $40-$50 a share. Not bad for a communist country!
Most amazing are the 48% operating margins that the company is claiming. If true, they make competitors Amazon (AMZN) and eBay (EBAY) appear wildly overvalued.
The firm?s customer base grew by 44% YOY to 231 million last year. Chinese Internet usage generally is expected to soar from 618 million to 790 million by the end of 2016, up another 28%.
Yahoo (YHOO) paid a mere $1 billion for 40% of Alibaba in 2005, probably the only good decision they made in 15 years. After successive dilutions, the stake has fallen to 22.6%.
Yahoo really blew it when they passed on Microsoft?s (MSFT) offer to purchase the company for $31 a share just before the Great Crash, when it then plummeted to $8 a share. It was one of the worst calls I?ve ever seen, and a classic example of great technology innovators becoming lousy managers, and fall victim to hubris.
The sad thing is if you strip out the value of Yahoo?s Alibaba and Japan holdings, it is worth zero. That is probably a fair valuation given the depth to which the quality of the product has fallen. Mobile? What?s that?
The deal will make instant billionaires out of several individuals, most notably founder, Jack Ma, who is facing a $20 billion payday. Don?t you just love China!
Alibaba Ownership
34% Softbank
23% Yahoo
31% Others
8.8% Jack Ma-founder
3.6% Joseph Tsai-CEO
As for me, I?ll be passing on the IPO. It seems like the only time I get allocated shares in a new deal are when they fail. British Petroleum (BP) in 1987, ouch!
You can be sure Alibaba will be one of the most overhyped events in history, complete with dancing characters on the floor of the New York Stock Exchange (dancing pandas? Dancing soy sauce bottles?). After all, that is all it is good for, now that all the trading has gone online and is controlled by high frequency traders.
I am sure that there will be a later opportunity to buy much lower, such as we saw with the Tesla (TSLA) public offering in 2010, which dropped by half to $16 before the ink was barely dry. Then it was the ?BUY? of the century.
Make Jack Ma an Offer
https://www.madhedgefundtrader.com/wp-content/uploads/2014/05/Alibaba.jpg278452Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-05-08 01:03:292014-05-08 01:03:29Will the Alibaba IPO Blow Up the Market?
My friend, Ian Bremmer of the Eurasia Group, a global risk analyst who I regularly follow, has published an outstanding book entitled The End of the Free Markets: Who Wins the War Between States and Corporations. I find this highly depressing, as it takes me as long to read one of Ian?s books as it takes him to write another one. To read a review of his highly insightful tome published in 2008, The Fat Tail: The Power of Political Knowledge for Strategic Investing, please click here. The world is reaching a tipping point. For the past 40 years, global multinationals with unfettered access to capital, consumer, and labor markets have driven the world economy. There is now a new competitor on the scene, the ?state capitalist,? where political considerations trump economic ones in the allocation of resources. Of course, China is the main player, joined by several other emerging nations. The Middle Kingdom has posted double-digit annual growth for the past 30 years without freedom of speech, economic rules of the road, and independent judiciary, and credible property rights. China?s leadership is clearly worried that Western style freedoms will enable wealth to be generated outside their control and be used to orchestrate their overthrow. Private Western companies can only engage in transactions, which stand on their own economically and deliver the short-term profits, which their shareholders demand. In China, long-term political goals enable them to pay through the nose to obtain stable supplies of oil, gas, minerals, and materials. That keeps the country?s massive work force employed, off the streets, and politically neutered. The bottom line is that there are now two competing forms of capitalism. The recent financial crisis has accelerated their entrance to the global stage, moving us from a G7 to a G20 dominated world. Globalization is not ending, but it is definitely entering a new chapter. For those of us who read tea leaves to ascertain major, market moving economic trends, this will be a must read. To buy the book at Amazon, please click here.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/06/Ian-Bremmer.jpg359275Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-05-07 01:04:392014-05-07 01:04:39The New Cold War
Winter is definitely over here in Incline Village, Nevada. When I started my daily ten-mile hikes from the Tunnel Creek Caf? ten days ago, I had to don snowshoes in the parking lot. Yesterday, I had to climb for two hours to find snow at 8,000 feet.
