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Latest  |  Highest rated
  • The Japanese Yen May Finally Be Peaking [View article]
    “Oh, how I despise the yen, let me count the ways.” I’m sure Shakespeare would have come up with a line of iambic pentameter similar to this if he were a foreign exchange trader. I firmly believe that a short position in the yen should be at the core of any hedged portfolio for the next decade, but so far every time I have dipped my toe in the water, it has been chopped off by a samurai sword.

    But now the 200 day moving average has been decisively broken, suggesting that the death of the yen may finally be at hand.

    I was heartened once again this week when friends of mine in Tokyo told me that the loose money crowd at the Bank of Japan was slowly gaining in ascendance. Japanese exporters are getting hammered by the strong yen, accelerating the hollowing out of Japanese manufacturing, further adding to the country’s real unemployment rate. It has become a major political problem for the Noda administration.

    The Mad Hedge Fund Trader
    Aug 20, 2012. 10:02 PM | Likes Like |Link to Comment
  • Time To Invest In Gold Mining Stocks [View instapost]
    Gold has clearly evolved into a call option on global quantitative easing. Don’t think of it just as the stuff your dentist puts in your teeth or the thing your girlfriends gets you to wrap around her finger anymore. I don’t think that the Federal Reserve will implement QE3 at its September 16-17 meeting, or even next year. This shocking realization will be bad for gold prices.

    However, Europe is a completely different kettle of fish. Having just spent two months there, I can tell you with great certainty that the economic conditions are far more extreme than any economic data releases are indicating so far.

    So the ECB has to launch its own QE through a second tranche of the LTRO or some other vehicle of at least €500 billion – €1 trillion. While most of this money will be used to buy high yield European sovereign bonds, some will spill over into the gold market, and that will be good for prices.

    I can’t tell you how bad things are in Italy. I just visited the main middle class shopping district in Milan. The sales were offering discounts of 70%, 80%, and 90%. They were literally throwing inventory out the door. I’m talking pants for $5 and overcoats for $25. I ended up buying four suitcases, those at 50% off, and filing them up with clothes for everyone I know. I got clothes for the kids, cloths for distant relatives, even clothes for people I don’t like. And it barely made a dent on my credit card.

    The attraction of the September, 2012 $148-$151 call structure is the following. The $151 strike is just below rock solid support for gold that has held for several months. The September expiration allows us to take out 90% of the profit before the Fed gives us the bad news on no QE3 next month. Gold could well keep moving sideways until then, which is why I am not rushing out and buying out-of-the-money calls. This all happens going into the traditional seasonal strength of the Indian wedding season, Christmas in the West, and the Chinese Lunar New Year.

    By leveraging up an out of the money call spread in a limited risk position, I get an outsized return. This is a bet that gold will move up, sideways, or down no more than 3% over the next four weeks. If this happens, the call spread will rise in value from $2.42 to $3.00, a gain of 24%. This is why I went for a heavy 10% weighting. .

    The Mad Hedge Fund Trader
    Aug 16, 2012. 11:56 PM | Likes Like |Link to Comment
  • The Best Ways To Invest In Gold [View article]
    Gold has clearly evolved into a call option on global quantitative easing. Don’t think of it just as the stuff your dentist puts in your teeth or the thing your girlfriends gets you to wrap around her finger anymore. I don’t think that the Federal Reserve will implement QE3 at its September 16-17 meeting, or even next year. This shocking realization will be bad for gold prices.

    However, Europe is a completely different kettle of fish. Having just spent two months there, I can tell you with great certainty that the economic conditions are far more extreme than any economic data releases are indicating so far.

    So the ECB has to launch its own QE through a second tranche of the LTRO or some other vehicle of at least €500 billion – €1 trillion. While most of this money will be used to buy high yield European sovereign bonds, some will spill over into the gold market, and that will be good for prices.

    I can’t tell you how bad things are in Italy. I just visited the main middle class shopping district in Milan. The sales were offering discounts of 70%, 80%, and 90%. They were literally throwing inventory out the door. I’m talking pants for $5 and overcoats for $25. I ended up buying four suitcases, those at 50% off, and filing them up with clothes for everyone I know. I got clothes for the kids, cloths for distant relatives, even clothes for people I don’t like. And it barely made a dent on my credit card.

