My Big Picture in 5 minutes

Wow, I nearly choke on my coffee. Sorry to spoil your mood if you are one of the big fans of Bitcoin. This article by Rakesh Sharma for Investopedia crossed my desk and may be of interest to some clients. Here is a part of the article: O human folly, thy name is Bitcoin! At least that might be the takeaway from hedge fund Elliott Management's latest letter to clients.  In a creative January missive that is equal parts critical about the hyperbole associated with cryptocurrencies and admiring of the manner in which they have captivated public imagination, Elliott Management described cryptocurrencies as “one of the most brilliant scams in history.” “FOMO (Fear of Missing Out) has solidly trumped WTHIT (What the Hell Is This??),” Elliot wrote to clients, as an explanation for the current crypto mania. According to the hedge fund, cryptocurrencies are the marketing power of inventors, financiers, and “others who love the idea of buying a black box (which is obviously emp

This article in Business Wire crossed my desk and may be of interest to some clients. Interestingly, I have been looking to incorporate ESG into our investment strategy with new partners. Here is a part of the article: Volatility finally roared back to abnormally tame markets, but most institutional investors were already bracing for impact; their efforts to diversify and build durable portfolios may now pay off, according to new survey findings released by Natixis Investment Managers. Seventy-eight percent of institutional investors expected stock market volatility to spike in 2018, and they are making opportunistic allocations to active management and alternative investments in order to help meet average long-term return assumptions of 7.2% this year. Natixis’ Center for Investor Insight surveyed 500 institutional investors around the world to gain insight about how they are balancing long-term objectives with short-term opportunities and pressures. 7 in 10 investors agre

This article by Mary Childs for Barron’s caught my attention and may be of interest to some clients. Here is a part of the article: Sentiment toward hedge funds has officially turned around. Data provider Preqin tracks the proportion of investors planning to increase or decrease their exposure to hedge funds. Since about December 2014, that metric has shown trouble: More clients were planning to flee the sector than join it. Now, that has shifted. New data show that 27% of investors plan to boost their allocation in 2018, the biggest proportion since December 2013. 46% plan to maintain what they have got. It turns out that 2016 was a particularly rough year for hedge funds, as their poor performance failed to convince investors they were worth the high fees they charge. Clients pulled a net $110 billion from the sector, Preqin data show. Here is the full ARTICLE .

Over the past couple of months I have presented at several private events for investors and urged them to think outside the mainstream. With each session triggering a flood of requests for additional meetings. Every traditional investor faces the same dilemma. Shoot for huge returns and you put way too much capital at risk. Choose safety and your cash is spread so thin you barely break even. Do you know the #1 thing on everyone’s mind in today’s challenging economic and market conditions especially with stock market volatility making a comeback recently? It is guaranteed income and steady capital growth during market upturns and downturns. The perfect investment model does exist. I am sending you this VIP invitation to join me for a private presentation on how to grab guaranteed income and steady capital growth at the same time. No obligation and lengthy sales pitch. I will also be giving you my latest views on global asset classes like stocks, bonds, foreign currencies, com

It is good to be back to work after a long Chinese New Year break. Over the weekend, I had a very interesting conservation with an old friend who is a brilliant fifty-something fund manager. He spoke to me on a number of things and was quite provocative. Sorry, we did not touch on Bitcoin. I picked a few interesting questions for this limited space out of our long conversation of about 2 hours. YH: We finally got a much needed “correction” of overbought market conditions.  Similar to a steadily boiling tea kettle, an overheating stock market must let off occasional steam. What do you think? Bob: We just always seem to forget that corrections happen. Stocks staged a recovery last week. The recovery has stalled near retracement objectives, which could be a potential turning point in the market. I feel that making a short-term bottom may be more of a struggle because of the ferocity and speed of the correction. It may take a few weeks or longer to work itself out. YH: On CN

