(UYG) - Mad Hedge Fund Trader

January 22, 2025

Global Market Comments
January 22, 2025
Fiat Lux

Featured Trades:

(TRADING FOR THE NON-TRADER),
(ROM), (UXI), (UCC), (UYG)

January 22, 2025/by april@madhedgefundtrader.com

I like to start out my day by calling readers on the US East Coast and Europe, asking how they like the service, are there any ways I can improve the service, and what topics they would like me to write about.

After all, at 5:00 AM Pacific time, they are the only ones around.

You’d be amazed at how many great ideas I pick up this way, especially when I speak to industry specialists or other hedge fund managers.

Even the 25-year-old day trader operating out of his mother’s garage has been known to educate me about something.

So when I talked with a gentleman from Tennessee this morning, I heard a common complaint. Naturally, I was reminded of my former girlfriend, Cybil, who owns a mansion on top of the levee in nearby Memphis overlooking the great Mississippi River.

As much as he loved the service, he didn’t have the time or the inclination to execute my market-beating Trade Alerts.

I said “Don’t worry. There is an easier way to do this.”

Only about a quarter of my followers actually execute my Trade Alerts. The rest rely on my research to correctly guide them in the management of the IRAs, 401Ks, pension funds, or other retirement assets.

There is also another, easier way to use the Trade Alert service. Think of it as a “Trade Alert light.” Do the following.

1) Only focus on the four best of the S&P 500’s 101 sectors. I have listed the ticker symbols below.

2) Wait for the chart technicals to line up. Bullish long-term “Golden crosses” are setting up for several sectors.

3) Use a macroeconomic tailwind, like the ramp up from a -31% GDP growth rate to +31% we are currently seeing.

4) Shoot for a microeconomic sweet spot, companies, and sectors that enjoy special attention.

5) Increase risk when the calendar is in your favor such as during November to May.

6) Use a modest amount of leverage in the lowest-risk bets but not much. 2:1 will do.

7) Scale in, buying a few shares every day on down days. Don’t hold out for an absolute bottom. You will never get it.

The goal of this exercise is to focus your exposure on a small part of the market with the greatest probability of earning a profit at the best time of the year. This is what grown-up hedge funds do all day long.

Sounds like a plan. Now, what do we buy?

(ROM) – ProShares Ultra Technology 2X Fund – Gives you double exposure to what will be the top-performing sector of the market for the next six months, and probably the rest of your life. Click here for details and the largest holdings.

(UXI) – ProShares Ultra Industrial Fund 2X – Is finally rebounding off the back of a dollar that will slow down its ascent once the first interest rate hike is behind us. Onshoring and incredibly cheap valuations are other big tailwinds here. For details and largest holdings, click here.

(UCC) – ProShares Ultra Consumer Services 2X Fund – Is a sweet spot for the economy, as tight-fisted consumers finally start to spend their gasoline savings now that it no longer appears to be a temporary windfall. This is also a great play on a housing market that is on fire. It contains favorites like Home Depot (HD) and Walt Disney (DIS) which we know and love. For details and largest holdings, click here.

(UYG) – ProShares Ultra Financials 2X Fund – Yes, after six years of false starts, interest rates are finally going up, with a December rate hike by the Fed a certainty. My friend, Janet, is handing out her Christmas presents early this year. This instantly feeds into wider profit margins for financials of every stripe. For details and largest holdings, click here.

Of course, you’ll need to keep reading my letter to confirm that the financial markets are proceeding according to the script. You will also have to read the Trade Alerts as we include a ton of deep research in the Updates.

You can then unload your quasi-trading book with hefty profits in the spring just when markets are peaking out. “Sell in May and Go Away?” I bet it works better than ever in 2021.

For Those Who Invest at Their Leisure

January 22, 2025/by MHFTR

April 17, 2024

Diary, Newsletter, Summary

Global Market Comments
April 17, 2024
Fiat Lux

Featured Trade:

(THE LAZY MAN’S GUIDE TO TRADING),
(ROM), (UXI), (BIB), (UYG),
(THE NEXT THING FOR THE FED TO BUY IS GOLD)
(GLD), (GOLD), (GDX), (NEM)

April 17, 2024/by april@madhedgefundtrader.com

The Lazy Man’s Guide to Trading

Diary, Newsletter

I like to start out my day by calling readers on the US East Coast and Europe, asking how they like the service, if are there any ways I can improve the service, and what topics they would their like me to write about.