    The attraction of the September, 2012 $148-$151 call structure is the following. The $151 strike is just below rock solid support for gold that has held for several months. The September expiration allows us to take out 90% of the profit before the Fed gives us the bad news on no QE3 next month. Gold could well keep moving sideways until then, which is why I am not rushing out and buying out-of-the-money calls. This all happens going into the traditional seasonal strength of the Indian wedding season, Christmas in the West, and the Chinese Lunar New Year.

    By leveraging up an out of the money call spread in a limited risk position, I get an outsized return. This is a bet that gold will move up, sideways, or down no more than 3% over the next four weeks. If this happens, the call spread will rise in value from $2.42 to $3.00, a gain of 24%. This is why I went for a heavy 10% weighting.

    - The Mad Hedge Fund Trader
    Aug 16, 2012. 11:56 PM | Likes Like |Link to Comment
  • Investing In Gold - Long-Term Trend [View article]
    Gold has clearly evolved into a call option on global quantitative easing. Don’t think of it just as the stuff your dentist puts in your teeth or the thing your girlfriends gets you to wrap around her finger anymore. I don’t think that the Federal Reserve will implement QE3 at its September 16-17 meeting, or even next year. This shocking realization will be bad for gold prices.

    However, Europe is a completely different kettle of fish. Having just spent two months there, I can tell you with great certainty that the economic conditions are far more extreme than any economic data releases are indicating so far.

    So the ECB has to launch its own QE through a second tranche of the LTRO or some other vehicle of at least €500 billion – €1 trillion. While most of this money will be used to buy high yield European sovereign bonds, some will spill over into the gold market, and that will be good for prices.

    I can’t tell you how bad things are in Italy. I just visited the main middle class shopping district in Milan. The sales were offering discounts of 70%, 80%, and 90%. They were literally throwing inventory out the door. I’m talking pants for $5 and overcoats for $25. I ended up buying four suitcases, those at 50% off, and filing them up with clothes for everyone I know. I got clothes for the kids, cloths for distant relatives, even clothes for people I don’t like. And it barely made a dent on my credit card.

    The attraction of the September, 2012 $148-$151 call structure is the following. The $151 strike is just below rock solid support for gold that has held for several months. The September expiration allows us to take out 90% of the profit before the Fed gives us the bad news on no QE3 next month. Gold could well keep moving sideways until then, which is why I am not rushing out and buying out-of-the-money calls. This all happens going into the traditional seasonal strength of the Indian wedding season, Christmas in the West, and the Chinese Lunar New Year.

    By leveraging up an out of the money call spread in a limited risk position, I get an outsized return. This is a bet that gold will move up, sideways, or down no more than 3% over the next four weeks. If this happens, the call spread will rise in value from $2.42 to $3.00, a gain of 24%. This is why I went for a heavy 10% weighting.

    The Mad Hedge Fund Trader
    Aug 16, 2012. 11:56 PM | 1 Like Like |Link to Comment
  • Paul Ryan's Proposed 2012 Budget and Its Impact on Employment [View article]
    For the second time in four years, the Republican Party has blown a presidential election through the choice of a running mate. What little chance the GOP had in winning the election has gone up in smoke with the selection of Wisconsin congressman Paul Ryan to join the ticket. Think of him as a Sarah Palin with pants.

    Of course, there was great celebration by the Tea Party wing that sees Ryan as a standard bearer. And don’t get me wrong. With an economics background, Ryan brings far more intellectual weight to the game than the former governor of Alaska.

    The problem is that Ryan doesn’t bring a single new vote to Romney. He had a lock on the Tea Party vote, no matter who the vice presidential candidate is. It’s not like they were going to vote for Obama because they didn’t like his pick.

    What Ryan does do is dash any hopes the Republicans had of capturing moderates, independents, and undecideds. Romney can’t win without these. As I write this, Obama is already winning every battleground state, except Virginia, which is a dead heat.

    Since Ryan has been the poster boy for the replacement of Medicare with a voucher system, he brings this crucial issue for seniors to the forefront. Most people have already figured out that this would freeze benefits at current levels while medical care inflation continues at a 10%-20% annual rate unabated. This is why it never made it into law, even when the Republicans controlled all branches of government. You could not imagine an issue better designed to alienate voters, and the Ryan pick focuses a giant, great spotlight on it.

