With today’s break below the key 1522 level, gold is highly vulnerable to a very ugly unwind. Everyone from mom-and-pop to hedge funds have loaded up on gold on the theory that Fed policy was destroying the dollar. It didn’t happen. Then the “death of fiat money” theorists underpinned further legs of strength in gold. In the end the predictions of imminent hyper inflation were dead wrong. Will inflation come? Sure. Anytime soon? Highly unlikely. Still, six years into the crisis, central banks are pushing on a string, with a continued threat of deflation. What was underestimated? It’s a global balance sheet driven recession/depression/slowdown (take your pick). All of the efforts to reignite credit via various monetary policy mechanisms don’t work when consumers, corporates and sovereigns are all austerity focused.
So for the masses that own gold at 1500, 1700 … even 1900 bucks still have no evidence to support their positions – yet, the gold longs have been rather arrogant, showing little fear of the downside risk. Their reckless message: Every portfolio has to own gold (as an inflation hedge). Meanwhile, they may be risking a fall back to $1,100 or lower. Keep in mind, that’s losing 40% of the value of your money (potentially quickly, if you are familiar with the way gold can move) … all in an effort to protect against an inflation rate that can’t muster 2% per annum in most of the developed world.
Given the massive and widespread position in gold, watch for margin calls, forced liquidations, hedge fund failures and perhaps we get a true stress-test of the loved ETF instruments (can GLD, the world’s second biggest ETF withstand a mass exodus?).
Bryan Rich
Bryan Rich began his trading career with a $600 million family office hedge fund in London. Later, he was a senior trader for a $750 million leading global hedge fund in South Florida. There, he helped manage and trade a multi-billion dollar foreign exchange options portfolio. Today, Bryan runs Logic Fund Management, a currency and macro research, advisory, consulting and money management firm. He is also the founder of FXTraderProfessional.com and co-founder of BillionairesPortfolio.com.
North Korea could be launching a nuclear attack and the stock market is making all time highs, investing has never been more difficult than right now.
So when things get confusing I like to look at what the “smart billionaire money” is doing, and they are doing a lot right now.
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I have been very pleased with the amount of feedback I have received from readers of this blog, and I thank you for all your comments. One of the things that I have noticed from the hundreds of emails I have received is that people want creative and lucrative ways to trade stocks, ETFs, commodities and options, so I am going to list some of the secrets that I have learned in my 14 years ofworking in the hedge fund industry as both a trader and an analyst.
1) How to trade commodities, and commodity futures – I use pattern recognition only. Pattern recognition is using past historical patterns which have been back tested over huge data sets (a million or more units of data) to find recurring patterns that have profitably predicted price direction. My favorite patterns in commodities use both momentum and mean reversion. My average holding period is usually 1 to 3 days, and these profitable historical patterns occur almost daily in one of the 20 or so commodity markets.
One of my favorites patterns is based on volatility reversion, this pattern begins when a commodity market makes a strong move in one direction then pauses and consolidates, volatility drops, and then you buy when price breaks out again. Right now this pattern is occurring in the gold and silver markets. One way retail investors can trade this is through the use of leveraged inverse etfs from proshares, proshares has 2x short silver and 2x short gold etfs, and these ETFs are just as powerful as the actual commodity futures.
2) Options, this is the real secret way traders at hedge funds make huge returns. Flat out options can make you rich!! I have seen many traders including myself that have turned a $10,000 account into $100,000 very quickly trading options. Some of the secret techniques that I use to trade options are: the secret stock replacement strategy, strangles, penny options and synthetic calls. These secret option techniques not only produce huge returns but protect you against market downturns as well.
3) ETFs– I trade ETFs using leveraged ETFs but again the best most lucrative way to trade ETFs is to use ETF options. Again I have seen people make $10,000 and $20,000 dollars in a week trading ETF options on Gold ($GLD), silver ($SLV), natural gas ($UNG) and volatility ($VXX) just to name a few.
4) Stocks- this is by far the most safest and most lucrative way to become a millionaire. Stock are the place where you should have the bulk of your personal assets in. The reason there is no better risk reward than stocks, especially when you use my “follow the billionaires money” technique which allows you to follow the worlds best billionaire investors and hedge funds. These stock can produce 100% and 200% returns but also have limited downside, meaning you can feel safe and sleep at night with this technique. To find out more about this strategy check out www.billionairesportfolio.com
If you want to learn more about the secrets that billionaire hedge fund traders use to make 100% 500% even 1000% returns than please visit www.billionairesportfolio.com.
