Presentation Transcript

1. The Diary of a Mad Hedge Fund Trader“The Investment Landscape in 2030” HS Dent Network ConferenceTampa, Florida 1:00 PM, November 9, 2012www.madhedgefundtrader.com
2. Why Listen to John Thomas? *40 years experience in the global financial markets*10 years as The Economist correspondentin Tokyo*10 years setting up the international equity division at Morgan Stanley*10 years running the first international dedicated hedge fund*5 years of fracking for natural gas inWest Texas*A founder of the modern hedge fund industry
3. This is not a Forecast 1876 This 'telephone' has too many shortcomings to be seriously considered as a means of communication." --Western Union internal memo.1895 Heavier than air flying machines are impossible. –Lord Kelvin, president of the Royal Society.1927 "Who the hell wants to hear actors talk?" --H.M. Warner, Warner Brothers.1943 “I think there is a world market for maybe five .” Thomas Watson, Chairman of IBM.1962 We don't like their sound, and guitar music is on the way out." --Decca Recording Co. rejecting the Beatles, 1962.1981 “640k of memory ought to be enough for anybody.” Bill Gates, founder of Microsoft.
4. The New Golden AgeThe 2020’s will be another “Roaring Twenties”the 50 year advantage-my personal experience *Get ready for the “roaring twenties” as four majortrends combine in ten years to create an extremely positive economic backdrop1) The Demographic headwind that started in 2006 flips to a tailwind in 20222) The US lead in technology exponentially accelerates3) US Energy Independence by 2020 as alternatives, conventional and conservation leverage each other4) A massive health care market develops as most major diseases are cured. Is biology the electricity of the 21st century?*Dow rockets from 15,000 to 50,000 by 2030,and 100,000 by 2036
5. Introduction to DemographicsDad: The Home ATM“Hey dad, can I borrow $10 please?” From: “The Crash Ahead” by Harry S. Dent
6. The Only Chart You’ll Ever Need to ReadDemographics turn to tailwind in 2022, Peaks in the 46-50 Spending groupWorks in a 40 Year Cycle 2006Peak 2036Peak 2022 Trough 1966Peak From: “The Crash Ahead” by Harry S. Dent
7. Implications of The Demographic Tailwind that Starts in 2022 *Labor Oversupply turns to a shortage*Unemployment rate falls to under 5%*Rising wages lead to consumer spending boom*Housing shortage leads to residential real estate boomno serious construction for 15 years*Soaring capital investment to meet this demand drives up interest rates*Inflation at long last returns*Both legal and illegal immigration accelerates*Subprime loans make a comeback
8. Major Long Term Trends Reassert in the 2020’sbring back the “RISK ON” *The growth of the global population from 7 billion to 9 billion*The rise of the emerging market middle class, from 500 million to 2 billion*The scarcity of essential natural resources*Global food shortages accelerates *The rise of technology*Deflation ends, inflation resumes
9. Population Changes 2010-2050 2 billion new peopleMore than half of the increase will be in Islamic countries.Islamic population growth from 1 to 2 billion Greatest growth in poorest countries The war against terrorism will not end in 4 yearsPopulation levels off in Latin America, Africa, ChinaChina’s one child policy has cut growth by 400 million China demographically turns into Japan in 20 yearsPopulation shrinks in Japan and levels off in EuropeUS population levels off at 400 million in 2050from the current 300 million The immigration advantage: Add 1%/year of GDP growth California jumps from 37 million to 50 millionsource: CIA Fact Book
10. The Rise of the Emerging Market Middle Class 1980 Global Middle Class580 million2010 Global Middle Class 900 million (add China)2050 Global Middle Class2 billion add India, more in China, Latin America, and other emerging markets1980 35% US exports to emerging markets2010 54% 2050 ?source: World Bank
11. The 2020’s will be the “Risk On” Decade *Growing economy=“RISK ON”, buy:stocks, emerging marketscommoditiesprecious metals, especially silverforeign currenciesespecially the Australianand Canadian dollarscommercial real estate & multifamily dwellingssingle family homes*Avoid “RISK OFF” Assets, sell:US Treasury bondsCorporate bondsMuni bondsSovereign bonds
12. US Energy IndependenceThe greatest investment opportunity of the century *Fracking technology allows US to become a net energy exporter in 8 years,a new 100 year supply has been discovered in the last 5 years*Will take 10 years to put new gas infrastructure in place,cost of gas is 15% of oil on a BTU basis, 60 cents/gallon fuel*Truck conversion to natural gas cuts oilimports by two million barrels/day*Hybrid, electric, and fuel cell driven cars cuttransportation demand*US conventional gasoline mileage is rocketing 25 to 55 mpg by 2025 means 50% of US oil consumption becomes 25%*Natural Gas crash accelerates coal conversion.Coal has fallen from 50% to 37% of powergeneration in 2 years*Conservation is the sleeper-buildings and light bulbs
13. North Dakota Oil Productionfracking and horizontal drilling take production from near zero to 700,000 b/d in 5 yearsHeaded for 1.8 million b/d = 1 Libya
14. Dow Average 1900-2012The last demographic trough was followed by a 20 fold return in stocks in 18 yearsDow Average soared from 600 to 12,000 1962Demographic Headwind starts 1937 1982DemographicTailwindStarts 1942Battle ofMidway
15. So What Do We Do Until 2022? *The demographic headwind predominates*GDP stuck at a slow 1.5% annual rate *Unemployment remains high*Markets stay stuck in the range with a slightupside tilt*2013 recession is going to be tough*The million dollar question: How far in advance do markets discount the demographic tailwind? 2017, or 2022?
16. The Only Chart You’ll Ever Need to ReadDemographics turn to tailwind in 2022, Peaks in the 46-50 Spending group 2006Peak 2036Peak 2022 Trough 1966Peak From: “The Crash Ahead” by Harry S. Dent
17. Trading DemographicsVietnam (VNM) is a buy Rising populations create ever more consumers and little need for social services, which mean strong GDP growth, small budget deficits, and a strong currency.Source: US Census Bureau
18. If Demographics is Destiny, then America’s Short Term Future is Scary. Source: US Census Bureau Aging population and falling birth rate brings a slower growing GDP, a growing demand for social services, rising budget deficits, and a weak currency. Source: US Census Bureau
19. Global Trading DispatchHow to Run Your Own Personal Hedge Fund From Home *Daily newsletter with 3-4 trading ideas a day *E-mail and text messaged trade alerts for immediate action *Daily updated position sheet and risk analysis *Dedicated password protected website *Biweekly global strategy webinars *Five year research data base *Podcasts with investment heavyweights *Strategy luncheons in your city *2012 “RISK ON” Portfolio & Whento Implement It*All for $3,000 a year$40.17% Return in 2011
20. Trade Alert Daily Performance Since InceptionThe Stairway to Heaven-Average Annualized Return +31.3%
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