https://risksandreturns.com/category/trades/ In search of asymmetric trading opportunities… en-US https://risksandreturns.com/2017/04/24/shorting-palladium-again/ https://risksandreturns.com/2017/04/24/shorting-palladium-again/ Mon, 24 Apr 2017 14:08:48 +0000 It’s not often that one gets an opportunity to execute the exact same trade based on the same investment thesis after closing out the initial trade profitably. But that is exactly what I am facing and decided to take advantage of by shorting Palladium last Friday at $802. https://risksandreturns.com/2017/02/17/selling-bank-of-america-nyse-bac/ https://risksandreturns.com/2017/02/17/selling-bank-of-america-nyse-bac/ Fri, 17 Feb 2017 15:22:11 +0000 I have sold out of my Bank of America (NYSE; $BAC) position yesterday at the close for a 94% gain. It was one year ago that I purchased BAC after it sold off hard due to recessionary fears. I believed there would be no recession and a major, profitable, and under-leveraged bank selling for 80% of tangible book with an earnings yield of 11% was a slam dunk. https://risksandreturns.com/2016/10/30/selling-alibaba-group-holding-via-yahoo-nyseyhoo/ https://risksandreturns.com/2016/10/30/selling-alibaba-group-holding-via-yahoo-nyseyhoo/ Sun, 30 Oct 2016 23:22:59 +0000 On Friday, I closed my position in Yahoo (NYSE:YHOO) at $41.85. I purchased the stock at the beginning of the year during the stock market selloff as a cheaper way of buying Alibaba (NYSE:BABA). At the time I bought Yahoo, China’s economic growth was slowing and investors ignored Alibaba as a play on Chinese e-commerce that could withstand, and perhaps benefit from a China slowdown as the economy shifts its reliance away from investment towards consumption. https://risksandreturns.com/2016/02/04/buying-bank-of-america-nyse-bac/ https://risksandreturns.com/2016/02/04/buying-bank-of-america-nyse-bac/ Thu, 04 Feb 2016 05:46:19 +0000 The relentless selloff in US bank stocks continued today as several of them hit new 52-week lows intraday before staging a strong rally into the close. I believe the selling is unjustified and decided to buy Bank of America ($BAC) at $12.66. The current market reminds me of the 2011 market when fears of a Eurozone breakup caused European bank stocks to plummet. US bank stocks also got hit hard due to fears of European debt holdings, a possible recession, and falling interest rates. https://risksandreturns.com/2016/01/14/buying-goldman-sachs-nyse-gs/ https://risksandreturns.com/2016/01/14/buying-goldman-sachs-nyse-gs/ Thu, 14 Jan 2016 05:27:57 +0000 Financial stocks have been hit hard in recent days due to concerns about an economic recession and declining interest rates. Financials are leveraged to the economy so it is no surprise that they are underperforming the market. Since I do not believe that the global slowdown will infect the US, I am taking advantage of the recent decline in equity prices to buy high-quality names. One attractive opportunity that I am taking advantage of is buying Goldman Sachs ($NYSE). https://risksandreturns.com/2016/01/05/buying-alibaba-group-holding-nyse-baba/ https://risksandreturns.com/2016/01/05/buying-alibaba-group-holding-nyse-baba/ Tue, 05 Jan 2016 07:47:48 +0000 During the recent market volatility, I decided to build a position in Alibaba Group Holding (NYSE: BABA). This might be surprising to those who are familiar with my long-standing bearishness on the Chinese economy. Aside from buying one Chinese stock 5 years ago (which turned out to be a fraud), I have always traded China from the short side. https://risksandreturns.com/2015/03/30/shorting-palladium/ https://risksandreturns.com/2015/03/30/shorting-palladium/ Mon, 30 Mar 2015 14:57:37 +0000 A lot of my financial wealth was created riding the great commodity super cycle during the previous decade. In 2004, when I first had enough money to invest, it was apparent to me that the industrialization of China, the underinvestment in mining, and easy US monetary policy would create an ideal setting for commodities to rally. To speculate on this, I bought a basket of Junior gold exploration companies and watched their value multiply several-fold. https://risksandreturns.com/2015/03/03/closing-fiat-italy-fca/ https://risksandreturns.com/2015/03/03/closing-fiat-italy-fca/ Tue, 03 Mar 2015 03:16:33 +0000 Today I sold out of my position in Fiat Chrysler at a price of €14.10. I established the position on July 28th of last year and enjoyed an 80% gain in 7 months. The company is benefiting from an improving European economy, a weaker euro, and the upcoming spinoff of