After all, at 5:00 AM Pacific time, they are the only ones around.

You’d be amazed at how many great ideas I pick up this way, especially when I speak to industry specialists or other hedge fund managers.

Even the 25-year-old day trader operating out of his mother’s garage has been known to educate me about something.

So when I talked with a gentleman for Tennessee the morning, I heard a common complaint.

Naturally, I was reminded of my former girlfriend, Cybil, who owns a mansion on top of the levee in nearby Memphis overlooking the great Mississippi River.

As much as he loved the service, he didn’t have the time or the inclination to execute my market-beating Trade Alerts.

I said “Don’t worry. There is an easier way to do this.”

Only about a quarter of my followers actually execute my Trade Alerts and a lot of them are professionals. The rest rely on my research to correctly guide them in the management of the IRA’s 401k’s, pension funds, or other retirement assets.

There is also another, easier way to use the Trade Alert service. Think of it as a “Trade Alert light.” Do the following.

1) Only focus on the four best of the S&P 500’s 101 sectors. I have listed the ticker symbols below.
2) Wait for the chart technicals to line up. Bullish long-term “Golden crosses” are setting up for several sectors, as with energy and precious metals.
3) Use a macroeconomic tailwind, like the ramp-up from a 2.0% GDP growth rate to 3.4% we are currently seeing.
4) Shoot for a microeconomic sweet spot, companies and sectors that enjoy special attention.
5) Increase risk when the calendar is in your favor, such as during November to May.
6) Use a modest amount of leverage in the lowest-risk bets, but not much. 2:1 will do.
7) Scale in, buying a few shares every day on down days. Don’t hold out for an absolute bottom. You will never get it.

The goal of this exercise is to focus your exposure on a small part of the market with the greatest probability of earning a profit at the best time of the year. This is what grown-up hedge funds do all day long.

Sounds like a plan. Now what do we buy?

(ROM) – ProShares Ultra Technology 2X Fund – Gives you double exposure to what will be the top-performing sector of the market for the next six months, and probably the rest of your life. Click here for details and the largest holdings.

(UXI) – ProShares Ultra Industrial Fund 2X – Is finally rebounding off the back of a dollar that will slow down its ascent once the first interest rate hike is behind us. Onshoring and incredibly cheap valuations are other big tailwinds here. For details and largest holdings, click here.

(BIB) – ProShares Ultra NASDAQ Biotechnology 2X Fund – With technology, this will be the other hyper-growth sector in the stock market for the next 20 years. How much is a cancer cure worth to stock valuations? Oh, about $2 trillion. A basket approach favors this notoriously volatile sector by rotating in new winners to replace losers.

(UYG) – ProShares Ultra Financials 2X Fund – Yes, after six years of false starts, interest rates are finally going up, with a December rate hike by the Fed a certainty. My friend, Janet, is handing out her Christmas presents early this year. This instantly feeds into wider profit margins for financials of every stripe. For details and largest holdings, click here.

Of course, you’ll need to keep reading my letter to confirm that the financial markets are proceeding according to the script. We all know that sectors can rotate rapidly, as they have just done.

You will also have to read the Trade Alerts, as we include a ton of deep research in the Updates.

You can then unload your quasi-trading book with hefty profits in the spring, just when markets are peaking out. “Sell in May and Go Away?” I bet it works better than ever in 2024.

For Those Who Invest at Their Leisure

April 17, 2024/by MHFTF

April 9, 2024

Diary, Newsletter, Summary

Global Market Comments
April 9, 2024
Fiat Lux

Featured Trade:

(APRIL 23 HAVANA CUBA STRATEGY LUNCHEON)
(My Favorite Passive/Aggressive Portfolio)
(ROM), (UYG), (UCC), (DIG), (BIB)

April 9, 2024/by april@madhedgefundtrader.com

My Favorite Passive/Aggressive Portfolio

Diary, Newsletter

What if you want to be a little more aggressive with your investment strategy, say twice as aggressive? What if markets don’t deliver any year-on-year change from here?