    Just take a look at the three states with the highest percentage of seniors, who are understandably gun shy over the matter. Those are Florida, with 29 electoral votes, Pennsylvania with 20 votes, and Iowa with 6. A Republican loss of the first two alone is enough to decisively swing the election to Obama. If you live outside of Wisconsin and are unaware of the Ryan Medicare plan, just wait. The videos of him pushing granny in a wheelchair over a cliff are already running online.

    At least Romney and Obama finally agree on something. They both wanted Ryan as the vice presidential candidate. One Democratic strategist said they are now going to gather up what campaign money they have left, buy a margarita machine, and party until November.

    What all of this does mean is that traders and investors can now build a second Obama term into their strategic and asset allocation assumptions. It means that when Ben Bernanke’s term is up in 18 months, he will either be reappointed or replaced with a clone with an identical philosophy. That means QE3, QE4, and QE5 until the economy returns to a more robust 3%-4% growth rate, which for demographic reasons is probably ten years off.

    This means that financial markets could continue to bounce along in narrow ranges for four more years. Every bout of weakness will be met with more Fed action, or the implied threat of it. But the economy never reaches the escape velocity for the markets to bust out to the upside either. We all end up dying of boredom instead of Armageddon.

    Romney and Ryan’s antipathy towards Bernanke and the Fed are well known. So a Republican win would have brought quantitative easing to a screeching halt, and possibly a quick unwind of the central bank’s massive $2.8 trillion balance. Such a policy would be highly recessionary. Remember, no Bernanke means no Bernanke put. You could halve asset prices everywhere pretty quickly in such a scenario.

    This is all frustrating for me because I much prefer crashes to slow grinds. I can make a bundle in a good market meltdown, and outperforming conventional long only competitors by a huge margin is a piece of cake. Basically, crises are good for my business. Give me a good 500 point down day in the Dow, and traffic on my website soars as the desperate seek guidance from wherever they can find it.

    I know this piece will probably ignite a firestorm of controversy. These political pieces usually do. However, in election years an accurate call on outcomes can be crucial to your performance. If you have something to say, send me data, not opinions. I live in the world of facts and hard numbers, not beliefs or religions. I’m always looking for someone to prove me wrong so I can readjust my global view, but I need evidence to do this, not a new chant from a Yaqui Indian.

    By the way, if you want to watch a fascinating insider account of the Palin vice presidential run, watch the movie “Game Changer”, which is now out on HBO. It really gives you an inside look at how campaigns are run, warts and all. I saw several of these during my days in the White House Press Corps three decades ago, and what goes on behind the green curtains is truly amazing, if not unbelievable. For you, it might be an eye opener. .

    The Mad Hedge Fund Trader
    Aug 16, 2012. 11:54 PM | Likes Like |Link to Comment
  • Acacia CEO Paul Ryan Clarifies Second Quarter Results And 'Key Performance Metrics' [View article]
    For the second time in four years, the Republican Party has blown a presidential election through the choice of a running mate. What little chance the GOP had in winning the election has gone up in smoke with the selection of Wisconsin congressman Paul Ryan to join the ticket. Think of him as a Sarah Palin with pants.

    Of course, there was great celebration by the Tea Party wing that sees Ryan as a standard bearer. And don’t get me wrong. With an economics background, Ryan brings far more intellectual weight to the game than the former governor of Alaska.

    The problem is that Ryan doesn’t bring a single new vote to Romney. He had a lock on the Tea Party vote, no matter who the vice presidential candidate is. It’s not like they were going to vote for Obama because they didn’t like his pick.

    What Ryan does do is dash any hopes the Republicans had of capturing moderates, independents, and undecideds. Romney can’t win without these. As I write this, Obama is already winning every battleground state, except Virginia, which is a dead heat.

    Since Ryan has been the poster boy for the replacement of Medicare with a voucher system, he brings this crucial issue for seniors to the forefront. Most people have already figured out that this would freeze benefits at current levels while medical care inflation continues at a 10%-20% annual rate unabated. This is why it never made it into law, even when the Republicans controlled all branches of government. You could not imagine an issue better designed to alienate voters, and the Ryan pick focuses a giant, great spotlight on it.