Ferrari. https://risksandreturns.com/2015/02/13/buying-aig-nyseaig/ https://risksandreturns.com/2015/02/13/buying-aig-nyseaig/ Fri, 13 Feb 2015 21:06:19 +0000 Yesterday I purchased shares of AIG (NYSE:) after its earnings release and tweeted about it. Last year, Barron’s wrote a bullish article on the company and did a good job of explaining why it was too cheap. At my purchase price of $52.50, AIG trades at only 75% of book value (excluding accumulated other comprehensive income). That is a valuation given to companies losing money and with troubled balance sheets. However, AIG is has been profitable the last 4 years and is trading at 10 times this year’s earnings. https://risksandreturns.com/2014/11/03/buying-nikkei-futures-priced-in-usd/ https://risksandreturns.com/2014/11/03/buying-nikkei-futures-priced-in-usd/ Mon, 03 Nov 2014 18:05:32 +0000 I tweeted on Thursday that I thought that there was a greater than expected chance for the Bank of Japan to positively surprise markets and increase its QE program. The BOJ did increase its QE amounts and I tweeted that I bought Nikkei futures as the market exploded higher. https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ Mon, 20 Oct 2014 05:31:29 +0000 My bullish view on single family housing starts (as detailed in a recent post), coupled with the recent sell off in homebuilders caused me to buy the iShares US Home Construction ETF (NYSE:ITB). I tweeted about it late Wednesday night and will track it in my portfolio page using that day’s closing price of $22.17 as my initial price. https://risksandreturns.com/2014/08/11/closing-russia-nysersx/ https://risksandreturns.com/2014/08/11/closing-russia-nysersx/ Mon, 11 Aug 2014 04:22:42 +0000 Last Friday I closed my long position in the Russia ETF (RSX) at $24.80 which is equal to my initial buying price. As I mentioned in this post, if the RTS index were to have a weekly close below 1220 I would close the trade. As it turned out, the RTS finished the week on August 1st at 1212 for a second false breakdown this year making the triangle pattern unreliable. https://risksandreturns.com/2014/07/28/buying-fiat-italy-f/ https://risksandreturns.com/2014/07/28/buying-fiat-italy-f/ Mon, 28 Jul 2014 03:34:25 +0000 I recently purchased Fiat’s stock listed in Italy after coming across a persuasive presentation by Michael Guichon, a Columbia University MBA student, who presented his bull case for Fiat at the 2014 Ira Sohn Contest. A panel of judges including Bill Ackman, Joel Greenblatt, Seth Klarman, and Michael Price selected Guichon as the winner. Below, Guichon summarizes why he likes Fiat’s stock. I will be tracking Fiat’s performance here. https://risksandreturns.com/2014/05/20/buying-russia-nysersx/ https://risksandreturns.com/2014/05/20/buying-russia-nysersx/ Tue, 20 May 2014 14:44:59 +0000 I recently bought the Market Vectors Russia (NYSE:RSX) etf at $24.80. I am bullish on Russian equities based on its terrible past price performance, negative sentiment, dirt cheap valuation, and attractive chart pattern. https://risksandreturns.com/2009/11/05/closing-november-09-fed-funds-futures/ https://risksandreturns.com/2009/11/05/closing-november-09-fed-funds-futures/ Thu, 05 Nov 2009 12:05:45 +0000 Recently I have closed my long position in the November 2009 fed fund futures contract at over 99.80 for an exceptional gain. I believe the market is pricing in too much tightening for 2010 so I have purchased the January and February 2011 contracts at an average price of 98.55. https://risksandreturns.com/2009/03/22/update-buying-november-09-fed-funds-futures/ https://risksandreturns.com/2009/03/22/update-buying-november-09-fed-funds-futures/ Sun, 22 Mar 2009 20:53:41 +0000 Last November I started going long November ‘09 fed fund futures at 98.25 (i.e. the market priced in an effective Fed funds rate of 1.75%). I was hoping that the Fed would slash rates to 0.50% and keep it there through November so that I could net a profit of over $5,000 per contract. As it turned out the Fed reduced its rate to fluctuate within a range of 0% to 0.25%. Since the economy has continued to deteriorate and I can’t see how a sustained recovery can take hold this year, the funds rate is likely to remain under 0.25% during the remainder of 2009. https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ Mon, 03 Nov 2008 21:19:57 +0000 Last Friday I purchased fed funds futures contracts for November 2009 at 98.25. I went long fed funds futures earlier this year and closed the position in September with a huge gain. In retrospect, I could have made even more if I held on to the position, but