Friday marks the start of the Lunar New Year, also known as Chinese New Year or Spring Festival. The holiday is also celebrated by millions of people around the world, including in Vietnam, South Korea and by people of Chinese decent all over the world including in the US. Chinese New Year traditions vary across Chinese communities, but most celebrations involve fireworks, family reunions and feasts, and paying respects to one’s ancestors. The New Year is also a chance to prepare for good fortune and luck in the coming year. Each year on the Chinese calendar is assigned an animal of the zodiac, which is repeated every 12 years. Last year was the Year of the Rooster and 2018 is the Year of the Dog. The years 1934, 1946, 1958, 1970, 1982, 1994, 2006 were also assigned Year of the Dog. Those born in these years are said to be loyal, honest, selfless, cautious, and prudent. But they are also meant to have poor communication skills, and can leave an impression of stubbornness.

Without feeling guilty, I have to admit that my personal investment style is driven more by Soros’ approach. Yes, I have a collection of all books written by him. Legendary macro investor George Soros founded and ran the legendary Quantum Fund which compounded at 32%+ between 1969 and 2000 (over 30 years). A $1000 investment in the Quantum Fund at inception would have been worth over $4 million by 2000.  This makes Soros arguably one of the most successful hedge fund managers of all time. He also worked with and mentored other trading greats such as Stanley Druckenmiller and Jim Rogers. Soros retired in 2011 from managing outside money so he could focus on trading his own vast fortune, estimated to be over $25 billion. When George Soros (the man who broke the Bank of England in 1992 and watch it HERE ) acts in the investment arena, he remains aware that he can be wrong, and is critical of his own thought processes. This gives him unparalleled mental flexibility and agility. If

I managed to catch up with my good friend Sharon Soo and her daughter Rachel briefly. Rachel is just like any other young adults. She is witty, goes on road trips, spends time online, catches up on the latest movies and reading her favorite novels. However, what sets her apart from the rest is the rare disease she lives called Morquio Syndrome which is also known as MPS IVA. In short, she is born with one missing enzyme. This condition affected her growth progressively, disabling her physically but not intellectually. Rachel is unable to walk or stand for long but she is determined to keep herself mobile as opposed to relying on a wheelchair. As long as she is mobile, she is exercising her muscles. She is unable to climb stairs or lift heavy items (not more than 2kg). Her fingers do not have the strength to hold a scissor to cut paper or press on a nail clipper. Rachel is bubbly and hopeful. She can hold discussion with people from all walks of life. Her laughter is contagio

Sorry, I had never heard of the LJM Preservation & Growth Fund before this. What is the big deal about this fund? Well, it fell 80% last week. The fund says it tries to profit from the difference between realized and implied volatility. This is one example of an options fund blowing up but it is unlikely to be the only one that experienced similar problems. My partner has found another one which has lost more than 90%. Investors were wiped out.   Wall Street has gone nowhere but up since 2010. Volatility has scraped along the bottom that entire time. With volatility so low for so long these kinds of funds would have had large positions, but when volatility finally broke out on Monday, they incurred huge losses which forced them to cover quickly, selling potentially hundreds of billions of dollars in equities.   Barron’s has an interesting story on this blowing up. Here is a part of the article: For investors in the LJM Preservation and Growth fund, Monday, Feb

Over the past couple of months I have presented at several private events for investors and urged them to think outside the mainstream. With each session triggering a flood of requests for additional meetings. Every traditional investor faces the same dilemma. Shoot for huge returns and you put way too much capital at risk. Choose safety and your cash is spread so thin you barely break even. Do you know the #1 thing on everyone’s mind in today’s challenging economic and market conditions especially with stock market volatility making a comeback recently? It is guaranteed income and steady capital growth during market upturns and downturns. The perfect investment model does exist. I am sending you this VIP invitation to join me for a private presentation on how to grab guaranteed income and steady capital growth at the same time. No obligation and lengthy sales pitch. I will also be giving you my latest views on global asset classes like stocks, bonds, foreign currencies,

