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The Mad Hedge Fund Trader’s 2010 Review
What a Year It Was! I have never been one to boast. But looking at the 2010 year end returns for many securities that I discussed encouraged me to push my chest out more than a little bit. I basically nailed every asset class, picking not only the best performers, but also the worst as well.
Stocks
The top performing stock market in the world was Argentina, which I missed. I caught number two, Chile (ECH) (+45%) (click here for “Chile is Looking Hot” at http://www.madhedgefundtrader.com/august-2-2010.html ). Thailand (TF) (+75%) came in at number three (click here for “Where to Buy on the Dip” at http://www.madhedgefundtrader.com/may_18__2010.html ).
I managed to take a huge bite out of Apple (AAPL) (+55) this year, the best performing large NASDAQ stock (click here for “Apple’s Next Stop: $1,000” at http://www.madhedgefundtrader.com/june_3__2010.html ). I wrote extensively about Chinese Internet provider Baidu (BIDU) (+96%), (click here for “Check Out Chinese Internet Firm Baidu” at http://www.madhedgefundtrader.com/april-19-2010-3.html ). I also was right on top of this year’s best IPO, for Molycorp (MCP) (+340%), picking it up for little more than $12.50, some $2.50 below the launch price (click here for “It’s Off to the Races for Molycorp” at http://www.madhedgefundtrader.com/august-25-2010-2.html ).
To prove that I absolutely had my finger on the pulse beat of the market, I aggressively recommended a short in the for profit education firm Apollo Group (APOL) (-48%), of Phoenix University fame (click here for “Hedge Funds Are Now Targeting For-Profit Education” at http://www.madhedgefundtrader.com/june_2__2010.html ).
Bonds
I correctly identified emerging market debt (PCY) (a total return of 28%) as a big winner in 2010 (click here for the piece at http://www.madhedgefundtrader.com/january_29__2010.html ). Ditto with junk bonds (JNK) (total return of 17%) (click here for http://www.madhedgefundtrader.com/january_4__2010.html ).
But I was painfully early with my short in Treasury bonds (TBT), stopping out at $44. All was forgiven when I picked the August bottom in yields within five days, riding it all the way back up from $30 to $42, for a healthy 40% gain (click here for “The Great Bond Market Crash of 2010” at http://www.madhedgefundtrader.com/august-30-2010.html ).
Commodities
I was all over the commodities space in 2010 from day one, fervently believing that investors would strongly favor hard assets over paper ones, avoiding like the plague anything that can be made with a printing press. Of course, the really huge call was on the rare earth stocks in May, with Avalon Rare Metals (AVL) soaring by 155% and Lynas Corp (LYSCF) up a blistering 432% (click here for “Rare Earths Are About to Become a Lot More Rare” at http://www.madhedgefundtrader.com/may-3-2010-4.html ). Dr. Copper (CU), the only commodity that has a PhD in economics, posted a healthy 80% gain (click here for “Business is Booming at Freeport McMoRan at http://www.madhedgefundtrader.com/may-3-2010-3.html ).
This newsletter was also probably one of the earliest to go back into the food sector big time (click here for “Going Back Into the Ags” at http://www.madhedgefundtrader.com/june-24-2010.html ). Acolytes were richly rewarded, with corn (CORN) up +59%, soybeans +54%, wheat 80%, and sugar (SGG) +150%. The world has making people faster than the food to feed them, and this will continue as a dominant market theme for decades.
Currencies
My calls to stay long the Australian dollar (FXA) (+16%), the Canadian dollar (FXC) (+6%), and the Chinese Yuan (CYB) (+5%) worked like a finely tuned Swiss watch (click here for the story at http://www.madhedgefundtrader.com/march_3__2010.html ). I turned negative on the Euro (FXE) in the run up to the latest PIIGS crisis, carving out a nice ten cent profit on the short side.
Only the Japanese yen (YCS) was out there sticking an uncomfortable chopstick in my eye. It closed the year near its high at ¥81, confounding my prediction that it was headed for a fall, and sending the YCS back to its lows. How the world’s worst managed economy with the lowest interest rates can stay this extremely elevated is a mystery to me.
Energy
My four years wildcatting in the Barnet shale in East Texas paid off by the barrel full. Crude finished the year on its highs, and with a full head of steam. Coal (BTU) (+42%), (JOYG) (+74%) was on fire on the back of insatiable Chinese demand (click here for “Is Coal the New Black Gold” at http://www.madhedgefundtrader.com/september-21-2010.html ).