I didn’t anticipate the Federal Reserve slashing the overnight rate by 100 basis points in October. https://risksandreturns.com/2008/10/17/closing-short-position-in-mbia-calls/ https://risksandreturns.com/2008/10/17/closing-short-position-in-mbia-calls/ Fri, 17 Oct 2008 11:25:57 +0000 Today I closed my short position in MBIA’s January ‘09 call options with a strike price of $10 for 85 cents compared to my selling price of $4. I also closed a short position in the January ‘09 calls with a strike price of $15 for 35 cents compared to my $3.30 selling price. As I previously outlined, the bond insurers are going to be hit by an avalanche of claims and insurers like MBIA have under reserved. After a spectacular rally in August that took MBIA’s share price from $4 to $19, the market has come to accept my view as the stock has collapsed to as low as $5 last week. https://risksandreturns.com/2008/10/15/covered-short-position-in-us-treasury-bonds/ https://risksandreturns.com/2008/10/15/covered-short-position-in-us-treasury-bonds/ Wed, 15 Oct 2008 11:23:31 +0000 Today I covered my short position in the December contract of 30 year US Treasury bonds futures at $113.89. I initially sold the contract last Thursday for $118.29. This was only a small short term trade to play some lessening of fear after the US and Europe announced they would recapitalize the banking system. Although today’s stock market plunge seems to indicate that the market remains as fearful as last Friday, Treasury bonds have taken the hit that I expected. This may be due to concern about the huge supply of bonds that the US government will have to issue to finance all these bailouts. https://risksandreturns.com/2008/10/13/im-now-neutral-on-equities/ https://risksandreturns.com/2008/10/13/im-now-neutral-on-equities/ Mon, 13 Oct 2008 11:21:26 +0000 The recent stock market rout has left equities no longer trading at the expensive valuations that I had been concerned about. They aren’t cheap either, so I don’t plan to do any buying at current levels. But I have closed virtually all of my short positions leaving my portfolio with lots of cash. My reasoning for believing that stocks have become more fairly priced is based on my outlook for earnings and the multiple the market will assign to those earnings. https://risksandreturns.com/2008/10/13/shorting-us-treasury-bonds/ https://risksandreturns.com/2008/10/13/shorting-us-treasury-bonds/ Mon, 13 Oct 2008 11:19:06 +0000 Last Thursday I shorted 30 year US Treasury bonds futures which trade on the Chicago Board of Trade. I sold the December contract for $118.28. This is only a short-term trade based on my belief that the plan for governments around the world to directly recapitalize banks, guarantee interbank lending, and provide a blanket guarantee on all deposits would be enough to prevent a total financial system meltdown and restore confidence in banks. https://risksandreturns.com/2008/10/10/covering-short-position-in-american-axle-manufacturing/ https://risksandreturns.com/2008/10/10/covering-short-position-in-american-axle-manufacturing/ Fri, 10 Oct 2008 11:01:40 +0000 Today I covered my short position in American Axle & Manufacturing (NYSE: AXL) at an average price of $3.12 for a profit of 59% from where I initiated the position just two weeks ago. The stock has collapsed along with the general stock market and I am hoping that there could be a decent short-term bounce that will allow me to short the stock again. I don’t think the company or any of the major auto manufacturers can survive much longer. https://risksandreturns.com/2008/10/10/covering-short-position-in-suntrust-banks-nyse-sti/ https://risksandreturns.com/2008/10/10/covering-short-position-in-suntrust-banks-nyse-sti/ Fri, 10 Oct 2008 11:01:38 +0000 I have covered my short position in SunTrust Banks (NYSE:STI) at an average price of $33.22 for a profit of 26% in four weeks. As I have explained, SunTrust is worth significantly less than my covering price because the bank has still not taken the necessary write downs which will force it to raise capital. However, the stock market is incredibly oversold and due for a sharp counter trend rally. If that rally takes SunTrust back up to the low- to mid-forties than I might short the stock again. https://risksandreturns.com/2008/09/30/shorting-american-axle-manufacturing/ https://risksandreturns.com/2008/09/30/shorting-american-axle-manufacturing/ Tue, 30 Sep 2008 10:18:11 +0000 I am of the opinion that the US economy has just slipped into the worst consumer spending slump in decades. This will lead to a sharp pullback in