How We Made 20.5% In 3 Months With Carl Icahn

You learn something new every day.

Here?s Jeff Saut, from his latest market commentary as chief strategist of Raymond James:

Indeed, L. Frank Baum?s book was penned in 1900 following unrest in the agriculture arena (read: farmers) due to the debate over gold, silver, and the dollar standard. The book, therefore, is supposedly an allegory of these historical events making the information easier to understand. In said book, Dorothy represents traditional American values. The Scarecrow portrays the American farmer, while the Tin Man represents the workers and the Cowardly Lion depicts William Jennings Bryan. Recall that at the time, Mr. Bryan was the official standard bearer for the ?silver movement,? as well as the unsuccessful Democratic presidential candidate of 1896. Interestingly, in the original story Dorothy?s slippers were made of silver, not ruby, implying that silver was the Populists? solution to the nation?s economic woes. Meanwhile, the Yellow Brick Road was the gold standard and Toto (Dorothy?s faithful dog) represented the Prohibitionists, who were an important part of the silverite coalition. The Wicked Witch of the West symbolizes President William McKinley and the Wizard is Mark Hanna, who was the chairman of the Republican Party and made promises that he could not keep. Obviously ?Oz? is an abbreviation for ?ounce.?

It should be noted that before 1873 the U.S. dollar was defined as consisting of either 22.5 grains of gold or 371 grains of silver. This set the legal price of silver in terms of gold at roughly 16:1 and put the country on a gold/silver bimetallic standard. Since both metals had other uses than just coinage, whenever the ratio got out of whack, rational people would buy the cheaper metal and take it to the mint to coin. That provided a natural stabilizing arbitrage. With the 1873 Coinage Act, however, the silver dollar was omitted, effectively shifting the country from a bimetallic to a gold standard. Other countries soon followed this shift and as tons of silver were unloaded, the market price of silver in terms of gold rose from 16:1 to 40:1. The result was that the dollar was now linked to a metal that was getting scarcer and scarcer.

Particularly hurt by these events were the net debtors, among them the farmers because they had to face a rising real value of their debts combined with declining agricultural prices (in dollar terms). Now, while there was a bunch of ?noise? in between (the Sherman Silver Purchase Act of 1890, the panic and depression of 1893, etc.), the situation hit its zenith in 1896 culminating with William Jennings Bryan?s ?Cross of Gold? speech at the Democratic National Convention.

Sonofabitch!

I guess the flying monkeys represented the precious metals bloggers and conspiracy theorists, Glenda the Good Witch was probably Ayn Rand?s grandmother or some shit.

361 Capital portfolio manager, Blaine Rollins, CFA, previously manager of the Janus Fund, writes a weekly update looking back on major moves, macro-trends and economic data points. The 361 Capital Weekly Research Briefing summarizes the latest market news along with some interesting facts and a touch of humor. 361 Capital is a provider of alternative investment mutual funds, separate accounts, and limited partnerships to institutions, financial intermediaries, and high-net-worth investors.

361 Capital Weekly Research Briefing
December 9, 2013
Timely perspectives from the 361 Capital research & portfolio management team
Written by Blaine Rollins, CFA

?Tis the season. Your smart home needs a ?smart hub.? Check out a review of Revolv a smart home automation solution over at TechCrunch.

Quote of the day

Mike Sha, ?What people buy and what?s good for them is rarely the same thing?Fees and returns are inversely correlated. Fees are the long term bad egg in every portfolio.? (Pando Daily)

Chart of the day

Saddled with a pile of debt and a looming war with England, France was in desperate need of cash in 1803. So Napoleon took the same course of action that many publicly traded companies do today -- asset liquidation. The ensuing Louisiana Purchase was sealed for $15 million, or just 3 cents per acre.

Thomas Jefferson's emissaries to France struck an incredible bargain. They acquired a territory that stretched from the Gulf Coast to Canada, essentially doubling the size of the fledgling United States. France didn't know it, but Jefferson was willing to pay $10 million just for the city of New Orleans. Control of the strategic port secured navigation and trade along the Mississippi River, which is what he was really after.