Classic Bull Flag Pattern in the online gaming stock Zynga (ZNGA), the flag pole projects that this stock should go to over $6 in the next 3 to 4 months. I think this is very likely since Zynga has a lot of potential catalysts to push the stock higher including they a new game coming out, and the company’s entrance into the potentially lucrative online poker market. More importantly Zynga is the perfect stock to play the technology sector since it has the combination of a high market cap ($2.5 Billion) and high trading volume (more than 30 million shares a day) combined with a low price at $3.45 and lots of volatility so that if the tech sector and the Nasdaq 100 keeps rising this stock should easily hit the $5 or $6 mark, producing a 50% to 75% return. Also Zynga has limited downside with almost zero debt and over $1.2Billion in cash, meaning half the company’s market cap is cash.
Today we witnessed a huge upside momentum day in the Nasdaq 100, this is an extremely bullish signal and should set the stage for another 5% to 10% move in the Nasdaq 100 and in technology stocks.
As I mentioned in my previous blog, a secret that I learned from my hedge fund days was when you want to play a hot sector, such as technology right now, you want to try and buy the cheapest most volatile stocks which will give you the biggest returns when that sector or group is trending up. Remember the old investing adadge, “A Rising Tide lifts all Boats” and that is especially true in the stock market and with stock sectors. When a sector is hot such as technology and internet stocks are today, every stock in that sector will move up in tandem with the Nasdaq 100 or with the technology group.
So instead of buying a boring ETF like the $QQQ or $XLT which might make you a 5% or 10% at most return, you want to play the hottest most liquid stock, (meaning a stock with high average volume so institutions can buy it) but also has a cheap stock price preferably under $5. This combination is absolutely deadly and when you find a stock that fit this criteria in a hot sector you have to jump all over it. I found just the stock and even better it has one of the best chart patterns I have ever seen, a bullish flag pattern.
This stock which sells for less than $5 but trades more than 20 million shares a day is a technology stock and has quite possibly the most bullish chart I have seen, since it has completed a classic flag formation, probably the most powerful bullish chart pattern in the world. A flag formation is very rare and occurs only after a stock has moved up a minimum of 75% to 100% in price within a short period of time and then consolidates and then breaks out again. The great thing about the flag chart pattern is that it produces more triple digit winners than any other chart pattern I have ever seen.
To get a copy of this annotated chart with the flag pattern drawn in and the name of the stock that I am talking about please email me at
wmeade@purealpharesearch.com . I promise you don’t want to miss this one, this stock has very little downside, since it has tons of cash and zero debt yet could easily double in price over the next 3 months.
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
wmeade@purealpharesearch.com
Rumors have been swirling about the Solar Industry coming back, and I think it was officially confirmed on Monday when Bloomberg reported that the great Warren Buffett was interested in buying the bankrupt Chinese solar company, Suntech Power ($STP).
Buffett for the past two years through his various companies has invested in Solar Projects and companies as he believes there is a real future for Solar in the US and the rest of the world as well as the potential for big returns. So when an event like this happens traders want to participate buy buying a basket of solar stocks or a Solar ETF. Yet this is not the best way or the most lucrative way to play Solar Stocks.
Instead do what my hedge fund trader friend does at his $10 billion dollar hedge fund, he buys 2 or 3 solar stocks that he think will go up the most. Why?
The Solar ETF is too diversified and holds solar stock that are not Chinese based, remember Buffett’s latest target was a Chinese Solar Stock, so you want to focus on Chinese Solar Stocks only. Also the solar ETF ($TAN) will not give you quick triple digit returns which hedge fund traders look for. So what my hedge trader freind does is buy the most volatile, highest beta small cap and low priced solar stocks with the best charts, because stocks in the same sector like Solar all move in tandem. So to produce the biggest returns from solar stock you want to buy the two or three solar stocks that will go up the most if the Solar Group moves in price.
So using his methodology, good charts, low priced high beta stocks, I found two excellent low priced Chinese Solar stocks, that are not only low priced below $5 but have awesome charts and are volatile. I believe both of these Chinese solar stocks will go up 100% or more in the next 3 months if Solar stocks continue to move higher.
To find out the 2 solar stocks that I am buying, which I think will go up 100% or more in the next 3 months email at wmeade@purealpharesearch.com
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
As many of you know from reading this blog before I have spent years doing quantitative research building models for hedge funds, Commodity Trading Advisors and Independent Research Firms, I was educated in Applied Economics and Statistics from Johns Hopkins University and The University of Chicago, and I have worked with many of the biggest and most expensive backtesting software packages, such as Compustat (which costs up to $50,000 a user) in the world.
