InvestIdeas

Goldman Sachs Wrong on Economic Recovery, Macro Hedge Funds Say By Cristina Alesci

Sept. 1 (Bloomberg) -- Paul Tudor Jones, the billionaire hedge-fund manager who outperformed peers last year, is wagering that Goldman Sachs Group Inc. and Morgan Stanley got it wrong in declaring the start of an economic recovery.

Jones's Tudor Investment Corp., Clarium Capital Management LLC and Horseman Capital Management Ltd. are taking a bearish stand as U.S. stock and bond prices rise, saying that record government spending may be forestalling another slowdown and market selloff. The firms oversee a combined $15 billion in so- called macro funds, which seek to profit from economic trends by trading stocks, bonds, currencies and commodities.

If we have a recovery at all, it isn't sustainable, Kevin Harrington, managing director at Clarium, said in an interview at the firm's New York offices. This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.

Tudor, the Greenwich, Connecticut-based firm started by Jones in the early 1980s, told clients in an Aug. 3 letter that the stock market's climb was a “bear-market rally. Weak growth in household income was among the reasons to be dubious about the rebound's chances of survival, Tudor said.

A focus on misleading indicators is driving markets, macro managers say.

Clarium watches the unemployment rate that accounts for discouraged job applicants and those working part-time because they cant find full-time positions, Harrington said. July joblessness with those adjustments was 16 percent, according to the Department of Labor, rather than the more widely reported 9.4 percent.

The housing data isn't as rosy as some see it, Harrington said. As existing U.S. home sales rose 7.2 percent in July from the previous month, distressed deals including foreclosures accounted for 31 percent of transactions, according to the National Association of Realtors, a Chicago-based trade group.

A report by the Mortgage Bankers Association, based in Washington, showed the share of home loans with one or more payments overdue rose to a seasonally adjusted 9.24 percent in the second quarter, an all-time high.

Loaded for Bear

Clarium, which oversees about $2 billion, is positioned for an equity bear market through investments in the U.S. dollar, Harrington said. Falling stock prices will strengthen the currency by forcing leveraged investors to sell equities to pay down the dollar-denominated debt they used to finance those trades, he said.

High unemployment, lower wages and potential missteps by policymakers around the globe may stifle economic growth in 2010, Tudor said. The firm, which manages $10.8 billion, is at odds with 55 economists projecting an average of 2.3 percent growth next year, according to the Bloomberg survey.

Macro managers' pessimism is fueled in part by the U.S. government's response to last year's financial crisis, which they say fails to address the root cause. Banks still hold hard- to-sell assets on their balance sheets, the managers said.

Subdued Credit Growth

Some critical initiatives have been cut short, Tudor said. As a result, toxic assets remain on balance sheets and credit growth is likely to be subdued for a long period.

The Financial Accounting Standards Board voted in April to relax fair-value accounting rules. The change to mark-to-market accounting allowed companies to use significant judgment in gauging prices of some investments on their books, including mortgage-backed securities that plunged with the housing market.

Banks are reporting better earnings because they haven't been forced to account for their losses yet, Clarium's Harrington said.

We haven't fixed the problem, he said. We've just slowed down the official recognition of it.

Source: Bloomberg

http://www.bloomberg.com/apps/news?pid= ... GWGWlnohNo

August 10

Paul Tudor Jones, the hedge fund manager whose $8.9 billion Tudor BVI fund gained 10 percent this year through July, said he expects that global stocks may pause in September on slower Chinese economic growth.

The advance since March is a “bear- market rally, Jones wrote in a report to clients last week. We are not inclined to aggressively chase the market here.

THE GREAT LIQUIDITY RACE “ WHY GOLD WILL SOAR

Paul Tudor Jones appears to have shifted from the bear market rally camp to the bull market camp.

As of our last update he was firmly in the position that the market had rallied too much and was due for a downturn. Late last summer Tudor Jones stated his desire not to chase the 45% rally in stocks and rather, buy into an autumn downturn in anticipation for a year end rally:

He has changed his tune a bit now and believes the economy has the potential to remain quite robust into Q2 of 2010 as Fed policy remains accommodative, the dollar remains weak and inventory de-stocking continues:

Due to this easy money approach he is becoming heavily invested in gold and other precious metals as he expects metals to win the great liquidity race:

He continues to like equities into year-end. Let's just hope he didn't just buy at the top:

Source: Practical Capitalism

http://pragcap.com/the-great-liquidity- ... -will-soar

What 23 Pages of Paranoia Taught Me About Trading by Brian Hunt

"The most important rule of trading is to play great defense, not great offense. Every day I assume every position I have is wrong." – Paul Tudor Jones

Tucked near the middle of the greatest book on trading ever produced are 23 pages of pure paranoia.

These 23 pages center on a guy who sees trouble around every corner... a guy obsessed with risk... a guy probably worth over $3 billion... a guy who correctly called the 1987 stock market crash, made over $80 million in the process, and will go down as one of the greatest trading minds of all time.

Pages 117 through 139 of Market Wizards contain an interview with legendary trader Paul Tudor Jones.

For many years, Jones was the picture of the Wall Street big shot. He owned an enormous Chesapeake Bay mansion. He took skiing trips to Switzerland. He married a fashion model. To this day, Jones controls one of the largest hedge funds in the world.

He became so successful because of the idea behind the quote above – the idea that playing great defense is the key to succeeding in the markets. He became so successful by focusing on not losing money... His billions came as a result.