For half a century, this would be the cheapest and most transformative land grab in the nation's history. But it was outdone in 1867, when Russia (a motivated seller that also feared war with England at the time) ceded what would later become the state of Alaska for $7.2 million. This purchase netted more than twice the land area of Texas for just 2 cents an acre.

That's an amazing deal -- even before you consider the millions of ounces of gold or billions of barrels of oil that were subsequently unearthed.
A lot has changed since then, but as I've been telling High-Yield Investing readers for months now, prized real estate is still in fashion.

Scarce resources are typically associated with fungible commodities such as oil or metals. They're not exactly making any more land, yet the world's population is growing by 200,000 people (births minus deaths) each day.

That's over a million new people a week crowding into a fixed amount of space to live, work and shop -- placing upward pressure on housing, office parks and retail strip centers.

That's exactly why forward-looking investors like Warren Buffett are placing big bets on land and buildings. We tend to associate ultra-rich business tycoons with hard assets like steel, but a disproportionate number of the world's billionaires have invested the bulk of their wealth in real estate.

Ted Turner owns more than a dozen sprawling ranches from Oklahoma to Montana. This collection spans 2 million acres (an area more than twice the size of Rhode Island), making the media mogul one of the nation's largest private landowners.

Turner's explanation is simple: "I never like to buy anything except land. It's the only thing that lasts."

Liberty Media CEO John Malone scooped up 1 million acres of timberland in Maine. And Sam Zell (No. 66 on the Forbes 400 list with a net worth of $4.9 billion) made a fortune by investing in commercial office properties. His current portfolio includes housing in China, shopping malls in Brazil, and the Waldorf Astoria Chicago hotel.

The point is, real estate can be a sound, durable investment -- not to mention a great way to protect against the ravages of inflation and a depreciating dollar. And its low correlation to equities can provide some buoyancy when the economy deteriorates and stocks are sinking.

Most of us don't have the bankroll to buy an office tower, an apartment complex or a retail shopping center. But I've found what just might be the next best thing.

I call them "Eisenhower trusts."

And simply put, when it comes to income investments, they can't be beat. Income earned from "Eisenhower trusts" have risen through every recession, depression, stock market crash and economic meltdown -- and it does all this while growing faster than the rate of inflation... an average 10% a year for the past 60 years.

These investments get their name from a law hidden deep inside the Cigar Excise Tax Extension Act, signed 53 years ago by President Eisenhower. And now, thanks to this law, it's possible for ordinary Americans to invest in wealth-creating asset classes like real estate and tap into the same income sources that America's elite have used for generations to shield their wealth from taxes and turn it into a fortune -- but only if you know how.

- Nathan Slaughter

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BlackRock has $4.1 trillion in assets under management ? they?re the largest investment management firm on earth ? and probably 7 out of 10 people on the street where you live have never heard of them.

And as a result of being so large, the company owns an awful lot of shares in the world?s largest public companies as well.

The Economist has a sprawling profile of the firm (it?s the cover story of their latest print edition), from which the below chart comes:

Random Thoughts


As I preach, you can't take the action in the indices at face value. You have to dig a little deeper. Each day I cull through roughly 2,000 stocks, 250 sectors, several dozen ETFs, and then finally, a handful of indices.

The Ps closed at all-time highs.

The Nasdaq closed at multi-year highs.

In spite of these new highs, the market just felt a little soft internally. It seemed like the average stock ended lower. I guess this is no big shocker when you look at the broad based Rusty. It actually ended down a smidge on Monday.

Again, I'm not complaining. Things just seemed a little mixed. Friday's pop, so far, appears to be one and done.

As usual, take things one day at a time. Ideally, I'd like to see the market, sectors, and stocks break out and not look back for a while.

Getting back to the mixed thing....

Regional Banks stalled out in their rally from pullbacks.

Retail hasn't changed my on a net net basis in nearly a month.

Chemicals, The Semis, and Internet have been sideways intermediate-term but they are hanging out towards the top of their ranges.

