The Turning Radius of an Aircraft Carrier (HYT,HD)

Perhaps the most difficult aspect of successful trading is the ability to change course midstream, to admit that the market has proven you wrong and get back on side.   Because, as you know, the market is never wrong. You, on the other hand, will often be wrong, and making money is predicated on you acknowledging your mistakes and adjusting. Anyone who’s too fixed in his ways, who lacks flexibility or is too proud, will ultimately find himself swimming straight out into the middle of the deepest waters, where, eventually, he’ll simply run out of gas and drown.   We pray that’s never our lot, though we have to admit to some doozy mistakes in our time. Along the way we learned that the biggest error you can ever make is holding on too long to a loser – long after the market has proven itself right – and you wrong.   Today we’re going to look at a pair of trades that are connected to the theme of reversing course and getting back in line with the market.   We start with an initiative launched on September 10th in a letter called No Worry. No Fear. Big Discount. There,…

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The Great Wall Street Book of Revelations (NFLX)

The time has come friends, after all these years, to reveal my true identity.   You, of course, already know me as mild-mannered stock analyst and sometime comic genius Hugh L. O’Haynew. And for millions just like you, that suffices. After all, you make your money, you get your entertainment, you’re party to some of the most brilliant and insightful financial, economic and political analysis known to mankind – and it all comes to you practically free.   But that’s actually not our real name. And more than that, Normandy may or may not be the real company we’re working for. Indeed, it’s true. And the folks at Interpol, the NSA, the Mossad, MI5, the Stasi and Cheka have all attempted, unsuccessfully, to recruit us for their own nefarious purposes.   So who is ‘Hugh’?   Hugh is who, indeed?   Heh, heh, heh…   Allow me to introduce myself.   My real name is Joe Jacobson. It’s a name you’ll hear increasingly as the months pass, for the world is now ready to digest the truth of my existence.   But first a little background.   I make my home in the hill country of Northern Kashmir, where there…

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Rolling up the Holiday Gains (SPXL,TNA,SPY,FCX)

We’re going to open today with a look back at three trades that now require some attention.   So, without any further delay…   We start with a trade opened on the 2nd of June in a letter called Truth vs Reality: Cage Match to the Death. There we laid out our ‘philosophy’ of what we expect to transpire as the market comes to a peak – a moment that has drawn nearer much faster than we anticipated and proven us ever more correct than we could have hoped for.   Then, we wrote as follows (forgive the lengthy quotation) –   We contend that as the market peaks, it will do so on narrowing breadth, as nearly all bull markets do. But more than that, we’re convinced that the coupling of 1) an unprecedented and ever-increasing global liquidity with 2) access to instruments that permit immediate and easy entry into the blue chip sector (like index mutual funds, ETFs and stock futures) will keep the indexes climbing long after the underlying economic fundamentals and corporate growth numbers support any such advance. Those companies that are currently index components – particularly of the biggest and most widely followed indexes –…

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If You’re Gonna Do it, Do it Right! (FB)

We’ve long been of the opinion that certain nations just have an inborn aptitude for certain activities. The Brazilians, as you know, are natural music-makers and knock-out with a beach volleyball, the Irish – comedic wizards, the Icelandic – knitting wunderkinds, Canadians – hockey hotshots, and the Chinese…   Well, until recently we debated what the Chinese genius was, as they have a great wealth of national skill and accomplishments. But over the last few months the whole thing became crystal clear, as we were shown beyond any mite of a doubt, that the Chinese are plainly the planet’s foremost market fixers.   Easy, Bruce.   More than self-defense, even more than wall-making, China knows better than anyone else on the planet how to…ahem, repair a broken market.   Are you casting aspersions, Hugh!?   By no means. There are simply jurisdictions that understand how to deal with a falling market and are not ashamed to act when necessary in an open and un-muddled way.   China happens to be one of those places. There, if you speak badly about the prospects for equities or, heaven forbid, sell your equities, or encourage others to do so, you get arrested. Simple,…

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Helen Roper’s Revenge (FAS,GS,TLT,GLD,UUP,GDX,KWHIY)

