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The Mad Hedge Fund Trader

The Mad Hedge Fund Trader. Long Term Strategy Review The View from 90,000 feet HS Dent Network Demographic School Pointe Hilton Squaw Peak Resort, Phoenix, AZ, April 29, 2011 www.madhedgefundtrader.com. Major Long Term Trends.

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The Mad Hedge Fund Trader

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  1. The Mad Hedge Fund Trader Long Term Strategy ReviewThe View from 90,000 feetHS Dent Network Demographic SchoolPointe Hilton Squaw Peak Resort, Phoenix, AZ, April 29, 2011www.madhedgefundtrader.com

  2. Major Long Term Trends *The growth of the global population*The rise of the emerging market middle class*The scarcity of essential natural resources*The shift from paper to hard assets*Demographic investing*The rise of technology*Deflation and then inflationThe mixing and matching of multiple trends

  3. Should We Invest in Paper Assets or Hard Assets? or

  4. Paper Assets Stocks, bonds, derivatives,loans, promissory notes1) Potential supply is infinite2) Just turn on a printing press3) Several countries are competing to print as much as possible in a race to the bottom4) Risk of Inflation is great

  5. The Demise of the DollarUS Dollar Purchasing Power Parity 1790-2010 1835- Andrew Jackson closed the Bank of the United States1860 - Civil War begins massive government borrowing.1913 – Federal reserve Bank established1933 - Franklin D. Roosevelt devalues dollar, bans gold ownership1939 - WWII begins, 1961-Vietnam War Begins

  6. Hard Assets Commodity Bottlenecks1) 5 years to bring to market2) Enormous capital markets3) Equipment shortages4) Shortage of specialist engineers5) Financial crisis created two yearbubble in the pipeline6) Environmental approvals7) Infrastructure requirements (road, pipelines, water, electric power)8) 25 years of under investment 1980-2005Bottom Line: Linear growth cannot meet exponential demand

  7. Malthusian Economics Applied to Commodities

  8. What Happens to Hard Asset Prices?Exponential Growth overwhelms linear supply

  9. Hard Asset Classes • Precious metals gold, silver, platinumCommodity producing currencies Australian, Canadian dollarsEnergy oil, gas, coal, natural gas, uraniumRaw Materials Copper, Iron ore, rare earths, titanium, zinc, nickelFood corn, wheat, soybeans, fertilizer, seedsReal Estate agricultural land, emerging market commercial real estateCommodity Producing ETF’s Russia, Australia, Canada

  10. Gold *”Peak Gold” is upon us*Return of high inflation*Cost of production rising(power shortages in South Africa)*Exploitable mines are shrinking (ABA) at 15,000 feet in the Andes*End of EC central bank selling*Emerging market central bank bidding war*Rise of the emerging market middle class limited history of paper money*Limited supply and a small market

  11. Gold +14% since Macro Millionaire started

  12. Other Precious Metals • Silver-rising industrial demand cultural preferences-Latin AmericaPlatinum-Only 4 producing mines (South Africa 80%, Russia 10%) Global car boom 9 million to 15 million units/year to 2015. Cultural preference-JapanPalladium- Catalytic converters spill over collector demand

  13. Silver+100% since Macro Millionaire started

  14. Energy OilPeak oil is 5 years offMiddle East instability emerging market demand is the main driver rising monetary demand for oil 150 year head start in infrastructureCoal 50% US energy supply Cap & trade won’t happen in our lifetime Huge exports to emerging marketsNatural Gas Forget it. Discovery of a 200 year US supply, but long term, the infrastructure will rise to meet the new supply

  15. Oil+40% since Macro Millionaire started

  16. Raw Materials Iron OreCopperRare EarthsAluminiumLumberZincNickel

  17. Food *Global Food stockpiles at 20 year lows*We need another green revolution*40% of wheat producing world is in draught*China just announced a 14% cut back in wheat plantings *Corn, Wheat, Soybeans, Fertilizer farm equipment*Rising quality of food demanded by emerging populations. One pound of beef requires 16 pounds of grain.

  18. Corn+42% since Macro Millionaire started

  19. Commodity Producing CurrenciesAustralian (FXA) and Canadian Dollars (FXC)14% Since Macro Millionaire started

  20. Commodity Producing Stock MarketsAustralia (EWA), Canada (EWC), Russia (RSX)+18% since Macro Millionaire started

  21. TechnologyThe One Paper Asset I Will Buy *One of few areas where earnings growth is so high that it outweighs the other negatives of paper assets.*Companies still make stuff people want to buy.*Are in effect foreign companies, with 60%-80% of sales outside US.*The perfect way to surf the technology wave.

  22. Apple (AAPL)From a negative net worth to $350 Billion in market cap in 14 yearsgreat for a company that never invented anything-design, assembly, marketing, distribution

  23. To Access my Research Data Base Please Go towww.madhedgefundtrader.com

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