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Nailed Subprime Trade w/Help From Napoleon Hill & Donald Trump

Last week, the week of the 400 point DOW meltdown, was the worst week I have had trading since the Internet collapse of 2000.  On Tuesday, I woke up to Bloomberg discussing China’s 9% fiasco and the concerns of it carrying over to our markets.  Certainly stops would be triggered, at the opening, which would set off a domino effect.  Where would the market stop for a breather?  It was anyone’s guess.  Not being a fan of hard stops – I thought that my mental stop strategy would work in my favor.  My preference is to set mental stops and close out positions at the close if triggered.  This is a technique that I use to take the intra-day emotions out of my trading strategy.

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How to Survive Getting Hit by a BRIC

Now I know what it feels like to get hit by a BRIC: Brazil (EWZ) -8.81%, Russia (TRF) -8.2%, India (IFN) -7.5% and China (FXI) -10.7%.  It may take a few days or weeks before our bells stop ringing, but it will.  Unless Goldman Sachs grossly miscalculated the economic potential of these countries, February 27, 2007 will simply be a blip in a long term profitable cycle.  However, hard hats will be standard issue going forward.

I believe this action lends credence to my quest of developing indirect methods for investing in the BRIC economic cycle. Continue reading “How to Survive Getting Hit by a BRIC”

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Building a Better BRIC-Trap

In a 2003 research paper Goldman Sachs argued that the combination of countries Brazil, Russia, India and China (BRIC) has the economic potential to be larger than the G6 in US dollar terms by 2050.  The countries are forecast to encompass over 40% of the world’s population and hold a combined GDP of nearly $15 trillion dollars.  Goldman predicts China and India will be dominant global suppliers of manufactured goods and services and that Brazil and Russia will be dominant suppliers of raw materials. Brazil and Russia would form logical commodity suppliers to China and India;   cooperation amongst the four countries would create a powerful economic block.

Although the relationships are logical, it is not a no-brainer that the potential will be realized.  Take a look at these headlines. Continue reading “Building a Better BRIC-Trap”

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Profiting From Companies That Sell What China Wants

I was watching CNBC yesterday morning waiting for the Trade report to be released.  At exactly 8:30am, Becky Quick went to Rick Santelli at the Chicago Board of Trade for the report.  “For December the trade deficit increased $61.2 billion exceeding expectations of $59.7 billion.  November was revised down from $58.2 billion to $58.1 billion.  Back to you Becky,” reported Rick.   I am sure at direction of the producers – Becky quickly moved on to the next story.  

That was it.  No reaction from the trading pits.  No economist droning on and on.  Why not show the traders jumping up and down? Why no droning?  Simple – the story wasn’t U.S. Stock Market positive.  Even worse it was U.S. Dollar bearish.  They should have had a webcam on me to capture my big smile.  I was smiling, because I knew this report would create a positive back drop for gold to follow-through on last week’s move through $670/oz. 

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BHP Billiton : “Where Opportunity Meets Preparation”

Every now and then the market wakes me up with good news.  Since BHP Billiton, the No. 1 mining company in the world, is based in Australia – it did the opposite and tucked me into bed after announcing another record set of earnings and a $10 billion share buyback.  Yes, that’s 10 billion – with a “b.”   This is in addition to a previously announced $3 billion.  Not only did it announce the buyback, but it increased its dividend for the 10th consecutive time.  It doesn’t stop there.  The company has also earmarked $17.5 billion for 29 new projects worldwide and still has cash for potential acquisitions.  Wow, this company is printing money faster than Ben Bernanke. 

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