Then you need a little more pizzazz in your portfolio, and some extra leverage to earn your crust of bread and secure your retirement.

It turns out that I have just the solution for you. This would be my “Passive/Aggressive Portfolio”.

I call it passive in that you just purchase these positions and leave them alone and do not trade them. I call it aggressive as it involves a basket of 2x leveraged ETFs issued by ProShares, based in Bethesda, MD (click here for their link).

The volatility of this portfolio will be higher. But the returns will be double what you would get with an index fund, and possibly much more. It is a “Do not open until 2035” kind of investment strategy.

Here is the makeup of the portfolio:

(ROM) –- ProShares Ultra Technology Fund - The three largest single stock holdings are Apple (AAPL), Microsoft (MSFT), and Facebook (FB). It is up 13.7% so far this year. For more details on the fund, please click here.

(UYG) – ProShares Ultra Financials Fund - The three largest single stock holdings are Wells Fargo (WFC), Berkshire Hathaway (BRK.B), and JP Morgan Chase (JPM). It is up 6.2% so far this year. For more details on the fund, please click here.

(UCC) – ProShares Ultra Consumer Services Fund - The three largest single stock holdings are Amazon (AMZN), (Walt Disney), (DIS), and Home Depot (HD). It is up 18.3% so far this year. For more details on the fund, please click here.

(DIG) -- ProShares Ultra Oil & Gas Fund - The three largest single stock holdings are ExxonMobile (XOM), Chevron (CVX), and Schlumberger (SLB). It is DOWN 38.2% so far this year. For more details on the fund, please click here.

(BIB) – ProShares Ultra NASDAQ Biotechnology Fund – The three largest single stock holdings are Amgen (AMGN), Regeneron (REGN), and Gilead Sciences (GILD). It is up 15% so far this year, but at one point (before the “Sell in May and Go away” I widely advertised) it was up a positively stratospheric 64%. For more details on the fund, please click here.

You can play around with the sector mix at your own discretion. Just focus on the fastest-growing sectors of the US economy, which the Mad Hedge Fund Trader does on a daily basis.

It is tempting to add more leveraged ETFs for sectors like gold (UGL), to act as an additional hedge.

There is also the 2X short Treasury bond fund (TBT), which I have been trading in and out of for years, a bet that long-term bonds will go down, and interest rates rise.

There are a couple of provisos to mention here.

This is NOT a portfolio you want to own going into a recession. So, you will need to exercise some kind of market timing, however occasional.

The good news is that I make more money in bear markets than I do in bull markets because the volatility is so high. However, to benefit from this skill set, you have to keep reading the Diary of a Mad Hedge Fund Trader.

There is also a problem with leveraged ETFs in that management and other fees can be high, dealing spreads wide, and tracking errors huge.

This is why I am limiting the portfolio to 2X ETFs, and avoiding their much more costly and inefficient 3X cousins, which are really only good for intraday trading. The 3X ETFs are really just a broker enrichment vehicle.

There are also going to be certain days when you might want to just go out and watch a long movie, like Gone With the Wind, with an all-ETF portfolio, rather than monitor their performance, no matter how temporary it may be.

A good example was the May 6 2010 flash crash, when the complete absence of liquidity drove all of these funds to huge discounts to their asset values.

Check out the long-term charts, and you can see the damage that was wrought by high-frequency traders on that cataclysmic day, down -53% in the case of the (ROM). Notice that all of these discounts disappeared within hours. It was really just a function of the pricing mechanism being broken.

I have found the portfolio above quite useful when close friends and family members ask me for stock tips for their retirement funds.

It was perfect for my daughter, who won’t be tapping her teacher’s pension accounts for another 30 years when I will be long gone. She mentions her blockbuster returns every time I see her, and she has only been in them for 10 years.

Imagine what technology, financial services, consumer discretionaries, biotechnology, and oil and gas will be worth then? It boggles the mind. My guess is up 100-fold from today’s levels.

You won’t want to put all of your money into a single portfolio like this. But it might be worth carving out 10% of your capital and just leaving it there.

That will certainly be a recommendation for financial advisors besieged with clients complaining about paying high fees.

Adding some spice, and a little leverage to their portfolios might be just the ticket for them.