For centuries, investors have been falling for crazy or “just too good to be true” investing schemes, systems and just bad investing ideas. With the current up-cycle in the market, these risky schemes and frauds just keep coming. In the US, BitConnect was shut down as an alleged Ponzi scheme. The company represented that investors could earn up to 40% per month, or 400% per year was promised to others. BitConnect solicited Bitcoin in exchange for BitConnect Coin (BCC) and claimed that BCC would be lent to others and accrue daily interest. Dillon Michael Dean of Colorado and his UK-registered company The Entrepreneurs Headquarters Ltd. were sued by the CFTC accusing them of operating a Ponzi scheme involving Bitcoin. The scheme allegedly solicited $1.1 million in Bitcoin from more than 600 investors. In Bulgaria, OneCoin offices were raided and documents and servers were seized from “One Network Services,” a Bulgarian company serving as a representative and distributor

This is another interesting video that caught my attention while I was busy looking at my charts. Tom Lee answers whether the Bitcoin crash signaled the market sell-off. He is considered as Wall Street’s most outspoken stock bull.  Earlier in the week, I was discussing the same topic with a number of clients in a meeting. Did the Bitcoin crash foreshadow the stock market pullback?  What do you think?  Here is the VIDEO .

This article by Shuli Ren for Bloomberg crossed my desk and may be of interest to some clients. Here is a part of the article: China ’s banks are in trouble again. With global markets in turmoil, the sell-off on the mainland has not generated as many headlines. That should not be the case. In just four days, banks on the CSI 300 Index tumbled on average almost 11 percent, erasing the benchmark’s entire gain this year. In part, it is because lenders were rallying too fast, as I warned last month. But traders are also blaming local media reports that say the China Banking Regulatory Commission will make cutting consumer debt a top policy consideration this year. That news alone can sink bank stocks. Since Guo Shuqing took over as chairman of the CBRC 12 months ago, he has made reining in the sale of wealth-management products, a huge money-spinner for banks a priority. Financial institutions fell in line quickly, as evidenced by the decline in investment receivables. In just

You may love him or hate him but you cannot ignore him. Harry Dent, the colorful and controversial prognosticator is back with his grim outlook for the stock market. Everyone is entitled to his or her own opinion and Dent has long been seen as a prophet of gloom and doom. Sometimes I agree with Harry. Other times, I think he is out of his mind. There is no need to shun or shame him just because you are a bull. His latest forecast is a good reminder of why disagreement makes a market. If you are looking for a relaxed and pleasant evening with your significant other, this is definitely not the place to go. So, can we profit when the market goes up, AND when it goes down?   Here is the VIDEO

You just sold your stocks or investment funds in panic and then ran to the bathroom and locked the door for a couple of days. Wonderful! Nobody in the world has it all. The short-term correction was always going to happen. It was just a case of when and from what level. I am not one of those gurus out there who always feed investors with doom and gloom in order to sell my services. Equally, I hope others will not blindly feed investors with greed in order to sell their products or seminars well. In the week through Wednesday, a record $30.6 billion flowed out of equities with redemptions in US large-cap, technology and health-care stock funds leading the exodus, according to Bank of America Merrill Lynch. The BofAML Bull & Bear indicator, a gauge of market sentiment, declined to 8.5 from 8.6 but remains in “excess bullish” territory, a sell signal for risky assets such as stocks. Time to call a doctor, anyone? Uncertainty is never welcome in our show business. It is i

Well, Bitcoin has been on a wild ride since 2017, first a 2,500% gain, then a 70% decline, but it still stands tall, higher by over 500% over the past year alone. Regardless of the volatility and the bad press coverage lately, Bitcoin is on its way to becoming a household word. How much do you know about it? Ever wonder how Bitcoin (and other cryptocurrencies) actually work? In this cool VIDEO , Bitcoin is explained from the viewpoint of inventing your own cryptocurrency.

