Nicholas Vardy
GLOBAL STOCK INVESTOR HOTLINE UPDATE 80
The past 10 days on Wall Street have been one for the for history books. Four of Wall Street’s top investment banks, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley, all either went bankrupt, were absorbed by larger entities, or turned themselves into highly regulated bank holding companies. The U.S. government announced a plan to buy $700 billion of assets from banks, much in the same way the federally established Resolution Trust Corporation (RTC) did with bad savings & loan assets in the early 1980s. Many market pundits, including the eminent Wall Street historian Peter Bernstein, observed that they could not recall seeing a week characterized by comparable drama.
Shelter From the Storm… Made In Asia
Last week was one for the history books. Many market pundits, including the eminent Wall Street historian Peter Bernstein, observed that they could not recall seeing a week characterized by comparable drama. With volatility in the markets now more than double what it was just a few weeks ago, this is a time to take a step back from the markets and seek out some rare, safe havens. With that in mind, this week’s Global Bull Market Alert pick revisits the CurrencyShares Japanese Yen Trust (FXY).
GLOBAL STOCK INVESTOR HOTLINE UPDATE 79
Stanley Druckenmiller, a former chief investment officer of Soros Fund Management, once said that his boss George Soros, the granddaddy of all Alpha Traders, taught him that the key to successfully managing a hedge fund was the "preservation of capital and hitting home runs." With risk aversion increasing and the de-leveraging of the global economy picking up, even former safe havens such as gold and commodities have entered a bear market territory. And with the takeover of Merrill Lynch by Bank of America, Lehman Brothers’ bankruptcy and the government bailout of AIG this week, this is one of those times when you need to step back from home plate, and focus instead on preserving your capital.
Currency Bets Hit Record Highs Last Week — And Keeping Your Powder Dry on “The Mother of All Mondays.”
Stan Druckenmiller, a former chief investment officer of Soros Fund Management, once said that his boss George Soros — the granddaddy of hedge fund managers — taught him that the key to successfully managing a hedge fund was the "preservation of capital and hitting home runs." With risk aversion increasing and the de-leveraging of the global economy picking up, even former safe havens such as gold and commodities have entered a bear market territory. And with the takeover of Merrill Lynch by Bank of America and the Lehman Brothers’ bankruptcy hitting the headlines today in what the Wall Street Journal calls "the mother of all Mondays," this is one of those times when you need to step back from home plate, and focus instead on preserving your capital.
GLOBAL STOCK INVESTOR HOTLINE UPDATE 78
Even as global markets swing wildly between pessimism and euphoria, the U.S. dollar continues its relentless pace upward, hitting an 11-month high against the euro. As a result, your holding in the Market Vectors Double Short Euro ETN (DRR) hit yet another record high this week and now is up a whopping 10.47% during the last four weeks. With analysts now targeting a $1.30 level for the euro, add to your positions here.
Betting Against the British
If you think the headlines in the United States are bad, you should see the London press. Here, even the United Kingdom’s Chancellor of the Exchequer Alistair Darling (the equivalent of the U.S. Secretary of the Treasury, Hank Paulson) admitted to the Guardian newspaper that economic times in the United Kingdom were "arguably the worst they’ve been in 60 years." While he quickly tried to back track on his analysis, his comments did push the British Pound Sterling to record new lows against the euro and 26-month lows against the U.S. dollar. This week’s Global Bull Market Alert pick revisits a trade that I recommended back in January, shorting the British Currency ("British Pound Sterling" or "GBP") by selling the CurrencyShares British Pound Sterling Trust (FXB).