Global Market Comments
July 3, 2013
Fiat Lux
Featured Trade:
(JULY 12 AMSTERDAM STRATEGY LUNCHEON),
(IRAN SHOULD FOLD ITS NUCLEAR PROGRAM, OR ELSE),
(PETER F. DRUCKER ON MANAGEMENT)
Come join John Thomas for lunch at the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Amsterdam, The Netherlands, on Friday, July 12, 2013. 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 $229.
The lunch will be held at a downtown Amsterdam hotel near Nieumarkt 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.
?We have 3,500 nuclear weapons left over from the cold war we don?t need, they take 20 seconds to re-aim, we?re not afraid to use them. And by the way, they?re already aimed at you.?
That is the approach James Baker III thinks America should take with Iran, Ronald Reagan?s Chief of Staff and Secretary of the Treasury, and George H.W. Bush?s Secretary of State.
At the same time, we should be talking to the regime in Tehran, while doing everything we can to support the reformers, tighten sanctions, and enlist Europe?s help. Baker does not see a military solution in Iran, even though their potential to create instability in the region is enormous.
This was one of dozens of amazing insights I gained spending an evening chatting with the wily Texas lawyer during an evening in San Francisco. Baker is happy to take on the ?America Bashers,? pointing out that the US still plays a dominant role in the UN, NATO, the IMF, and the World Bank. It still accounts for 25% of GDP, and its military is unmatched. The US spread globalization, and the spectacular growth of China and India is largely the result of open American trade policies, raising standards of living around the world.
But the US can?t take its leadership role for granted. The biggest threats to American dominance are the runaway borrowing and entitlements. US debt to GDP is now over 100%, the highest level since WWII. This is unsustainable, is certain to bring a return of inflation, and unless dealt with, will lead to a long term American decline on the world stage. Massive trade and capital flow imbalances also have to be addressed.
The 80-year-old ex-Marine, who confesses to being the only Treasury Secretary in history who never took an economics class, believes that the advantageous rates that the government now borrows at are not set in stone. Baker is the man who engineered an end to the cold war with a whimper, and not a bang. He thinks that ?even our power has its limits,? and that ?there is a risk of strategic overreach.?
Baker feels that while conditions in the Middle East still look dicey, there is a good chance that we can pull out all our troops, and still leave a stable region. With the US politically evenly divided, Congress has degenerated from debating teams into execution squads, and consensus is impossible. The media are partly to blame, especially bloggers who propagate wild conspiracy theories, as confrontation sells better than accommodation. Regarding the financial crisis, we need to end ?too big to fail? and embark on re-regulation, not strangulation.
All in all, it was a fascinating few hours spent with a piece of living history who still maintains his excellent contacts in the diplomatic and intelligence communities.
How Do You Say ?Bullseye? in Texan?
If you have been living in a cave for the last 71 years and missed the work of management guru, Peter F. Drucker, here is your chance to catch up. I just finished reading The Essential Drucker, a weighty tome of 368 pages which summarized the high points and pearls of wisdom of the author?s 38 books published since 1939.
A self described ?social ecologist?, Drucker was a journalist who moved to Germany because job prospects in his native Austria-Hungary were so poor following its defeat in WWI. He became a close friend of Austrian economist Joseph Schumpeter, who popularized the term ?creative destruction,? and attended lectures by John Maynard Keynes. He fled to the US in 1934 after his writings were burned by the Nazis.
For most of human history, armies were the predominant management model, and most corporations today show the military influence. Management only emerged as a science during the 1920?s, and Drucker was one of the founding fathers. Early adopters, like Coca Cola, DuPont, IBM, and General Electric, went on to prosper mightily.
He observed that Franklin Delano Roosevelt set up the most productive administration in history. Even a single step was so painful for him that he, and all those who worked around him, had to organize the government with the maximum efficiency possible. This was a key element in America?s victory in WWII.
Drucker writes at length on the risks and opportunities of entrepreneurship, and argues that all companies must innovate, or die, no matter how pedestrian their product. He predicted many of the trends that came to dominate the late 20th and early 21st century, such as privatization, decentralization, globalization, and the rise of the knowledge worker. He had a huge following when I was in Japan during the seventies, and his mark can be seen in today?s global presence of the major Japanese Keiretsu.
While most people define a company in terms of producing products and making a profit, Drucker sees its mission as ?creating a customer.? He presents a rigorous process for decision making. He lauds non profits as the best run organizations in the country because they have to be. Groups like the Girl Scouts, the Red Cross, and United Way maintain an effective global presence without paying their people any money. He makes the distinction between efficiency and effectiveness; doing things well, versus doing the right thing.
Anyone who manages any business of whatever size, from a Fortune 500 company to a single individual banging away on a PC at home, will benefit from reading this book. It forces you to take a look at your own operation with a fresh set of eyes. It even advises on how to manage one?s own time, from dispensing with unnecessary meetings to minimizing paperwork and bureaucracy.