    Just take a look at the three states with the highest percentage of seniors, who are understandably gun shy over the matter. Those are Florida, with 29 electoral votes, Pennsylvania with 20 votes, and Iowa with 6. A Republican loss of the first two alone is enough to decisively swing the election to Obama. If you live outside of Wisconsin and are unaware of the Ryan Medicare plan, just wait. The videos of him pushing granny in a wheelchair over a cliff are already running online.

    At least Romney and Obama finally agree on something. They both wanted Ryan as the vice presidential candidate. One Democratic strategist said they are now going to gather up what campaign money they have left, buy a margarita machine, and party until November.

    What all of this does mean is that traders and investors can now build a second Obama term into their strategic and asset allocation assumptions. It means that when Ben Bernanke’s term is up in 18 months, he will either be reappointed or replaced with a clone with an identical philosophy. That means QE3, QE4, and QE5 until the economy returns to a more robust 3%-4% growth rate, which for demographic reasons is probably ten years off.

    This means that financial markets could continue to bounce along in narrow ranges for four more years. Every bout of weakness will be met with more Fed action, or the implied threat of it. But the economy never reaches the escape velocity for the markets to bust out to the upside either. We all end up dying of boredom instead of Armageddon.

    Romney and Ryan’s antipathy towards Bernanke and the Fed are well known. So a Republican win would have brought quantitative easing to a screeching halt, and possibly a quick unwind of the central bank’s massive $2.8 trillion balance. Such a policy would be highly recessionary. Remember, no Bernanke means no Bernanke put. You could halve asset prices everywhere pretty quickly in such a scenario.

    This is all frustrating for me because I much prefer crashes to slow grinds. I can make a bundle in a good market meltdown, and outperforming conventional long only competitors by a huge margin is a piece of cake. Basically, crises are good for my business. Give me a good 500 point down day in the Dow, and traffic on my website soars as the desperate seek guidance from wherever they can find it.

    I know this piece will probably ignite a firestorm of controversy. These political pieces usually do. However, in election years an accurate call on outcomes can be crucial to your performance. If you have something to say, send me data, not opinions. I live in the world of facts and hard numbers, not beliefs or religions. I’m always looking for someone to prove me wrong so I can readjust my global view, but I need evidence to do this, not a new chant from a Yaqui Indian.

    By the way, if you want to watch a fascinating insider account of the Palin vice presidential run, watch the movie “Game Changer”, which is now out on HBO. It really gives you an inside look at how campaigns are run, warts and all. I saw several of these during my days in the White House Press Corps three decades ago, and what goes on behind the green curtains is truly amazing, if not unbelievable. For you, it might be an eye opener.

    - The Mad Hedge Fund Trader
    Aug 16, 2012. 11:54 PM | Likes Like |Link to Comment
  • Mitt Romney, Paul Ryan And Economic Uncertainty [View article]
    For the second time in four years, the Republican Party has blown a presidential election through the choice of a running mate. What little chance the GOP had in winning the election has gone up in smoke with the selection of Wisconsin congressman Paul Ryan to join the ticket. Think of him as a Sarah Palin with pants.

    Of course, there was great celebration by the Tea Party wing that sees Ryan as a standard bearer. And don’t get me wrong. With an economics background, Ryan brings far more intellectual weight to the game than the former governor of Alaska.

    The problem is that Ryan doesn’t bring a single new vote to Romney. He had a lock on the Tea Party vote, no matter who the vice presidential candidate is. It’s not like they were going to vote for Obama because they didn’t like his pick.

    What Ryan does do is dash any hopes the Republicans had of capturing moderates, independents, and undecideds. Romney can’t win without these. As I write this, Obama is already winning every battleground state, except Virginia, which is a dead heat.

    Since Ryan has been the poster boy for the replacement of Medicare with a voucher system, he brings this crucial issue for seniors to the forefront. Most people have already figured out that this would freeze benefits at current levels while medical care inflation continues at a 10%-20% annual rate unabated. This is why it never made it into law, even when the Republicans controlled all branches of government. You could not imagine an issue better designed to alienate voters, and the Ryan pick focuses a giant, great spotlight on it.

