Archive for October, 2016
I’ve been telling you for weeks that hedge funds have been bleeding cash – not just during 2016, but for the past 10 years or more.
And in our in-depth analysis of hedge fund performance – what historically made them extraordinary, and moreover, what they’re doing lately that’s undermining performance – yields an easy-to-follow roadmap leading to both investing and trading success.
That’s because these days, with markets being manipulated, being gamed, and being chased by too many hedge funds (and too many mutual funds) employing too many of the same strategies and getting into too many of the same stocks and getting out too late, means generating big returns requires a hybrid investing and trading strategy.
Employing both short-term trading and long-term investing strategies that incorporate what’s worked and what hasn’t worked, is the best way to make tons of money today.
But the news is better for some investors than others.
The truth is, today it’s easier for individual investors to make money running their own personal hedge funds than it is for the big boys to swing for the fences.
That’s because nimble investors who know what big hedge funds and sloth-like mutual funds are doing right (and wrong) can actually mimic, “fade,” and front-run funds into and out of positions.
On a recent episode on Varney & Co., host Stuart Varney put the question to Shah: Is Apple Inc. (NASDAQ:AAPL) still an innovative company, or are they simply milking the legacy of Steve Jobs?
Shah says no – there’s no reason to buy AAPL right now if you don’t own it… and if you do own it, you might want to consider taking profits.
Instead, for the stocks that Shah thinks are going to be the big innovators going forward… just click here.
For almost ten years now, hedge funds have been underperforming their benchmarks.
Even the biggest and historically best performing funds are underwhelming investors, who aren’t sticking around just because managers are lowering their exorbitant fees.
They’re fleeing in droves for passive investing strategies like index funds.
But don’t count the Masters of the Universe out just yet.
Not only are hedge fund managers figuring out what’s causing their underperformance, the headlong rush by investors into index funds and exchange-traded funds could backfire, making hedge fund escapees wish they’d stuck to their guns.
Here’s why passive strategies have become so popular, how much money has been moved into them, and why that trend could turn out to be devastating…
Most importantly, here’s how everyday investors can benefit from what amounts to a monumental industry upheaval…
As I told you Wednesday, investors are fleeing hedge funds in droves due to gross underperformance in the face of over-the-top fees.
In fact, the industry as a whole hasn’t seen anything like this since 2009 – maybe ever.
Ironically, the pain hedge funds are facing, based on the pain their trades have inflicted, holds the answer not only to their survival, but to an almost sure miraculous revival.
Understanding what’s gone wrong at hedge funds, how crowding into the same trades, staying too long in trades when cash registers should have been ringing, and how underperformance led to fee wars and investors fleeing for passive index funds, produces the roadmap funds have to follow to make a comeback.
And it shows average Joe investors how they can play the same profitable future.
Let me show you what I mean…
Hedge funds look like they’re down for the count, having been beaten-up by self-inflicted underperformance in the face of over-the-top fees, high profile slip-ups, and investors stepping over them on their way to low-cost, passive investing strategies.
But don’t count Hedgies out just yet…
One reason hedge funds have been underperforming benchmarks has become abundantly clear and can be overcome (as you’ll see). They’re also knocking down fees to hold onto investors and attract new limited partners.
Not only that, the multi-trillion dollar trend towards passive investing could blow up spectacularly.
Today, I’m going tell you what’s going on with hedge fund underperformance, those exorbitant fees, and why the trend tooward indexing could be hell for the market and a godsend for hedge funds.
But first, let’s all get on the same page…
On a recent episode of Varney & Co., Shah stopped by to talk about what the markets are indicating about the upcoming presidential election. Do the markets think a Hillary Clinton victory is in the offing? Would they prefer a government under the direction of President Trump?
Shah described it in simple terms: a battle between capitalism and socialism.
Here’s what else he had to say…
The big three American banks – JPMorgan Chase, Citigroup, and Wells Fargo – laid out their earnings today.
We’ve been following big bank earnings all year. Back in Q1, I told you that all was not what it seemed with their earnings numbers, and why they were once again a danger to the system. And in Q2, I told that you, while analysts were saying it was time to invest in the “too big to fail” banks, they were still a risky investment.
So has anything changed? Have the big banks gotten any better?
Here’s the skinny on the big three – whether you should buy, sell, or hold – and what to do at specific price levels…
Welcome to insanity, which – by a definition commonly attributed to Albert Einstein – is doing the same thing over and over and expecting a different result.
Our insanity is actually a dangerously circuitous negative feedback loop.
It’s all about “Extraordinary Popular Delusions and the Madness of Crowds,” which happens to be the title of a brilliant book published in 1841 by Scottish journalist Charles Mackay. If you haven’t read this book, you should because it provides factual, granular evidence of what happened in the past when crowds – mostly crowds of investors – went mad following popular delusions of their day.
We’re there again. Only this time the popular delusions are exponentially more dangerous and the crowds – most of the global populous – aren’t just going to go mad, they’re going to go broke.
Here’s who’s deluding us, over what, why, how they’re doing it, and how it’s going to end… and how you can save yourself from going broke.
To continue reading click here.
It seems that every few months, rumors surface that the poorly monetized (for now) social media network Twitter is a ripe takeover target.
But because of the company’s failure to capture and monetize its global audience the way its main competitor – Facebook – has, it’s hard to calculate Twitter’s value. Not only is it hard to nail down a decent price per share for a prospective buyer, but it’s hard to determine just what Twitter would bring to the table.
Here’s what Shah had to say…
Last week, I told you about how the banksters at Goldman Sachs lost $1.2 billion in Libyan sovereign wealth, and how the Libyan Investment Authority (LIA) subsequently sued the Vampire Squid, citing “undue influence.”
I asked for your comments – whether you sided with the Goldman or the LIA – and the story elicited more than a few great comments. (Then again, most of my reporting on banksters – and Goldman Sachs, in particular – tends to stir the pot.)
Here are some of your best comments, and my replies…