The old lady’s loose flowing garments were testimony to her growing brood of kids and the tendency, as one gets older, to pay less attention to the body’s need for dietary discipline.   We’re speaking, of course, of everyone’s favorite landlady (and Stanley’s wife), Helen Roper, who in many ways characterizes the investment landscape we’re now passing through.   Helen, you’ll recall was a product of the post-war generation’s affluence and the yearning of many aging folk in the 60’s and 70’s to reconnect with their inner child and lead a more fancy-free, shame-neutral life than their parents.   A Generation of Teens   So, too, with us today, though we’ve taken Helen’s moral lassitude and free-thinking, love-me-dobedobedo to heights undreamt of in 1977.   And that’s also likely why our markets are so disconnected from reality, and will continue to be so until all of us have doffed for good the fat rings and frisky hairstyles of the late mamasita who never managed to get her Stanley.   Recovering from Vladimir   We’re now going to take a quick run through the trades we missed reporting while we were suspended in a borscht-induced hiatus this last quarter. We now…

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Why Go to Hell in a Golden Hearse? (FXI,GLD,TSLA)

We want to lead off today on a serious note, with a quick word of tribute for a giant in the world of investment advisories: the late Richard Russell, a man who shaped the way the industry functions and whose integrity and intellectual honesty should be a beacon to us all. Richard Russell passed away on the 21st of November after 57 successful years writing the Dow Theory Letters.   His sweet, straightforward manner and his willingness to stand by unpopular positions will be missed by all who read and knew him.   Open Trade Report   We’ve got two trades to comment upon today. The first is our ongoing FXI saga.   You’ll recall that we’re currently the proud holders of three board lots of the iShares China Large Cap ETF (NYSE:FXI), and that we’ve been selling CALL options against them in order to recoup a small loss from a former trade. As it stands today, we’re long three FXI December 31st 40 CALLs and by the looks of things, we could see our shares called away as the calendar flips into 2016.   Have a look at the chart –   What’s most exciting for the China bulls…

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Straddling the War, Markets, Housing and Frida (HD)

“May you live in the most interesting of times…” – Ancient Chinese curse –   The Chinese were certainly on to something.   We’re alive today, friends, at a time of impending tectonic changes in the world. For most, it’s a foregone conclusion that the world we inhabit, let alone the one we passed through a few decades ago, will be nothing like the world we leave our children.   In fact, the revolution that’s taking place in our lifetimes will engender changes in the way the world operates that are absolutely unknown to all but those few of us endowed with a gawd-given and finely honed prophetic sense.   Now, the gift of prophecy, of course, is also a great responsibility, as our mentors advised us in our youth. So forgive us if we appear at times to be coy or coquettish. It’s not our intention. And it’s not because we’re deliberately trying to hide things. Rather, the truth is sometimes just be too painful to bear. And it’s prudence that dictates our silence.   Speaking the Truth   You can imagine our relief, then, when just this week mainstream ‘news’ peddler CNN offered a story that was chock…

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Go Suck on a Fish! (TYL,FXI,TSLA,QQQ,EPI,KSS,FAS,TD,IYF,RSX)

Oh, my! Is that any way to talk?   Life, as you know, is not a bowl of cherries. You can’t have your entertainment and your fine foods and your night on the town every day – no, sir. There are times when the drudgery of life takes precedence over its more inspiring moments, and suck as it may, there’s simply no getting around it.   We relate the foregoing because today’s letter is going to be a slight departure from the norm, composed as it is of a simple listing of former trades and their results or advice to close or otherwise repair them.   We apologize in advance for the tedium, and we’ll do our best to keep it lively. The truth is we had a great number of intestinal changes here at Normandy over the last three months and the recovery has taken us a tad longer than expected. That’s why this week we’re playing catch-up, and why we’ve had to curb some of the laugh-out-loud antics.   So bear with us.   Here we go…   Our first trade was opened on the 23rd of February. We urged you at the time to buy the deep-in-the-money…

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Running from the Guillotine (QQQ)

  When the guillotine falls, friends, it pays no mind to whether the neck below is righteous or wicked. So, too, the slice of the surgeon’s scalpel, restoring life when disease or danger threatens – what does it care a man’s past.   There’s an order to this world, comrades, and the knife’s edge is but a small part of it. Like gravity. Like sunrise and sunset. So, too, the knife.   So whether we end up shackled in front of Robespierre’s hordes or swabbed and etherized on a table is not always in our hands. We have to choose well, to be sure. We have to see ahead and plan for whatever is ours to plan for. And we have to pray for the grace of a divine providence that often measures ‘good’ with a different calculus than we’re used to.   And so it is with financial markets, as well. Without an appropriate blend of foresight and caution, without a healthy understanding of risk mixed the courage to assume it, and without some comprehension of the broad phenomenon we call reality, there will be no profits to be had. And certainly if the forces of heaven are opposed……

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