    Just take a look at the three states with the highest percentage of seniors, who are understandably gun shy over the matter. Those are Florida, with 29 electoral votes, Pennsylvania with 20 votes, and Iowa with 6. A Republican loss of the first two alone is enough to decisively swing the election to Obama. If you live outside of Wisconsin and are unaware of the Ryan Medicare plan, just wait. The videos of him pushing granny in a wheelchair over a cliff are already running online.

    At least Romney and Obama finally agree on something. They both wanted Ryan as the vice presidential candidate. One Democratic strategist said they are now going to gather up what campaign money they have left, buy a margarita machine, and party until November.

    What all of this does mean is that traders and investors can now build a second Obama term into their strategic and asset allocation assumptions. It means that when Ben Bernanke’s term is up in 18 months, he will either be reappointed or replaced with a clone with an identical philosophy. That means QE3, QE4, and QE5 until the economy returns to a more robust 3%-4% growth rate, which for demographic reasons is probably ten years off.

    This means that financial markets could continue to bounce along in narrow ranges for four more years. Every bout of weakness will be met with more Fed action, or the implied threat of it. But the economy never reaches the escape velocity for the markets to bust out to the upside either. We all end up dying of boredom instead of Armageddon.

    Romney and Ryan’s antipathy towards Bernanke and the Fed are well known. So a Republican win would have brought quantitative easing to a screeching halt, and possibly a quick unwind of the central bank’s massive $2.8 trillion balance. Such a policy would be highly recessionary. Remember, no Bernanke means no Bernanke put. You could halve asset prices everywhere pretty quickly in such a scenario.

    This is all frustrating for me because I much prefer crashes to slow grinds. I can make a bundle in a good market meltdown, and outperforming conventional long only competitors by a huge margin is a piece of cake. Basically, crises are good for my business. Give me a good 500 point down day in the Dow, and traffic on my website soars as the desperate seek guidance from wherever they can find it.

    I know this piece will probably ignite a firestorm of controversy. These political pieces usually do. However, in election years an accurate call on outcomes can be crucial to your performance. If you have something to say, send me data, not opinions. I live in the world of facts and hard numbers, not beliefs or religions. I’m always looking for someone to prove me wrong so I can readjust my global view, but I need evidence to do this, not a new chant from a Yaqui Indian.

    By the way, if you want to watch a fascinating insider account of the Palin vice presidential run, watch the movie “Game Changer”, which is now out on HBO. It really gives you an inside look at how campaigns are run, warts and all. I saw several of these during my days in the White House Press Corps three decades ago, and what goes on behind the green curtains is truly amazing, if not unbelievable. For you, it might be an eye opener.

    The Mad Hedge Fund Trader
    Aug 16, 2012. 11:54 PM | 1 Like Like |Link to Comment
  • Long Wal-Mart, Short J.C. Penney [View article]
    The stock of the day last Friday was, no doubt, JC Penny (JCP), one of the most heavily shorted stocks in the market, which announced Q2, 2012 earnings. Despite a huge miss, the stock soared by 20% because the losses were not as bad as many expected. This leads to the question of whether traders should double up or bail on the existing short positions.

    As the dispassionate analyst that I am, who only looks at numbers in the cold, harsh light of reality, the figures could not have been more disappointing. Q2 EPS showed a loss of $0.37/shares versus an expected loss of $0.25. Revenues came in at $3 billion compared to an estimate of $3.2 billion.

    Worst of all, same store sales cratered by -21.7% YOY, while traffic was off -12%. This is despite offering kids free haircuts. Gross margins shrank and Internet sales were off 30%. To top it all, the company announced that it would no longer provide future guidance. Moody’s immediately followed with a downgrade of the company’s debt from Ba1 to Ba3.

    The new CEO, Ron Johnson, has no retail experience and says he needs 4 years for a turnaround. In the meantime, competitor Macys is making good money and selling at 11X earnings with the best CEO in business. Well established luxury brand Coach (COH) sells for a 14X multiple. If you fall in love with retail and absolutely have to be in this sector, there are far better fish to fry. Personally, I would rather lie down and take a long nap.

    The hedgies still in this name are clearing gunning for a chapter 11. So a chance to sell again 20% higher than yesterday in the face of bad news has to be attractive. But with such a huge share of the company’s outstanding shares already sold short, the risk reward here is not great. I would have ridden the stock down from $40 to $20 and then said, “Thank you very much”, rather than chase the last few dollars just to prove I’m right.