Drugs stalled a bit after approaching their recent highs. And, the Biotech sub-sector here reversed at its old highs.

Most areas still remain in uptrends like the indices but again, it's getting a little mixed.

So what do we do? To recap, last week things were getting mixed then we had the mother of all up days on Friday. Then, on Monday, we go back to being mixed. Again, overall things remain constructive, it's just getting a little mixed (have I mentioned that yet?). At these levels, a few big up days would make all the difference in the world. Until then, when it comes to this market, I'm from Missouri. Show me. The database is still not producing many meaningful setups anyway. As mentioned recently, this might be it suggesting to let things shake out a bit. Again, don't worry. If we end up in a bona fide new bull trend, there will be plenty enough time to add new positions. In the meantime, wait for follow through.

Futures are soft pre-market.

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Best of luck with your trading today!

It?s no secret that I?m a big fan of advance/decline, new highs vs new lows and other internals to get a read on how markets are acting beneath the surface of the indices. It?s not that this information is always actionable (at least not for me), it?s that it often offers clues as to market mood and can signal ?regime change? from bullish to bearish attitudes.

Andrew Thrasher has been doing these great weekly technical rundowns that are worth checking out at his blog each Monday morning. Here?s something he posted about breadth and stocks trading above the 200-day moving average that might give you a new data point to keep an eye on:

Equity Breadth
Last week we did not see much improvement in breadth, which is to be expected with the weakness we saw in the equity market for the bulk of trading.

The bottom panel of the chart below shows the percentage of stocks above their 200-day moving average. This measure of market breadth has garnered quite a bit of attention over the last few months. While the negative divergence is important to point out, the percentage itself is still north of 60%.

I reference 60% because that?s the level it was unable to get back above at the 2007 high. We saw the percentage of stocks above their 200-day moving average drop for nearly eight months before a top was put in for the S&P 500 ($SPX) in ?07. While we are presently approaching the same duration of deterioration, the percentage itself still shows the bulk of stocks in theoretical up trends (above their long-term MA). A break of 60% would also end the trend of making higher lows for the percentage above 200MA, and that?s when I think it?ll be time to start getting concerned. So while this metric of market breadth is worrisome, it?s not yet to levels I feel trigger a red flag.

Stuff I?m Reading this Morning?

Steve Liesman is pounding the table on a December Fed meeting taper. We shall see, Stevie! (CNBC)

Morgan Housel?s The Five Most Important Rules in Finance is pretty sick. (BusinessInsider)

Sorry, hedge fund returns are not going to revert back to the old mean of outperformance. (FTAlphaville)

It?s Volcker Rule day, bitch. (DealBook)

?and even if hedge funds did start to outperform, are they even earning their keep on a risk-adjusted basis? (IndexUniverse)

The wirehouses are pushing upstream yet again, slashing payouts for middle of the road brokers. This will end when each firm has one advisor managing a $2 trillion book of business. (InvestmentNews)

Can you imagine how dirty Roger Ailes must be if they?re paying an ex-underling $8 million just to STFU? (Gawker)

These are the top traders and commentators to follow on StockTwits / Twitter during earnings season. (StockTwits)

Here?s The Moment Barack Obama Shook Hands With The President Of Cuba (BusinessInsider)

Read more: http://www.businessinsider.com/obama...#ixzz2n4wGx1UT
My book, Backstage Wall Street, available at Amazon


The Reformed Broker

The Chart of the Day is Speed Commerce (SPDC). I found the stock by sorting today's New High List for frequency and then skipped over the stocks that didn't have positive results for the last week and month. I reviewed the chart using the Flipshart feature. Since the last full Trend Spotter buy signal on 11/19 the stock gained 24.64%.

It provides platform of e-commerce services and distribution solutions to retailers and manufacturers. The company offers retail distribution programs, web site development and hosting, customer care, e-commerce fulfilment and third party logistics services.

?Obama is as lucky as a dog with two d**ks,? said former president Bill Clinton after Mitt Romney?s 47% comment.


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