But to be honest during all my days working for some of the smartest minds in the hedge fund industry and in High Level Academia, I have found that the simpler and easier the model is to understand the better it is. There are 1000’s of PHDs at Hedge Funds and on Wall Street from Ivy League Universities that have built highly sophisticated models and stil most of their models fail, Why, because they are just too complicated, they fall prey to data mining, curve fitting etc.
So with that I have been tinkering with a timing model for ETF’s and leveraged ETF’s based on the simple premise that all investors are controlled by things fear or greed, and that when fear or greed are at an extreme that is the best time to buy or sell short an asset class. With that I took over 20 different asset classes and ETFs: Stocks, International Stocks, Emerging Markets, Gold, Silver, Natural Gas, Tresury Bonds, Volatility, Oil, and various stock sectors (such as technolgy stocks, financial stocks and energy stocks) and backtested what would happen if you bought or sold short these Asset Classes and ETFs at moments of extreme greed or fear, and quite honestly I was shocked at the results.
Not only were the results incredibly profitable, using leveraged etf’s only the model returned over 82% a year and robust meaning (meaning the model made money in almost every month and quarter) but this ETF timing model literally picked almost all the tops and bottoms of most major asset classes, stocks, bonds, Gold etc. More interesting was the fact that the most profitable holding periods were longer than I expected (around 3 to 5 months) , so the model did not generate an excessive amount of trades, but consistently produced 100% plus returns using leveraged ETF’s.
The reason I am mentioning this, is my Leveraged ETF Timing Model has been producing some of the strongest signals I have ever seen in all my 12 years of backtesting.
I am seeing the start of 4 to 5 major trends in 4 to 5 different asset classes and by using leveraged ETF’s, I am pretty sure that I will able to produce a 100% this year off these signals, and the good thing it is not to late to act on these signals either.
Will Meade
Editor of the Billionaires Portfolio
wmeade@purealpharesearch.com
I just finished reading the book “Why I quit Goldman Sachs” last night written by a former Goldman Sachs employee. First off if you have not read the book dont waste your time, its terrible, but there is one key point that the author made in the book that I wanted to talk about.
That is about insider information and deal flow. The author makes a great point about how all the traders at Goldman Sachs see all of the deal flow that is happenining in the markets they cover. This means Goldman Sachs as one of the largest and most important brokers and market makers in the world has all the biggest pension funds, mutual funds and hedge funds trade through their desk. So of course this means they can see what these funds are buying and sellling throughout the day. This gives them a huge information advantage over everyone else especially retail investors.
So this reiterates my point further about Apple ($APPL), as I have told you in posts before, all of the “smart money” has been dumping Apple stock for months, and everyone knows this who is “inside” meaning Goldman Sachs, while you have been buying they have beee shorting Apple since they are seeing huge mutual funds and pension funds slowly dump their entire Apple Position right in front of their face.
If you dont believe me just read the lastest article on Fidelity Contrafund in the Wall Street Journal, it is the world’s largest Mutual Fund with over $90 Billion, yes Billion in assets, and was one of the biggest holders of Apple. Well over the last 3 months Fidelity Contrafund, because it is so big, has been slowly dumping its Apple stock, to the point where it almost owns zero Apple. Now if you knew that the world’s largest mutual fund was going to be dumping millions of shares of Apple stock over a three month period would you still buy Apple? of course not, its like standing in from of a freight train!!
So get smart and find out what the “smart money” is doing with The Billionaires Portfolio at www.billionairesportfolio.com, we tell you what the world’s biggest Billionaire Investors and Hedge Funds are doing with their money. Dont run out in front of a speeding train by buying Apple because Fidelity and its $90 billion in assets will run you over, and that is exactly what has happened to retail investors who have tryed to buy Apple this year.
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
I have told you to sell Apple now for the last 4 weeks, I told you to sell your Silver ETF ($SLV), I am exhausted trying to save you money because you don’t listen.
Again Apple is a broken stock with poor relative strength, as witnessed by yesterdays huge decline, while the Nasdaq 100 dropped less than 1%, Apple dropped 3%. This is going to happen every time we have a down day in the markets, so on a day like today when there is some strength in Apple get out before the stock goes to the $350 $360 range. Moreover always wrong and perennial Apple Bull, Jim Cramer, is even telling you Apple is garbage, Cramer is now calling Apple the JC Penney of Technology.