    The company only has to get a little right to trigger a bigger short squeeze. Technicians were clearly focused on a potential multiyear double bottom on the charts. Besides, I was never one for sloppy seconds, and don’t need a haircut.

    Looking for a better stock to sell short at the top of the recent range with dire fundamentals? I’d rather short Morgan Stanley on an up day.

    - Mad Hedge Fund Trader -
    Aug 15, 2012. 10:26 PM | Likes Like |Link to Comment
  • J.C. Penney: Valuing A Company Undergoing An Extraordinary Transformation [View article]
    The stock of the day last Friday was, no doubt, JC Penny (JCP), one of the most heavily shorted stocks in the market, which announced Q2, 2012 earnings. Despite a huge miss, the stock soared by 20% because the losses were not as bad as many expected. This leads to the question of whether traders should double up or bail on the existing short positions.

    As the dispassionate analyst that I am, who only looks at numbers in the cold, harsh light of reality, the figures could not have been more disappointing. Q2 EPS showed a loss of $0.37/shares versus an expected loss of $0.25. Revenues came in at $3 billion compared to an estimate of $3.2 billion.

    Worst of all, same store sales cratered by -21.7% YOY, while traffic was off -12%. This is despite offering kids free haircuts. Gross margins shrank and Internet sales were off 30%. To top it all, the company announced that it would no longer provide future guidance. Moody’s immediately followed with a downgrade of the company’s debt from Ba1 to Ba3.

    The new CEO, Ron Johnson, has no retail experience and says he needs 4 years for a turnaround. In the meantime, competitor Macys is making good money and selling at 11X earnings with the best CEO in business. Well established luxury brand Coach (COH) sells for a 14X multiple. If you fall in love with retail and absolutely have to be in this sector, there are far better fish to fry. Personally, I would rather lie down and take a long nap.

    The hedgies still in this name are clearing gunning for a chapter 11. So a chance to sell again 20% higher than yesterday in the face of bad news has to be attractive. But with such a huge share of the company’s outstanding shares already sold short, the risk reward here is not great. I would have ridden the stock down from $40 to $20 and then said, “Thank you very much”, rather than chase the last few dollars just to prove I’m right.

    The company only has to get a little right to trigger a bigger short squeeze. Technicians were clearly focused on a potential multiyear double bottom on the charts. Besides, I was never one for sloppy seconds, and don’t need a haircut.

    Looking for a better stock to sell short at the top of the recent range with dire fundamentals? I’d rather short Morgan Stanley on an up day. -

    Mad Hedge Fund Trader
    Aug 15, 2012. 10:26 PM | Likes Like |Link to Comment
  • J.C. Penney 'Warns' New Pricing, And A World War 'Might Negatively Affect Sales' [View article]
    The stock of the day last Friday was, no doubt, JC Penny (JCP), one of the most heavily shorted stocks in the market, which announced Q2, 2012 earnings. Despite a huge miss, the stock soared by 20% because the losses were not as bad as many expected. This leads to the question of whether traders should double up or bail on the existing short positions.

    As the dispassionate analyst that I am, who only looks at numbers in the cold, harsh light of reality, the figures could not have been more disappointing. Q2 EPS showed a loss of $0.37/shares versus an expected loss of $0.25. Revenues came in at $3 billion compared to an estimate of $3.2 billion.

    Worst of all, same store sales cratered by -21.7% YOY, while traffic was off -12%. This is despite offering kids free haircuts. Gross margins shrank and Internet sales were off 30%. To top it all, the company announced that it would no longer provide future guidance. Moody’s immediately followed with a downgrade of the company’s debt from Ba1 to Ba3.

    The new CEO, Ron Johnson, has no retail experience and says he needs 4 years for a turnaround. In the meantime, competitor Macys is making good money and selling at 11X earnings with the best CEO in business. Well established luxury brand Coach (COH) sells for a 14X multiple. If you fall in love with retail and absolutely have to be in this sector, there are far better fish to fry. Personally, I would rather lie down and take a long nap.

