I go long Gold and intend to hold this position for just 1-2 weeks, since it is obvious that we are in a US-Dollar Uptrend and in a Gold downtrend. The Investors still wane themselves in safety in Government Bonds and Stocks.
To me it seems we are in a BOND BUBBLE! So it would make sense for stocks to stop their advance for a few months and for Investors worldwide to rush into Government Bonds, especially in Europe. Stupid idea if you ask me, but hey it´s a bubble! Today i cover my short position at 1205$
I entered it at 1240$ so the difference is 2,8% Today i thought about how is should measure my gains. I studied how much leverage hedgefunds have and came to the conclusion that aldough some have a leverage of 4, most have leverage of 2 or lower. So even dough put-warrants on Gold have a leverage of 2-4 i will still calculate with a leverage of 2. I also realized that since it costs fees to trade i should change my starting capital from 1´000 to 100´000 otherwise the fees for trading would theoretically eat my gains. So the new Start Capital is now 100´000 and leverage stays at 2. So 2,8% gains for this trade, times two applied to the 100´000$ capital = 105´600$ New Balance: 105´600$ Annualized gains so far 5,6% Since Europe and its currencies are on the verge of collapse, many governments will go bankrubt, like in the 1930s. This Chaos provides an excellent opportunity for currency trading!
Therefore i thought about launching a second benchmark which will be established solely by currency trading. No stocks no bonds no commodities, just currencies. This benchmark will show how well i maneuver the currency flows among countries. The currency markets are one of the biggest and deepest markets and there is always something going on. So many trades out there: - going short rubles this march -going short euros now - going short the pound soon - going long the Dollar I like my new Currency Benchmark already :) I found another Top50 Hedgefunds List today.
http://www.faz.net/aktuell/finanzen/fonds-mehr/die-besten-hedge-fonds-jedes-jahr-fast-50-prozent-rendite-1490572/infografik-die-50-besten-1503295.html It shows that the top20 made an average of 30% gains over 3 years, every year. This list was published in 2011, so i got curious, as that was the peak of the resource boom with Gold, Silver, Grains, Oil and many others peaking. The "winner" hedgefund made a mind boggling 47% average gain over 3 years every year, which would triple your money in 3 years. Impressive! So i went and looked at the funds performance since then :) This is what i found from 2014: http://www.morningstar.co.uk/uk/news/AN_1394787301573000100/rab-special-situations-acutely-aware-of-poor-performance.aspx "The master fund's strategy remains what it was at the end of 2012. It invests in what it deems to be "assets of global significance" in the natural resources sector." "Chairman Quentin Spicer Friday said he is "acutely aware" that the company's net asset value and share price haven't performed well in recent years, after the company reported another loss in 2013." So they made big gains for 3 years, then they lost a lot of money in 2012,2013,2014 because the boom they were riding ended and they failed to change strategy even after a full year of losses. Now their 5 year performance is at minus -70%!!! Another famous example is John Paulson, who made big gains betting against Real Estate in 2007 (and thereby his ex-employer bair stearns) and then in the next years lost 50% because his bets went wrong. http://www.handelsblatt.com/finanzen/anlagestrategie/fonds/nachrichten/milliardaer-john-paulson-hedgefonds-des-starmanagers-hat-sich-halbiert/11260694.html Or the Bond-legend Bill Gross who left PIMCO the biggest Bond fund after his Emerging Markets fund lost 50% because it was invested in Russia when Russias currency and economy declined in 2014. How could he not have seen this coming after all the talks of sanctions? In this article from 2013 he promotes Brazil, Canada, Mexico as good places to invest: http://www.handelsblatt.com/finanzen/maerkte/anleihen/bondkoenig-bill-gross-warnt-vor-supernova-kreditexplosion/7719712.html Well since then Brazil went down hard, Mexico tanked 2013 pretty much within weeks of his recommendation, Canada and Australia went up, but in depreciating currencies. Or Jim Rogers who went on record that he is now bullish for the Russian economy for the first time in his life in 2012 and then again in 2014: "Jim Rogers is shorting U.S. stocks, particularly technology." "I'd Rather Invest in Russia Than the US: Jim Rogers" http://www.cnbc.com/id/49420446 That was pretty much when the NASDAQ took off again and US-Stocks went up, the Shanghai Composite did actually go up 20% later that year, but fell again back to where it was the next year. He is also famous for betting on Agriculture. It too had a nice run earning him a lot of money but then declined for many years while he was still advising on buying his ETF which is in a downtrend since 2007. What do these stories of famous investors have in common? They all made a lot of money during a bull market and when it ended failed to change their strategy. They all made big gains and then lost substantial amounts the next few years. I attempt to be Long US-Dollar and Short Gold most of this year. What i learned today from the mistakes of some of the most famous investors is that i will pay attention to when Gold switches from a downtrend to an uptrend! I will make it my goal to see when a Trend has changed and change my strategy. This is the way to long term profits. I invite you to follow me on this journey :) |
AuthorPascal |