Now Silver ($SLV), I told you two weeks ago was going to break down hard out of its triangle formation and it did, and the puts I bought and recommended are up more than 100%, so I made a 100% in less than 2 weeks not in 2 days LOL.
Now onto a major serious issue. As I have told you before plagiarism is rampant on the internet, here at The Billionaires Portfolio we have been ripped off multiple times by a website and company called Insider Monkey. First what a stupid name for an investment research company, I take investing seriously its not a joke to me, obviously to these people its funny.
Secondly Insider Monkey is run by a young girl with a journalism degree who has never ever worked or traded for a wall street firm or hedge fund, she has no experience to my knowledge in finance, she is a journalism bottom line. Now I have told you multiple times that my partner and I have over 25 years experience working on Wall Street and for major hedge funds. I have more than a decade of experience working for hedge funds, while my partner was a trader for one of the top Billion dollar global macro hedge funds in the world.
I am not saying this to say I am better than anyone, but I am trying to tell you that we know this business from experience, real world experience working for hedge funds, most of our competitors Motley Fool and Insider Monkey are writers with zero hedge fund experience.
Now Motley Fool, Motley Fool was founded by two brothers who were English majors, who again have zero investing experience, neither Gardner brother has ever worked for a wall street firm or hedge fund. Also Motley Fool hires 22 year old college grads with zero experience to write their articles. Their Apple analyst is 25 years old and was a former college baseball player from Playboy’s number one Party School Arizona State University. He has zero experience in investing or technology yet he is motley fools expert on Apple, and that should tell you plenty about this company.
My point is I cant stop these sites and companies from copying me (motley fool copied me on my apple article) but I can tell you how we differ from them. My partner and I have over 25 years of combined real experience on Wall Street and with Billion Dollar Hedge Funds, were economics majors and MBA’s. Our competitors are journalists and English majors who have never worked at a hedge fund, yet they want to tell you what hedge funds supposedly do.
Just think of it this way when you go to to the Doctor do you want to go to a foot doctor just out of medical school for your heart, or do you want to go to a heart specialist with 25 years of experience. Well here at Billionaires Portfolio, we are the heart specialist with 25 years experience.
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
I wrote a blog post last week about how I have consistently warned investors not to buy Apple ($AAPL), and I spelled out another reason why you should sell Apple immediately.
Well I received over 55 comments almost all of them negative, telling me I was wrong about Apple. I even had one gentleman from the UK who physically threatened me. (I hope he knows that in the US its illegal to threaten someone, and by the way I am 6’5″ 220, so Sir, I will give you my address if you want to talk to me in person lol)
But I am not hear to gripe or be upset over negative comments, I am simply here to try and make people better investors and educate them on how Hedge Funds and institutional traders work. When a stock has poor relative strength like Apple, mutual funds, hedge funds and traders will not buy it.. bottom line. Mutual Funds and Hedge Funds can only raise money or make more money if they beat the S&P 500 and post positive returns. So these professionals, mutual funds and hedge funds are only interested in the short term, they are only interested in making the best possible return for a quarter or three month period. So they will not touch stocks that have poor momentum, because these stocks have proven to lag the market over the short term (which is usually about 3 months).
Apple is a broken stock right now, not only is it down over 12.5% for this quarter, but its down 34% over the last six months also its gets even worse when you look at its performance versus the plain vanilla S&P 500 Index.
The S&P 500 is up 10.2% for the quarter, which means Apple is under performing the S&P 500 by more than 22%, The S&P 500 is up 8.3% over the last 6 months while Apple is down more than 34% over the last six months, so Apple is under performing the S&P 500 by more than 41%…
Because of this poor relative and absolute performance, Apple will go nowhere until we have a market correction of more than 10% or more. The reason for this is market leadership changes when their is a market correction, so when Apple goes to $350 during the next correction, thats when you will see funds loading up on this stock and that’s when you should buy.. until then stay away from Apple please.
Also I have no short position or any position in Apple, I run a service called the Billionaires Portfolio, where I am only long stocks. I am long stocks that have positive momentum plus value and are also owned by the world’s best billionaires investors and hedge funds. This combination has proven historically to produce huge market beating returns for the reasons I just told you (institutional investors such as hedge funds and mutual funds are short term performance chasers), so they like stocks that are moving higher with better relative strength and momentum than the S&P 500 index.
Will Meade
Editor of the Billionaires Portfolio
www.billionairesportfolio.com