    The hedgies still in this name are clearing gunning for a chapter 11. So a chance to sell again 20% higher than yesterday in the face of bad news has to be attractive. But with such a huge share of the company’s outstanding shares already sold short, the risk reward here is not great. I would have ridden the stock down from $40 to $20 and then said, “Thank you very much”, rather than chase the last few dollars just to prove I’m right.

    The company only has to get a little right to trigger a bigger short squeeze. Technicians were clearly focused on a potential multiyear double bottom on the charts. Besides, I was never one for sloppy seconds, and don’t need a haircut.

    Looking for a better stock to sell short at the top of the recent range with dire fundamentals? I’d rather short Morgan Stanley on an up day.

    Mad Hedge Fund Trader
    Aug 15, 2012. 10:26 PM | Likes Like |Link to Comment
  • Today's Economy Is The Antithesis Of The Great Depression - Invest Accordingly [View article]
    My grandfather was an immigrant from Sicily who joined the army during WWI to attain US citizenship, lost an eye when he was mustard gassed on the Western Front, and settled down in the Bay Ridge section of Brooklyn after the war.

    He bought a three bedroom brick home on 76th street for $3,000, eventually raising four kids. Back then, there was a dairy farm across the street, and horse drawn wagons delivered ice blocks door to door. During the roaring twenties an assortment of relatives chided him for avoiding the stock boom where easy fortunes were made trading on margin. When the 1929 crash came, all of them lost their homes. Grandpa finished off the basement, creating space for two entire families to move in. He never bought a stock in his entire life.

    Because dad contracted malaria with the Marines on Guadalcanal during WWII, the old man moved the family to Los Angeles in 1947 for the dry, sunny weather. Unfortunately, the train stopped long enough in Las Vegas for a flim flam man to sell him five acres of land for $500. Ten years later my dad drove out to check out the investment. It was a tumbleweed blown, jack rabbit and rattlesnake ridden piece of land so far out of town that it was worthless. You couldn’t see downtown, even if you stood on the rusted out model “T” that occupied the land. After that, the parcel became the family joke, and grandpa was ridiculed as the world’s worst investor.

    Grandpa died of emphysema in 1977 at the age of 78. Chateau Thierry and Belleau Wood finally caught up with him. What German shrapnel and gas failed to accomplish, 60 years of smoking two packs a day of Marlboro’s did. His estate executor put the long despised plot in Sin City up for sale. Although the final price was never disclosed, it was thought to be well into eight figures. In the intervening 30 years the city of Las Vegas had marched steadily Southward towards Los Angeles, eventually encompassing it, sending its value through the roof. The deal triggered a big fight among the heirs, those claiming he was the stupidest demanding the greatest share of the proceeds, the bad blood generated continuing to this day. It turns out the world’s worst investor was really the best, we just didn’t know it.

    What was the address of this fabled piece of real estate? Why, it is 3325 Las Vegas Blvd. South, the site today of the Venetian and Palazzo Hotels, home to the Dal Toro restaurant, the venue for the Mad Hedge Fund Trader’s last Las Vegas strategy luncheon. I’m sure grandpa is laughing in his grave.


    - The Mad Hedge Fund Trader -
    Aug 14, 2012. 11:21 PM | 3 Likes Like |Link to Comment
  • Another New Low For U.S.-China Trade [View article]
    One of the great things about running a website with a truly global reach is that readers send me material which is nothing less than outrageous. So I had to laugh when I found in my inbox an animation of two bears discussing the hopelessly idiotic approach the US government has taken towards its trade with China over the past two decades.

    America gave away 25 million jobs, got nothing in return, with the end result that our standard of living is falling, while China’s is rising. The Chinese made this easy by devaluing their currency 50%, thus giving their exporters an unassailable price advantage. This has enabled the Middle Kingdom to buy an increasingly larger part of the US every year at knock down prices.

    The US could address this imbalance at anytime through the imposition of punitive import duties and forcing a revaluation of the Chinese Yuan. But any attempts to do so are fought off by well-financed libertarian pro business elements spouting the principals of free trade. So China laughs all the way to the bank, and the unemployment rate here ratchets ever skyward.