The Middle Kingdom’s massive nuclear program kept uranium prices bubbling for Cameco (CCJ) (+86%) (click here for “Serve Yourself a Piece of Yellow Cake” at http://www.madhedgefundtrader.com/july-16-2010-3.html ).
My single stock picks also did outrageously well. My Gulf oil spill play paid off in spades, purchasing troubled stocks when the markets were pricing in a certain chapter 11 filing. I caught the big bounces in (BP) (+62% from the lows) and Transocean (RIG) (+67%) (click here for “Is It Time to Buy BP?) at http://www.madhedgefundtrader.com/june-17-2010.html ). Calls for ExxonMobile (XOM) (click here for “Contemplations on Oil” at http://www.madhedgefundtrader.com/october-5-2010.html ), ConocoPhillips (COP) (+26%) (click here for “Conoco Phillips Looks Like a Steal” at http://www.madhedgefundtrader.com/august-17-2010-2.html ), and Occidental Petroleum) (click here for “Looking for Value at Occidental Petroleum” at http://www.madhedgefundtrader.com/july-7-2010-2.html ) were also impressive.
In the meantime, my short play in natural gas (UNG) (-40%) stayed unloved and in the dumps for most of the year as investors digested the implications of the discovery of a new 100 year supply through the new “fracking” process (click here for “Don’ Get Sucked Into Natural Gas” at http://www.madhedgefundtrader.com/june-11-2010-3.html ).
Precious Metals
None other than the president of Toyota USA convinced me to commit early to palladium (PALL), betting that the auto industry would recover much faster than anyone realized (click here for “Time for Palladium to Play Catch Up” at http://www.madhedgefundtrader.com/august-12-2010-2.html ). The white metal used as a catalyst was up a scorching 87.5% in 2010.
I was also a huge advocate of silver (SLV) (+82%) (click here for “Silver is Hot, Hot, Hot” at http://www.madhedgefundtrader.com/august-30-2010-2.html ), platinum (PPLT) (+16%) (click here for the piece at http://www.madhedgefundtrader.com/february_16__2010.html ), and gold (GLD) (+26%) (click here for “The Ultra Bull Argument for Gold” at http://www.madhedgefundtrader.com/july-13-2010-3.html ).
Real Estate
My advice to rent and not buy now looks prudent as the real estate market now appears careening towards a real double dip (click here for “The Hard Truth About Residential Real Estate” at http://www.madhedgefundtrader.com/may_26__2010.html ). While there are no stock plays on the short side left in this busted sector, the email traffic tells me that I at least dissuaded many people from buying houses. And if you think the market is bad now, wait until mortgage rates rise 300 basis points and lose their tax deductibility, and 80 million returning baby boomers simultaneously try to sell their homes. Look out below!
Past is Not Prologue
In this harsh, brutal, and unforgiving business you are only as good as your last trade. Last year is now ancient history, and we are all starting the New Year with hopes, aspirations, and a blank trading sheet. Investors have a permanent mindset of “So what have you done for me lately?” 2010 was the performance of a lifetime for me. It involved a lot of blood, sweat, and tears, as well as some good fortune. All I know is that the harder I work, the luckier I get. So don’t expect a repeat. But you never know when lightening will strike in the same place twice. Good trading in 2011!
I will finish my piece today with one of my favorite quotes from the WWII general, George Patton, known to his soldiers as “Old Blood and Guts”:
“For over a thousand years Roman conquerors returning from the wars enjoyed the honor of triumph, a tumultuous parade. In the procession came trumpeters, musicians and strange animals from conquered territories, together with carts laden with treasure and captured armaments. The conquerors rode in a triumphal chariot, the dazed prisoners walking in chains before him. A slave stood behind the conqueror holding a golden crown and whispering in his ear a warning: that all glory is fleeting.”
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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I used to read his free articles on his website.
One thing i remember for sure is that just before the start of the Sept rally, he was also calling for "the right shoulder". I was not subscribed to his letter so i don't know he changed his positions but i can't really imagine that he was able to capture all the upside gains, as he described. But it is just my speculation, so i can't really tell.
Any other "so called market calls" seem like something that we can find easily on seeking alpha or any other websites....
MHFT,You told people their physical silver was useless in your article last year...something about only being able to use it to bribe border guards?...you are a Shill for the Wall Street game.