It?s definitely time to put my winter equipment into storage. The aspen trees are budding and yellow crocuses are breaking out all over.
That was also the conclusion of the killer April nonfarm payroll report, which brought in an eye popping 288,000. March was revised up from 192,000 to 203,000. Even more stunning was the plunge in the headline unemployment rate from 6.7% to 6.3%. It was a perfect number. Almost. We?re almost back to normal again.
I thought we were home free on our iShares Barclay 20+ Year Treasury Bond Fund (TLT) May, 2014 $113-$116 in-the-money bear put spread.
The blockbuster release should have driven a stake through the heard of the bond market.
And fall it did?.for about 15 minutes. Then news of the White House press conference announcing a further ratcheting up of tensions with Russia over the Ukraine triggered one of those rip your face off short covering rallies that have become so common this year. Prices for the (TLT) jumped to new 2014 highs, just short of our near short strike at $113. Stocks sagged.
If you had a mole at the Department of Labor who leaked to you the April nonfarm payroll a day in advance, you would have loaded the boat with long stock/short bond positions. Instead, we got the opposite. Welcome to a trader?s dull, brutish, and short life in 2014.
Throw bad news on the market, and if it fails to go down, you buy the heck out of it. That is a valuable lesson that I have learned over the decades, and I think it applied to the Treasury (TLT) bond market on Friday.
This was not weekend I wanted to go into short of bonds so close to the money. Putin is on a roll and appears to be willing to toss the dice once again. Now, he?s calling for a United Nations Security Council Meeting. Better to talk than shoot, I always say. It?s cheaper. I?ve tried both, and definitely prefer the latter.
If there has been another valuable lesson this year, it has been to keep positions small, and stop out of losers fast. So, as much as I hate to, I pulled the ripcord on my short, taking another nick on my performance this year.
?Markets can remain irrational longer than you can remain liquid,? said the great economist and primordial hedge fund trader, John Maynard Keynes. So true, so true.
The goal here is to maintain iron discipline in risk control and be the last man still standing when trading conditions improve and markets become easy again later this year. Until then, I?ll be engaging in small, short term opportunistic trades. I?ll also be doing a ton of deep research, building short lists of positions to Hoover up when life gets better.
Mind you, yields at these levels make absolutely no sense. They are predicting that deflation is now a permanent aspect of our lives. (To understand how that might be possible, read my interview in tomorrow?s letter with Google engineering director, Ray Kurzweil). Bonds are also shouting at us that we will remain stuck at a subpar 2% economic growth rate for years to come.
The inverse of bad news is also true. If you shower good news on a stock market and it fails to rise, you sell it. This suggests that a big dump in stocks is imminent, which is long overdue.
The markets certainly think this. Take a look at the chart below showing the ?spinning tops? in the S&P 500 in recent days, where shares trade across a wide range, but remain unchanged on the day. So named because the bar looks like a child?s toy, a spinning top suggests indecision among investors and a possible coming selloff. This is what happened in the beginning of March and April, opening the way for drops of 50 and 85 (SPY) handles.
This means that the ?head and shoulders? scenario I talked about a week ago is still on the table (click here for the article ?Watch Out for the Head and Shoulders?). That?s why I quickly knocked out a (SPY) June $193-$196 put spread.
In the meantime the media deluge for the upcoming midterm elections has already started, which are still five months away. Nevada governor Brian Sandoval is basing his entire campaign on his failed attempt to stop Obamacare in the courts. It is a strategy that will be repeated across the Midwest this year.
It sounds like this will be a good summer to stay out of the country. Sell in May and go away?
Going Into Storage
Beware the Spinning Tops
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