I have a very varied group of people as clients. Regardless of who you are, the latest violent ups and downs of the stock market have tested your mettle. That generally means you have stopped buying while leveraged folks are unwinding positions. This is contributing to the uptick in volatility. You still do not understand the nature of the beast. A dose of reality is no bad thing. Memories of the financial crisis have faded. During 2017, stock market volatility was low, investors started to take bigger and bigger bets on borrowed money and speculators discovered a new financial instrument in the form of Bitcoin. All these were signs of a reckless over-confidence. It appears to me that both the volume of selling and initial sentiment indications are pointing toward a bounce in the days ahead. I am not the only one telling you this. Elsewhere, Canaccord Genuity’s Tony Dwyer pointed to a record surge in the CBOE Volatility Index above 20 as a sign that investor anxiety

For many of my clients, owning an automobile is a necessity in this part of the world but depreciation and other rising costs almost ensure that it is also a poor investment. That is not always the case for wealthy individuals who have been jumping on the classic-car bandwagon, buying antiques and otherwise prized automobiles as an alternative to traditional investing over the years. Wow! Sleek fender lines, chrome grills, plush vintage interiors... Classic cars are items that inspire the imagination like nothing else. The ultimate symbol of luxury, they continue to fascinate collectors with their aesthetic beauty, engineering brilliance and historic importance. In our world powered by technology, the Internet has opened up the auction process, enabling collectors more easily to bid for and acquire objects anywhere in the world. In recent years, the global financial crisis and on-going stock market volatility has encouraged an increasing number of investors to place their mo

This is what I warned on January 22. “Stock markets are accelerating so we know that a reversion towards the mean is inevitable at some stage. If the next correction is led by Wall Street it will have a knock-on effect on other markets. It has the capacity to lead to a choppy medium-term correction that could last months with higher volatility. Things will have a shake out.” Never mind. As always, the media needs to fill pages and rack up views, and so there are gazillions of explanations for why the stock market does this or that. In this article by Gary Jackson, FE Trustnet asked some experts whether the latest downturn has much further to run. Of course, they are certainly smarter than me. Here is a part of the article: The sell-off that has hit stock markets in recent days appears to be little more than a correction albeit a painful one that should be welcomed, according to several investment commentators. Jim Wood-Smith, head of research at Hawksmoor Investment Managem

This by Olga Kharif for Bloomberg crossed my desk and may be of interest to some clients. Here is a part of the article: Bitcoin tumbled for a fifth day, dropping below $7,000 for the first time since November and leading other digital tokens lower, as a backlash by banks and government regulators against the speculative frenzy that drove cryptocurrencies to dizzying heights last year picks up steam. The biggest digital currency sank as much as 22 percent to $6,579, before trading at $7,054 as of 4:08 p.m. in New York, according to composite Bloomberg pricing. It has erased about 65 percent of its value from a record high $19,511 in December. Rival coins also retreated on Monday, with Ripple losing as much as 21 percent and Ethereum and Litecoin also weaker... Here is the ARTICLE .

US stocks went into free fall on Monday, and the Dow plunged almost 1,600 points, easily the biggest point decline in history during a trading day. Buyers charged back in and limited the damage, but at the closing bell the Dow was still down 1,175 points, by far its worst closing point decline on record. According to media reports, the selloff has been sparked by inflation fears and worries that interest rates could rise faster than expected. The VIX more than doubled to 35.7 at one point. It was up more than 100% and is the largest one-day spike in history. The drop amounted to 4.6%, the biggest decline since August 2011 during the European debt crisis. But it was nowhere close to the destruction on Black Monday in 1987 or the financial crisis of 2008. Still, for investors lulled to sleep by the steady upward climb since Election Day, it was alarming. The rout in US markets continued to ripple around the world. According to various valuation metrics, many stocks m

This article by Alistair Barr for Bloomberg crossed my desk and may be of interest to some clients. Here is a part of the article: “The super cycle is dead,” Steven Milunovich, an analyst at UBS, wrote in a note to investors on Friday. Apple shares slipped 2.9 percent to $163 at 12:18 p.m. in New York, leaving the stock down 3.7 percent so far, this year. To adjust, Apple is now focusing on its huge installed base of devices and how to make more money from that rather than selling a lot more phones each year, Milunovich added...  You can read the  ARTICLE here.