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[Joshua Brown]

Stuff I?m Reading this Morning?

Beijing?s plans to liberalize the Chinese economy send Asian markets soaring. (Guardian)

Mark Hulbert: Five ways to know you?re in a bubble. (MarketWatch)

Farhad Manjoo: Good luck using 20-year-olds as reliable predictors of tech trends. (WSJ)

John Hussman explains how risk-managed strategies can be very wrong for a long time and still outperform over a cycle. (HussmanFunds)

What happens to stocks when disaster strikes? (CrossingWallStreet)

Shelly Adelson (Las Vegas Sands) readies for the battle of his career as internet gaming makes in-roads. (WaPo)

Buzzfeed chief Jon Steinberg:Having a Mobile Strategy is Like Having a Laptop Strategy 20 Years Ago (Medium)

Jason Zweig on floating rate funds ? they?re good except when they?re bad. (WSJ)

Expect the Bitcoin mania to go into overdrive now that US agencies are expected to be cool with it. (Bloomberg)

The Barron?s ETF Roundtable is must-read for asset allocators and advisors. (Barrons)

Superhero movies save Hollywood. (BusinessWeek)

REMINDER: Backstage Wall Street is now on Kindle!

[Joshua Brown]

I sit here painfully typing this letter, as my fingertips have been worn down to bloody stumps. I have been pounding out the Trade Alerts since the month started, sending out 37, and the month is only half over. That works out to a 3.3636 Trade Alerts a day!

I have been so busy that I literally haven?t had time to eat, living entirely on black coffee, and losing three pounds since November 1. Maybe I should go into the weight loss business. I hear it?s more profitable than this financial stuff.

Not only have I worked myself to the bone, my staff is rapidly wearing out as well. Everyone is taking a well-earned rest this weekend, melting a few ice cubes along the way.

Still, you don?t get market melt ups like this very often in life. You have to strike while the iron is hot, make hay while the sun shines, and carpe diem. Usually I warn investors that if they ?invest in haste, they will repent at leisure.? In this market it?s the opposite. Invest at leisure, repent with haste.

Still, it?s all worth it when it?s working. Including both open and closed trades, the last 18 consecutive Trade Alerts have been profitable. I am rapidly closing in on an old record of 25 successful Trade Alerts, made earlier this year.

The Global Trading Dispatch service of the Mad Hedge Fund Trader is now up 56.4% in 2013. The November month to date record is now an enviable 11.92%.

The three-year return is an eye popping 111.43%, compared to a far more modest increase for the Dow Average during the same period of only 30%.

That brings my averaged annualized return up to 38.2%.

This has been the profit since my groundbreaking trade mentoring service was launched 35 months ago. These numbers place me at the absolute pinnacle of all hedge fund managers, where the year to date gains have been a far more pedestrian 3%. I predict the arrival of a lot more job seekers on Craig?s List in January.

I took profits on all of my extensive shorts in the Treasury bond market, taking advantage of the sudden back up in ten-year yields from 2.47% to 2.77%, the sharpest move of the year. I then reloaded on the first 9 basis point back up in yields.

I then bet that the stock market would continue another tedious sideways correction going into the Thanksgiving holidays. I bought an in the money put spread on the S&P 500, and then bracketed the index through buying an in the money call spread. Both of these expired profitably on Friday.

I then took advantage of the weakness to add another long in the Industrials ETF (XLI), a rifle short at one of the best performing sectors of the market. I piled on more shorts in the Japanese yen (FXY), (YCS), believing that the Bank of Japan will have to accelerate its monetary easing program to deal with an economic slowdown. I also caught the China recovery play by going long the Australian dollar (FXA).

This is how the pros do it, and you can too, if you wish.

Carving out the 2013 trades alone, 74 out of 89 have made money, a success rate of 83%. It is a track record that most big hedge funds would kill for.

My esteemed colleague, Mad Day Trader Jim Parker, has also been coining it. He caught a spike up in the volatility index (VIX) by both lapels. He also was a major player on the short side in bonds, to the delight of his many followers.

The coming winter promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014. The Trade Alerts should be coming hot and heavy. Please join me on the gravy train.

Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. Upgrade to Mad Hedge Fund Trader PRO and you will also receive Jim Parker?s Mad Day Trader service.

To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.

[Joshua Brown]

I sit here painfully typing this letter, as my fingertips have been worn down to bloody stumps. I have been pounding out the Trade Alerts since the month started, sending out 37, and the month is only half over. That works out to a 3.3636 Trade Alerts a day!

I have been so busy that I literally haven?t had time to eat, living entirely on black coffee, and losing three pounds since November 1. Maybe I should go into the weight loss business. I hear it?s more profitable than this financial stuff.

Not only have I worked myself to the bone, my staff is rapidly wearing out as well. Everyone is taking a well-earned rest this weekend, melting a few ice cubes along the way.

Still, you don?t get market melt ups like this very often in life. You have to strike while the iron is hot, make hay while the sun shines, and carpe diem. Usually I warn investors that if they ?invest in haste, they will repent at leisure.? In this market it?s the opposite. Invest at leisure, repent with haste.

