The Freedom Factory

The stock market hit and then furiously bounced off a low on March 9th. Since then it has shot up about 30% nearly uninterrupted. Hope abounds that we may be emerging from one of the worst economic disasters in 20+ years. By many measures the frantic chaos of the last year appears to be subsiding, particularly when looking at the resurgence of corporate earnings, stock prices, and declining value of the CBOE Volatility Index (VIX). Yet it is at times like these when it makes most sense to buy insurance, and it just happens to be cheaper than it has been in a long time. Continue Reading

Obama continues Bush policy of surveillance secrecy despite campaign promises, tax protests spark conservative insurgency online, submit video footage of your tax woes to CNN and you might be aired nationally, Fed historian and political economist predicts worse inflation than 1970s, consider real estate as an inflation hedge, municipal bond market shows signs of life, older workers 45 years and older face brunt of recession, and flood of government debt crowds out private economy… Continue Reading

Obama’s budget plans bring $9.3 trillion in deficit spending, regulators “seize” credit unions and banks, Energy Department to give $40 billion in alternative energy loans, drug violence sparks debate on legalization, and Obama offers Iran “new beginning” in U.S.-Iranian relations…just the latest in your Freedom Under Fire Report! Continue Reading

With all the speculation on a government takeover of the banking industry, including Alan Greenspan’s statement that “the U.S. may have to temporarily nationalize some banks until the industry is restructured,” we should do some serious soul searching. America has a long tradition of respecting property rights and restricting government power from the private domain. Overt nationalization would be unconstitutional, but change is in the air… Continue Reading

The Fund lost 2.05% this week, closing out a terrible month with a total loss of 25% for August. Despite increased precautions in our risk management approach, we suffered severe losses driven by currency markets. Unprecedented appreciation in US dollar hit us hard on multiple euro bets, and also took a toll on our commodities positions. Overall, the Fund is down 4.59% since inception. Continue Reading

The Fund performed mainly flat this week, down 0.76%. We reallocated 85% of the portfolio over the course of the week, leaving 15% in cash to lower risk and add flexibility. Reallocation usually comes with a slight weekly loss due to illiquidity of assets, in which case they are immediately revalued from bid to ask after opening them. We temporarily lose the spread. All positions currently remain within acceptable risk parameters, with additional risk hedging applied to the most volatile assets. Continue Reading

Diversification is critical for long term portfolio health. We’ve all heard about the benefits of not “putting all your eggs in one basket,” but conventional wisdom needs to be updated every now and then. The modern investor has a wealth of new tools to achieve real diversification. Small retail investors are encouraged to spread their portfolios across a range of different types of stocks and bonds. Small caps, mid caps, large caps, value, growth, short and long-term Treasuries, and municipal bonds have been the staple of a diversified portfolio. Well, times have changed and so too should your notions of eggs and baskets. Continue Reading

Iron condor credit spread strategies are particularly vulnerable to severe market movements, either up or down. For a portfolio predominantly allocated towards this trading strategy there are certain steps one should consider to protect against potentially catastrophic events.

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Americans should be afraid of the long term value of the dollar. The country has massive fiscal imbalances that only look to be worsening. The social-political trajectory we are on is not likely to change, so a prudent thing to do is start transferring assets out of the country. A great way to do that is to buy foreign currencies. Exchange-traded funds (ETF’s) allow the regular investor to gain exposure to a variety of the world’s largest currencies, including Euro, British Pound, Canadian dollar, Australian dollar, Japanese Yen, Swedish Krona, Mexican Peso, and Swiss Franc.

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