Reading Jones' interview will take you less than 10 minutes... and it might be the greatest "time put in versus value received" proposition an investor or trader will ever get. You'll find that for a guy associated with "winning" so much money, Jones constantly talks about losing... he constantly talks about playing great defense.

There's a comment on defense on nearly every page. In addition to his quote above, he says:

· Don't focus on making money. Focus on protecting what you have.

· I know that to be successful [in trading], I have to be frightened.

· I am always thinking about losing money as opposed to making money.

· Risk control is the most important thing in trading.

· Never play macho man with the market.

Like all great traders, Jones sees his No. 1 job as cutting risk to the bone. You can cut your own risk by always using protective stop losses and intelligent position sizing.

Bottom line: Keep your losses small and your winners large. And never put more than 1% or 2% of your account at risk on a given trade. An amateur trader will often risk 5% to 10% of his account on a trade, which eventually leads to disaster.

I often hear: "I'm thinking about getting into trading, what should I know?" I always reply: "Most people lose in the stock market. It's an incredibly hostile place, where you're going toe-to-toe with the world's smartest people."

I also encourage them to buy Market Wizards and read Jones' interview many times. Repeating his "defense" lines over and over is about the best "daily affirmation" a trader or investor will find.

Playing great defense. Winning by not losing. It's the system Paul Tudor Jones used to become a billionaire... and it's the second most important factor in your trading success.

http://www.growthstockwire.com/

Very interesting. Tony Robin's Hedge Fund Manager was scared out at the bottom in late August and now wants to buy after everything has gone up ...

PAUL TUDOR JONES: BUY THE MOMENTUM BUBBLE by TPC

World renowned hedge fund manager Paul Tudor Jones says global imbalances are causing extreme problems in the USA and that the Fed’s response is ultimately creating an environment exactly like the late 90′s when the Fed bailed out LTCM.

In short, Tudor Jones says the current economic malaise is being caused by the manipulation of the Yuan and the loss of US labor to China. This currency imbalance has resulted in a much weaker US economy over the last 15 years:

These comments are interesting to me mainly because I disagree with just about everything he says. He says QE is inflationary. He says China funds our spending. He says there is a high risk of a bond bubble. He says we are at risk of becoming Greece.

What is perhaps most interesting about these comments is that a mysterious hedge fund manager was panicking about global economic collapse in late August. We know, because self-help guru Tony Robbins warned us that his money manager was very concerned.

This person was later revealed to be Paul Tudor Jones. So, after getting scared at the bottom one has to wonder if Paul Tudor Jones isn’t jumping on the momentum train at the very top?

http://pragcap.com/paul-tudor-jones-buy-momentum-bubble

Just saw this....always a good reminder for the traders.


Source: TurtleTrader

From Market Wizard:-

For many years, Jones was the picture of a hot shot Wall Street trader. He owned an enormous Chesapeake Bay mansion.

He took skiing trips to Switzerland. He married a fashion model. To this day, Jones controls one of the largest hedge funds in the world. According to Forbes, he's a billionaire.

You'll find that for a guy associated with "winning" so much money, Jones talks a lot about losing. He emphasizes that successful trading is all about playing great defense.

Some quotes from Jones about this idea:

The most important rule of trading is to play great defense, not great offense…

I am always thinking about losing money as opposed to making money…

Risk control is the most important thing in trading…

Never play macho man with the market.

Like all great traders, Jones sees his No. 1 job as cutting risk to the bone. He became so successful by

Anyone can put Jones' ideas to work by making sure to keep their trading "bets" small.

You never want to risk a substantial portion of your wealth on just one idea. Be conservative.


Source: Daily Wealth

Trader - Paul Tudor Jones

http://www.tudou.com/programs/view/XH5W4vffBbY/

Don’t be a hero.

Don’t have an ego. Always question yourself and your ability.

Don’t ever feel that you are very good. The second you do, you are dead… my guiding philosophy is playing great defense.

If you make a good trade, don’t think it is because you have some uncanny foresight.

Always maintain your sense of confidence, but keep it in check.

- Paul Tudor Jones II

Amber Lee Mason: Where to find the world's cheapest stocks today

Regular readers know one of our goals is to pass along insight and actionable ideas from the world's best investors. The top investors have decades of experience, proven track records, big research budgets, and the best contacts.

Every quarter, these elite investors file a report (called a "13F") on what stocks they've recently purchased (or sold). Reading these reports is a way to get millions of dollars' worth of research for free. We'd be fools not to "look over their shoulders" for potential trading and investment ideas.

... Today, we start with an idea from one of the best traders of all time, Paul Tudor Jones.

For many years, Jones was the picture of the Wall Street big shot. He regularly put on huge winning trades. He owned an enormous Chesapeake Bay mansion. He took ski trips to Switzerland. He was profiled in the trading bible Market Wizards. To this day, Jones controls one of the largest hedge funds in the world.

He became so successful because of his legendary focus on risk management. Like all great investors and traders, Jones made sure to limit his risk... The rewards took care of themselves.

Jones is still one of the world's top money managers. And just recently, his 13F revealed he's bullish on emerging markets. Specifically, he owns the iShares Emerging Markets Fund (EEM)... which is one of the largest and most liquid ways to take a diversified position in emerging stocks like India, Russia, Indonesia, and Brazil.

Regular readers know we like the idea of owning emerging markets right now. These markets are typically seen as riskier than developed markets.

From early 2011 to mid-2013, investors fled riskier assets... so emerging markets sold off heavily. This has made the emerging-markets complex home to some of the cheapest stocks in the world...


Source: DailyWealth Trader