big ticket purchases. Automobile sales, which tend to be financed, are especially vulnerable given the current problems in the credit markets. Moreover, the average US household owns almost two vehicles meaning that the market is saturated. Most new demand will come from replacement and this need, too, is declining as cars released in recent years are lasting longer. Another consideration is the rise in energy prices which is leading to a shift in de https://risksandreturns.com/2008/09/17/doubling-down-short-position-in-suntrust-banks-nyse-sti/ https://risksandreturns.com/2008/09/17/doubling-down-short-position-in-suntrust-banks-nyse-sti/ Wed, 17 Sep 2008 12:30:29 +0000 I have shorted some more shares of SunTrust Banks. My average price is now $45.16. I believe that it’s only a matter of time before the stock retests its July low of $25. https://risksandreturns.com/2008/09/16/closing-my-short-position-in-washington-mutual/ https://risksandreturns.com/2008/09/16/closing-my-short-position-in-washington-mutual/ Tue, 16 Sep 2008 12:28:31 +0000 Today I covered my shorts in Washington Mutual (NYSE: WM) at $2.25. I shorted WaMu in April at $11.94. It is my view that the nation’s largest savings and loan institution is insolvent and deserves to fail. However, Merill Lynch, too, deserved to go bankrupt but was bought out by Bank of America at a ridiculously high premium. Could Washington Mutual similarly be taken over at a big premium? According to Britain’s Daily Mail newspaper, JPMorgan Chase is in advanced talks to buy Washington Mutual. So far no other source is confirming this story, but it can happen. https://risksandreturns.com/2008/09/14/closing-my-position-in-fed-funds-futures/ https://risksandreturns.com/2008/09/14/closing-my-position-in-fed-funds-futures/ Sun, 14 Sep 2008 21:23:47 +0000 I just closed my long position in the federal funds futures contract for February 2009 at 98.24. The contract is spiking higher tonight as it looks increasingly likely that a bankruptcy filing is forthcoming from Lehman Brothers. My average cost was 97.17 and in just 11 weeks I have realized a profit of around $4500 per contract compared with an initial margin requirement of $1350 per contract. https://risksandreturns.com/2008/09/09/shorting-suntrust-banks-nyse-sti/ https://risksandreturns.com/2008/09/09/shorting-suntrust-banks-nyse-sti/ Tue, 09 Sep 2008 12:22:49 +0000 Over the last few weeks I have been taking advantage of the rally in financial stocks to accumulate a short position in SunTrust Banks. My average price is $42.93, but I do plan to short more shares if the price continues to rise. As I have explained previously, US banks are facing a massive credit bust that will lead to hundreds of institutions becoming insolvent. To profit from the situation I am shorting some of the banks which I think have a high probability of failing. Washington Mutual is one. SunTrust is another. https://risksandreturns.com/2008/09/03/selling-mbia-calls/ https://risksandreturns.com/2008/09/03/selling-mbia-calls/ Wed, 03 Sep 2008 12:17:07 +0000 One year ago, I initiated a short position in MBIA (NYSE:MBI) based on a compelling presentation by hedge fund manager Bill Ackman. I shorted the stock at $61.29 and closed the position two months later at $46.47. My reasoning for ending the trade at the time was that MBIA had not disclosed in detail its CDO and RMBS exposures so in my mind there existed a possibility for MBIA to absorb the losses and survive. Unfortunately, shortly after closing out my position MBIA did provide more color on its insured structured finance portfolio and it wasn’t pretty. Before I could short the stock again, i https://risksandreturns.com/2008/06/24/buying-fed-funds-futures/ https://risksandreturns.com/2008/06/24/buying-fed-funds-futures/ Tue, 24 Jun 2008 22:00:31 +0000 Today I purchased the 30 day federal funds futures contract for February trading on the Chicago Board of Trade for 97.17 meaning that I do not believe that the Federal Reserve will increase the fed funds rate above 2.83% by February. The market has priced in a hike of at least 83 basis points within the next 8 months due to Bernanke’s and other committee members’ recent speeches expressing concern for the weakening dollar and rising inflation. The fear is that the Fed will follow up its hawkish talk with aggressive monetary tightening. https://risksandreturns.com/2008/06/22/doubling-down-on-altius-minerals-tsxals/ https://risksandreturns.com/2008/06/22/doubling-down-on-altius-minerals-tsxals/ Sun, 22 Jun 2008 11:44:54 +0000 I decided to double my investment in Altius Minerals (TSX: ALS, Pink Sheets: ATUSF) after the company’s stock price plummeted by more than 40%. I originally analysed the company here. The reason for the collapse was that Altius was notified by Newfoundland and Labrador Refining Corporation (NLRC) that it was seeking creditor protection after SNC-Lavalin, an engineering firm which provided services for NLRC, served NRLC with a notice of proceedings that it was seeking to have NLRC declared bankrupt. https://risksandreturns.com/2008/04/24/shorting-washington-mutual-nysewm/ https://risksandreturns.com/2008/04/24/shorting-washington-mutual-nysewm/ Thu, 24 Apr 2008 11:37:42 +0000 As mentioned in a previous post, I am short Washington Mutual (NYSE:WM) at an average price of $11.94. I think the country’s largest savings and loan institution owns a portfolio of very risky mortgages and consumer loans that could eventually render it insolvent. https://risksandreturns.com/2008/04/14/prepared-for-a-bear-market/ https://risksandreturns.com/2008/04/14/prepared-for-a-bear-market/ Mon, 14 Apr 2008 11:27:21 +0000 Until late January I was aggressively long gold and commodity stocks believing that the Fed would be able to confront any economic downturn by printing more money which would immediately cause lots of inflation and rising asset prices. https://risksandreturns.com/2008/01/16/buying-pico-holdings-nasdaq-pico/ https://risksandreturns.com/2008/01/16/buying-pico-holdings-nasdaq-pico/ Wed, 16 Jan 2008 21:02:28 +0000 In my previous post, I explained why the US Southwest is on the brink of facing a water crisis and why it is important that the large allocation of water for agriculture be shifted to residential and industrial use. There is one company which specializes in acquiring water rights from farmers and selling them to municipalities at a profit. That company is PICO Holdings (NASDAQ: PICO), which I own and view as an attractive value investment. https://risksandreturns.com/2008/01/11/investing-in-water-rights/ https://risksandreturns.com/2008/01/11/investing-in-water-rights/ Fri, 11 Jan 2008 13:39:50 +0000 I believe I have come across an attractive investment opportunity: owning water rights in the US Southwest. Rather than actually buying water rights, it is far easier to buy shares of a publicly traded company that is involved in this space. There is only one which I am aware of and I will discuss it in my next post. But in this post, I will explain why water rights in the Southwest is likely to become much more valuable. https://risksandreturns.com/2007/12/14/buying-altius-minerals-tsxals/ https://risksandreturns.com/2007/12/14/buying-altius-minerals-tsxals/ Fri, 14 Dec 2007 10:52:31 +0000 Altius Minerals (TSX: ALS, Pink Sheets: ATUSF) is my favorite stock and the largest holding in my portfolio. I initially purchased the stock in 2004 at about C$3.75, but I have recently added to my position at prices as high as C$23.60. https://risksandreturns.com/2007/11/11/covered-my-shorts/ https://risksandreturns.com/2007/11/11/covered-my-shorts/ Sun, 11 Nov 2007 10:47:34 +0000 This past week I covered my short positions in Yahoo (NASDAQ:YHOO) at $27.65, Dick’s Sporting Goods (NYSE:DKS) at $28.29, and HOLDRs Retail ETF (AMEX:RTH) at $93.26. I am no longer shorting any stocks. I covered these positions not because I don’t believe they could fall further, but due to my eagerness to increase my already massive exposure to gold and to start new positions in Canadian junior natural gas stocks, Quest Capital (TSX:QC, AMEX:QCC), and PICO Holdings (NASDAQ:PICO). Since my cash was fully invested I needed to free up some margin, hence the short covering. https://risksandreturns.com/2007/11/07/shifting-my-short-positions/ https://risksandreturns.com/2007/11/07/shifting-my-short-positions/ Wed, 07 Nov 2007 10:43:18 +0000 I have been traveling lately and haven’t had time to write any posts, but I do want to make a quick note: last week I had closed my short position in MBIA (NYSE:MBI) at $46.47 and Target (NYSE:TGT) at $58.00. https://risksandreturns.com/2007/09/23/adding-to-my-gold-position/ https://risksandreturns.com/2007/09/23/adding-to-my-gold-position/ Sun, 23 Sep 2007 20:29:48 +0000 Gold hit a 27-year high last week in response to the Fed’s 50 basis points cut which showed that the central bank was more concerned about economic growth than restoring confidence in the US dollar. The economy is on the path to a recession and it looks like the Fed and the government will do everything in their powers to prevent it, and in the process, devalue the dollar against other currencies and gold. https://risksandreturns.com/2007/09/05/shorting-mbia/ https://risksandreturns.com/2007/09/05/shorting-mbia/ Wed, 05 Sep 2007 13:07:42 +0000 Today I shorted MBIA (NYSE:MBI) at $61.29. The bearish outlook for MBIA is presented here. Basically, MBIA is a credit insurer of products such as municipal bonds, MBS, and CDOs. The problem is that the company has insured over $200 billion of structured finance assets while maintaining a total statutory capital base of only $7 billion to payout on defaults. Therefore, a mere 3% structured finance loss will wipe out MBIA’s entire capital base. https://risksandreturns.com/2007/08/26/increasing-my-short-position-in-retail-stocks/ https://risksandreturns.com/2007/08/26/increasing-my-short-position-in-retail-stocks/ Sun, 26 Aug 2007 13:05:26 +0000 On Thursday, I decided to up my bet against US retailers by shorting the Retail HOLDRS (AMEX:RTH) ETF at $99.11. The collapse of the housing market and the current credit crisis will soon cause the consumer to significantly cutback on spending. If retail stocks continue to rally, I am willing to further increase my short position. https://risksandreturns.com/2007/08/19/repositioning-my-portfolio-after-the-sell-off/ https://risksandreturns.com/2007/08/19/repositioning-my-portfolio-after-the-sell-off/ Sun, 19 Aug 2007 12:53:17 +0000 Thursday saw major declines in US stocks, which at one point had the S&P 500 down 10% from its 52-week high — a threshold defined as a market correction. This was the first correction in 52 months and the end of the second longest streak since World War II. However, Thursday afternoon the markets recovered and further recouped losses on Friday after the Fed announcement that the discount rate had been cut by 50 basis points. https://risksandreturns.com/2007/08/08/shorting-retailers/ https://risksandreturns.com/2007/08/08/shorting-retailers/ Wed, 08 Aug 2007 12:47:55 +0000 I am currently holding a significant short position in retail stocks because I believe consumer spending is beginning to falter. The housing recession, which began with the collapse of homebuilding stocks, has started to spill over to rest of the economy as can be seen in the recent troubles of financial stocks. The next shoe to drop maybe the shares of retailers. https://risksandreturns.com/2007/08/03/closing-my-short-position-on-the-brokers/ https://risksandreturns.com/2007/08/03/closing-my-short-position-on-the-brokers/ Fri, 03 Aug 2007 12:26:50 +0000 In August of last year, I mentioned my initiation of short positions on Bear Stearns (NYSE:BSC) and Lehman Brothers (NYSE:LEH), two investment banks which had profited handsomely from the abundance of liquidity in the financial system. https://risksandreturns.com/2007/03/13/protecting-my-portfolio-from-a-crash/ https://risksandreturns.com/2007/03/13/protecting-my-portfolio-from-a-crash/ Tue, 13 Mar 2007 21:25:37 +0000 I believe the recent global equity sell-off may have marked the beginning of a period of much greater volatility. If so, the possibility of some sort of violent financial crash cannot be ignored. The world has been flush with liquidity originating from the US trade deficit and the yen carry trade; this has encouraged extreme speculation in asset markets. https://risksandreturns.com/2007/02/14/buying-the-yen-etf/ https://risksandreturns.com/2007/02/14/buying-the-yen-etf/ Wed, 14 Feb 2007 21:03:57 +0000 In my previous post I mentioned that I was sitting on 20% cash. Today I decided to use almost all of that cash to buy the CurrencyShares Japanese Yen Trust (NYSE:FXY) for $82.75 per share. In effect, I am still in cash — albeit yen rather that dollars. https://risksandreturns.com/2006/12/11/doubling-down-against-the-brokers/ https://risksandreturns.com/2006/12/11/doubling-down-against-the-brokers/ Mon, 11 Dec 2006 20:18:19 +0000 Fueled by stronger than expected earnings and a rising stock market the brokers have rallied by 15-20% since I mentioned that I was going to short them. However, my long-term view of the sector is unchanged. The economy will suffer a housing-led recession in 2007 that will hurt the brokers’ profits significantly. The current rise in their share prices could mean a greater fall once the stock market begins to decline. https://risksandreturns.com/2006/08/29/shorting-the-brokers/ https://risksandreturns.com/2006/08/29/shorting-the-brokers/ Tue, 29 Aug 2006 20:55:07 +0000 Earlier this month Marc Faber caught my attention for predicting that the stocks of brokers are set-up for a fall similar to the stocks of the home builders 12 months ago. An article in yesterday’s Barron’s discusses this idea in greater detail;