Still, it?s all worth it when it?s working. Including both open and closed trades, the last 18 consecutive Trade Alerts have been profitable. I am rapidly closing in on an old record of 25 successful Trade Alerts, made earlier this year.

The Global Trading Dispatch service of the Mad Hedge Fund Trader is now up 56.4% in 2013. The November month to date record is now an enviable 11.92%.

The three-year return is an eye popping 111.43%, compared to a far more modest increase for the Dow Average during the same period of only 30%.

That brings my averaged annualized return up to 38.2%.

This has been the profit since my groundbreaking trade mentoring service was launched 35 months ago. These numbers place me at the absolute pinnacle of all hedge fund managers, where the year to date gains have been a far more pedestrian 3%. I predict the arrival of a lot more job seekers on Craig?s List in January.

I took profits on all of my extensive shorts in the Treasury bond market, taking advantage of the sudden back up in ten-year yields from 2.47% to 2.77%, the sharpest move of the year. I then reloaded on the first 9 basis point back up in yields.

I then bet that the stock market would continue another tedious sideways correction going into the Thanksgiving holidays. I bought an in the money put spread on the S&P 500, and then bracketed the index through buying an in the money call spread. Both of these expired profitably on Friday.

[Joshua Brown]

?A high stock price is somewhat distracting,? said Tesla CEO, ElonMusk.



go to the Mad Hedge Fund Trader's website

[Joshua Brown]

I took the biggest risk of my life at age 33 and I was terrified.

With a wife and two kids, a mortgage and almost nothing in the bank, I left my management position at broker-dealer and dropped my Series 7. I essentially bolted from the business I had been in for a decade, giving up my license and my livelihood on a bet that I could be doing better for my clients as their advisor and make a lot more money once I was happy and the pit in my stomach dissolved.

Thank God it worked. I?m not sure what I would have done if it hadn?t. In hindsight, I wouldn?t change much about my timing and all of what I had gone through to get things things right in the end ? it was the real-world education of a lifetime. However, if I could change one thing, maybe it would be not waiting so long and staying with a profession that I truly hated. It probably would have been a lot less stressful had I pulled the ripcord in my twenties, before the babies and the bills.

Oh well.

Jim Chanos, one of the most successful investors of all time, began his career on The Street as a banker and then a brokerage firm analyst. The conflicts inherent in those roles drove him to seek out something more and that?s when he became a hedge fund manager. You see, Chanos was interested in the pursuit of truth and, what?s more, a way to make money from the discovery of truth before others could find it. The name of his firm, Kynikos Associates comes from the Greek word for cynic (and it can also mean ?dog-like?, another apt metaphor for a fund that relentlessly hunts down meaning in the public information that others cannot see).

Here the legendary manager offers some advice to young professionals about timing their risk-taking:

?If you ever have an idea and you think you need to take career risk to accomplish it, do it early in your career?

Life intrudes ? as when you get older you end up with more responsibilities and your ability to take risk diminishes. If you are 25 and have a great idea and you fail, no one is going to hold it against you, and future employers and investors might actually look favorably upon it.

So it you really want to pursue something, do it while you?re young ? you?ll have more energy and you?ll be able to take more financial and career risk. If it doesn?t work, you still have your whole life ahead of you.?

I would counsel the same thing. I have some close friends in their late-20′s and early-30′s on The Street who are in the process of doing exactly this. They?re going for it now before they lose the chance or life intrudes.

For more words of wisdom from Jim Chanos, I highly recommend Mamta Badkar?s round-up at the link below:
22 Brilliant Quotes From Legendary Short-Seller Jim Chanos (BusinessInsider)

[Joshua Brown]

Quote of the day

Andrew Beer, ?Fee reduction is the purest form of alpha.? (All About Alpha)

Chart of the day



Market breadth is confirming new market highs. (StockCharts Blog)

Markets

Bubble talk dominated the past week. (A Dash of Insight)

Five signs of a bubble: not there yet. (Mark Hulbert)

[Joshua Brown]

The S&P 500′s valuation on current earnings is more expensive than it was last year and more expensive than it was the year before. Relative to 2012 and 2011, it is not cheap. In addition, it is also expensive relative to the earnings growth rate and to the rate of growth in the US economy overall.

But the S&P 500 is not at a bubble valuation at the current moment.

I know sometimes you wish things would be black or white, Summer Roberts or Marissa Cooper, but that sort of exactitude just isn?t how the world works.

And so the answer as to whether or not the market is cheap comes laden with asterisks and caveats and on-the-other-hands.

Here?s FactSet Research with some nuance on the current valuation puzzle:

The forward 12-month P/E ratio for the S&P 500 now stands at 15.0, based on yesterday?s closing price (1790.62) and forward 12-month EPS estimate ($119.26). This is the highest forward 12-month P/E ratio logged by the S&P 500 in more than four years (September 2009). Given the high values driving the ?P? in the P/E ratio, how does this 15.0 P/E ratio compare to historical averages? Is the index now overvalued? On the one hand, the index is now trading above both the 5-year (13.0) and 10-year (14.0) average P/E ratios. On the other hand, it is still trading below the 15-year average P/E ratio (16.2), and is not close to the peak P/E ratio of 25 recorded in the late 1990?s and early 2000?s.