Truth re ZH featured MHFT posts, using closing prices on MHFT links to end of 2010:
ECH Claim +45%, Actual +11% from 2 August 2010 to recent lows
TF Claim +75%, Actually not even mentioned on 18 May 2010 MHFT link, but 16 other tickers were, and they did not do +75%, nor even the +32% for TF for 2010 since then
AAPL Claim +55, with further personal relationship claim: When I took a young, cocky, long haired, Levis wearing Steve Jobs around to meet Morgan Stanley’s institutional investors to pitch an Apple share offering 28 years ago, I vowed never to buy anything from the man
AAPL Actual +22%. On that same link MHFT had MSFT, -2% vs SPX up 12%
19 April 2010 MHFT link Claim: BIDU +96%. Actual: BIDU +57%. On that same link MHFT had GOOG, +7%
25 Aug 2010 MHFT link Claim: MCP+340%. Actual +291%
2 June 2010 MHFT Link Claim: Short APOL-48%. Actual: -23%, with the MHFT claim:
To prove that I absolutely had my finger on the pulse beat of the market
29 Jan 2010 MHFT Link Claim: PSY Total Return +28%. Actual +10.77%
4 Jan 2010 MHFT Link Claim: JNK Total Return +17%. Actual +9.77%
30 Aug 2010 MHFT Link Claim: TBT+40%. Actual+20% despite MHFT claim:
All was forgiven when I picked the August bottom in yields within five days, riding it all the way back up from $30 to $42, for a healthy 40% gain
Inflated claims of +299% not even half the way through MHFT prevarications.
Perhaps other ZH readers may care to vet other outrageous MHFT performance claims like:
This newsletter was also probably one of the earliest to go back into the food sector big time
My four years wildcatting in the Barnet shale in East Texas paid off by the barrel full
None other than the president of Toyota USA convinced me to commit early to palladium
2010 was the performance of a lifetime for me
We used to have a broker who cuffed quotes and churned client credibility. Sadly it took major settlements and SEC suspension of the manager to get him out of the business.
What will it take for ZH to stop enabling/sponsoring this madman at the expense of ZH reputation?
That MHFT claims 550 Fans on Facebook says it all:
There's a sucker born every minute for shameless PT Barnum promoters
If this guy is so good he should be making millions from his own advice. Why post a single word on the internet?
Gees,I love myself too you know. Everything went up last year so big deal. I did just as well with silver and palladium alone.
For the record, I hit frontier markets way earlier than you buying FFD @ 9 and PCY @ $20, silver @10, palladium @220, PWER @ 3, SATC @ 2.70, VKNG @ .21 (sold @ .40), MO @$19, Citi @3 sold @ 5, UBT @ 88 sold @ 102 (unusual trade and the opposite of yours). So on and so on. I did get burned going short though, but my gains were greater than my losses. In other words, EVERYTHING went up and no I did not do AAPL like everyone else. If we had a really bad year I would be congratulating you, but everyone is a genius when the markets go higher, even me.
Nice FIGJAM.
Home
Damn...update from Markets entity...Too many immediacy values with too high sums in the impact, duration, and tension levels to ignore so had to stop work to extract and post the update below. Rest of the report better not be like this or it will take forever....
Extract from upcoming Shape Report: Markets entity:
As 2010 fades rapidly from sight, and mind, we note that the Markets entity is pretty much as its primary supporting descriptors would have it, a [basket (of) crises]. The [basket-case markets] set has secondary support coming from [interwoven] and [inextricably twined] which are themselves both supported at their primary levels by [bad foods] which, given its supporting sets, we are interpreting as [indigestible products]. These [indigestible (financial) products] are about to make [minions (within markets)] go into [spasms] of [violent puking]. This is indicated to be a [planet wide] level event, that in its turn brings [international grievances] and [inter country tensions] to a [visible] and [frightening] level that will be described (in the msm propaganda press) as being a [boil over] situation. The interpretation that we have about the [indigestible products] is that they fall into the category of [derivatives] in general, but specifically there are linguistics around the idea of a [gold price tied/bound] form of [derivative] that [fails] in an [instant] due to a [crisis] in the [gold/precious metals market]. This forecast is based on a lot of immediacy data value sets and so may be within days of happening, and likely will be occurring by the time that this Shape report is published.
clif
January 11, 2011
A little girl, member of Congress and Federal Judge get shot or killed so the loonies come out of the woodwork.
Is Clif off his meds again or just High? He promised to stop epublishing when he forecast the end of the world last Fall.
And speaking of I have never been one to boast, where are the antidotes for delusional grandiose MHFT?