Drucker moved to California during the seventies, where he set up one of the early MBA programs for Claremont College. He died in 2005 at the age of 96. To obtain preferential pricing from Amazon for this insightful book, please click here.
Global Market Comments
July 2, 2013
Fiat Lux
Featured Trade:
(JULY 16 BERLIN STRATEGY LUNCHEON),
(DIAMONDS ARE STILL AN INVESTOR?S BEST FRIEND),
(SO YOU THINK THEY?RE NOT WATCHING YOUR PC?)
Come join John Thomas for lunch at the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Berlin, Germany, at 12:00 noon on Tuesday, July 16, 2013. 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 $219.
The lunch will be held at a downtown Berlin hotel within sight of the Brandenburg Gate, the details of which 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.
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 at http://www.mazaldiamond.com 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 their 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 industry 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.
They are getting a boost from a 30% price gain, a woman?s best friend has seen since the March, 2009 stock market bottom, taking them back to pre crash levels. The US 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 last three decades. To avoid another week on the sofa, you might even think about buying next year?s Valentine?s surprise early.
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, which you have a high probability of clicking on. 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 at http://www.hyundaiusa.com/, 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 at http://www.garydanko.com/site/bio.html ? 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 at http://www.visitlasvegas.com/vegas/index.jsp . 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 http://us.levi.com/home/index.jsp had a 42-inch waist, up from the 40?s in your last order. Better lay off those cheeseburgers. Pretty soon, they?ll be calling you ?tubby? or ?fatso?. Better visit http://www.weightwatchers.com/Index.aspx 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 PC?s.
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 http://www.nfl.com/ you got deluged with product offers from your local team, the San Francisco 49ers. I?ve got friends at Google, Facebook, MySpace, 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 http://www.bluenile.com/ 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 at http://www.3stepdivorce.com? and see what you?re in for?
Naw, 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. Oooh 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? Aaaaah.
Global Market Comments
July 1, 2013
Fiat Lux
Featured Trade:
(MAD DAY TRADER IS NOW FOR SALE),
(AUGUST 1 MYKONOS, GREECE STRATEGY LUNCHEON),
(BE CAREFUL WHO YOU SNITCH ON),
(COULD YOU QUALIFY TO BECOME A US CITIZEN?)
I am pleased to announce that the The Mad Day Trader is now for sale, my first major upgrade to your service.
While the Global Trading Dispatch focuses on investment over a one week to six-month time frame, Mad Day Trader will exploit money-making opportunities over a ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Mad Day Trader uses a dozen proprietary short-term technical and momentum indicators to generate buy and sell signals. These will be sent to you by text message and email for immediate execution. During normal trading conditions, you should receive three to five alerts a day.
As with our existing service, you will receive ticker symbols, entry and exit points, targets, stop losses, and regular real time updates. At the end of each day, a separate short-term model portfolio will be sent to you and posted on the website.
The new service will generate long and short selling signals for a range of widely traded exchange traded funds (ETF?s). These include stock indexes (SPY), bonds (TLT), (TBT), foreign exchange (FXY), (FXE), (FXA), commodities (CU), (CORN), energy (USO), (UNG), and precious metals (GLD), (SLV). There is also a special focus on the leading hot stocks of the day. This will be followed up with a series of educational webinars that will be an important resource for the serious trader.
The Mad Day Trader service will be provided out of Chicago by my old friend and industry veteran, Jim Parker. Jim is a 40-year veteran of the financial markets and has long made a living as an independent trader in the pits at the Chicago Mercantile Exchange.
Jim has worked his way up from a junior floor runner to advisor to some of the world?s largest hedge funds. We are lucky to have him on our team and gain access to his experience, knowledge, and expertise. You will not find a better man in Chicago to look after your positions.
I have been following his alerts for the past five years, and his impeccable market timing has become an important part of the ?unfair advantage? that I provide readers. The time has finally come to offer Mad Day Trader as a stand-alone product.
A trading service with this degree of success and sophistication normally costs $20,000 a year. As a client of The Mad Hedge Fund Trader, you can purchase Mad Day Trader alone for $2,000 a year or $699 a quarter. Or you can buy it as a package together with Global Trading Dispatch, which we call Global Trading Dispatch PRO, for $4,000 a year, a 20% discount to the full retail price.
Existing subscribers to the Global Trading Dispatch are invited to upgrade their subscription to include both products. Just send an email to Nancy at customer support at support@madhedgefundtrader.com.
She will calculate the remaining value of your current subscription and give you a full credit towards the new one-year Global Trading Dispatch PRO subscription. She will then send you instructions on where to send a check. As no two amounts will be the same, our store is unable to handle personalized orders.
Part of the deal is that I want to hear from you on how we can evolve Mad Day Trader to make it more user friendly and coherent to better meet your needs. Sometimes, a couple of old warhorses like us forget how much our specialized language is incomprehensible to the outside world. Just send us an email with suggestions to support@madhedgefundtrader.com.
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