    -The Mad Hedge Fund Trader-
    Aug 14, 2012. 10:47 PM | 1 Like Like |Link to Comment
  • China's Trade Surplus At USD 5.35 Billion In March [View instapost]
    One of the great things about running a website with a truly global reach is that readers send me material which is nothing less than outrageous. So I had to laugh when I found in my inbox an animation of two bears discussing the hopelessly idiotic approach the US government has taken towards its trade with China over the past two decades.

    America gave away 25 million jobs, got nothing in return, with the end result that our standard of living is falling, while China’s is rising. The Chinese made this easy by devaluing their currency 50%, thus giving their exporters an unassailable price advantage. This has enabled the Middle Kingdom to buy an increasingly larger part of the US every year at knock down prices.

    The US could address this imbalance at anytime through the imposition of punitive import duties and forcing a revaluation of the Chinese Yuan. But any attempts to do so are fought off by well-financed libertarian pro business elements spouting the principals of free trade. So China laughs all the way to the bank, and the unemployment rate here ratchets ever skyward. -

    The Mad Hedge Fund Trader
    Aug 14, 2012. 10:47 PM | Likes Like |Link to Comment
  • U.S. stock futures tilt lower after China trade data surprises. S&P -0.3%, Dow -0.3%[View news story]
    One of the great things about running a website with a truly global reach is that readers send me material which is nothing less than outrageous. So I had to laugh when I found in my inbox an animation of two bears discussing the hopelessly idiotic approach the US government has taken towards its trade with China over the past two decades.

    America gave away 25 million jobs, got nothing in return, with the end result that our standard of living is falling, while China’s is rising. The Chinese made this easy by devaluing their currency 50%, thus giving their exporters an unassailable price advantage. This has enabled the Middle Kingdom to buy an increasingly larger part of the US every year at knock down prices.

    The US could address this imbalance at anytime through the imposition of punitive import duties and forcing a revaluation of the Chinese Yuan. But any attempts to do so are fought off by well-financed libertarian pro business elements spouting the principals of free trade. So China laughs all the way to the bank, and the unemployment rate here ratchets ever skyward.

    The Mad Hedge Fund Trader
    Aug 14, 2012. 10:47 PM | Likes Like |Link to Comment
  • Why Apple's Sell-Off Is Good For Investors [View article]
    Steve Jobs’ creation dropped a real bombshell on the market Tuesday when it announced Q2, 2012 earnings that were rotten to the core. The timing could not have been worse for a market that was on the verge of complete nervous breakdown. Of the 53 brokers who provided research coverage of the Mountain View, California firm, 27 rated it a “buy”, 21 “outperform”, and precisely zero “underperform”. And you wonder why retail has bailed on Wall Street.

    The numbers made grim reading. Sales, which had been targeted at $37 billion came in at only $35 billion. Profits amount to $8.82 billion, taking earnings per share to $9.32, well down from the $10.37 expected. Estimates for iPhone sales had run as high as the low 30 millions. The actual figure was 26 million. In overnight trading, the shares opened down a gob smacking $40, instantly vaporizing $37 billion in market capitalization.

    Apple is suffering from the mother of all delayed consumption headaches. Consumers love their products so much they have gone on strike until the vastly upgraded and better performing iPhone 5 is launched in the fall, yours truly included. So the dip in profits will reappear as a spike in profits in the next one or two quarters. This means that if you missed the 50% run up since the beginning of the year, you may have a chance to take another bite at, well, the apple.

    Apple is not just an IPhone story. The mini iPad is expected out soon. Apple TV is expected to be huge next year. Apple has only just scratched China’s market of 600 million cell phone users. Its six stores are regularly the scene of long lines, and occasional riots by consumers desperate to buy their products. Droves are crossing the border by train from Shensen to Hong Kong, where Apple products are more easily available.

    In the spring I lead readers into the August $400-$450 call spread which became one of our most profitable trades of the year. I took them out a month ago because we had already squeezed out most of the profit, and because I thought that exactly this kind of disappointment might occur.

    The intelligent thing to do here is to wait for the current shock to work its way through the system. You also want the present melt down in the broader market to exhaust itself. That could take us well into August. The best-case scenario here is that you get back in when the stock falls all the way down to its June low at $525. If it then drops below $500, double up. This would be a once in a lifetime gift.
    - Mad Hedge Fund Trader -
    Aug 9, 2012. 06:32 PM | Likes Like |Link to Comment
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