Market Wizard, Vic Sperandeo interview: gold, inflation, and trading the QE wave

Trader, author, and Market Wizard, Victor Sperandeo joins us for an exclusive interview in our first Finance Trends podcast. To say we caught a lucky break with our first guest is a bit of an understatement. 

Victor is a highly regarded veteran trader who has been involved with the markets since his first job as a Wall Street quote boy back in 1966. When he began his independent trading career in 1971, his primary goal was to make money consistently, month after month, year after year. 

After 40+ years of consistent profitability, I'd say he's met that goal. 

Over the course of his career, Vic has traded independently, managed hedge funds and CTAs (commodity trading advisors), and ran portfolios for George Soros and Leon Cooperman. He has also written three books on trading, including, Trader Vic: Methods of a Wall Street Master, a personal favorite which interlaced Vic's trading insights with sections on Austrian economics and personal psychology!

In this rare, hour-long interview you'll hear "Trader Vic" discuss his recent editorial on Paul Krugman (a "political hack") and our debt problems, the Fed's quantitative easing program and prospects for future inflation, his outlook on gold prices, Austrian economics and economic and personal freedom (or lack thereof), as well as his insights on successful trading and the importance of trading psychology. 

Plus, you'll hear about the upcoming Trader Master Class with Vic in New York City (more info below).



Some highlights and quotes from our interview with Vic Sperandeo: 

On gold prices: "What gold doesn't like is higher growth...gold didn't do well from 1982 to 1999. Gold likes chaos and it likes inflation. With every central bank in the world inflating, long-term, gold is a buy. Short-term, there is someone putting pressure on the gold market. I believe it's the Fed or banks working through the Fed to keep gold prices down and to make money-printing policies more acceptable."

The effects of Quantitative Easing: "QEs have not worked to the degree that most people have assumed they would because nobody is spending the money. Money velocity (the turnover of money in the system) hasn't sped up to a degree that would create runaway inflation... and banks aren't making loans of any consequence. What it's doing [with the mix of current, offsetting fiscal policies] is slowing the economy and distorting the markets as people are putting their money in stocks, thinking that this is good for corporate profits."

Vic's insights on trading and the need for emotional discipline: "Sometimes the smartest people and those who have biases, like yours truly, can cost themselves money. You try to eliminate your biases. In my case, I'm biased against believing in the Fed and in Ben Bernanke knowing what he is doing. But that doesn't subtract from trading - if you're trading you really don't care what Bernanke knows or doesn't know [set aside your biases]." 

Investing vs. trading in 2013: "We're not in a real good investment environment here. We're in a very good trading environment and a great liquidity environment. If you're a trader, you should be doing well following the uptrend in stocks because of QE. If you're taking bigger positions and you're betting on longer-term growth, there's where the differences lie and you have to be very careful. Trends and the technicals trump the fundamentals here [in a Fed-driven market]." 

How crucial is psychology in trading and in life?: "The fact is you can train a number of people to do the same thing and you get different results. Why is that? The difference is emotions - it's psychology. The problem is not in the knowledge, it's in the execution. Very few people can discipline themselves to execute the knowledge. It takes emotional discipline." 

Victor Sperandeo will be sharing his global macro outlook and his trading techniques with a select group of participants in an upcoming (March 22nd) Trader Master Class in New York City. You can learn more and sign up (class size is tightly limited) at the link above. 

I hope you enjoyed listening to this interview half as much as I enjoyed doing it. If you'd like to help us spread this discussion to more listeners, please share and retweet this post with your friends and readers by choosing from the ShareThis buttons below (email is included). Thank you for reading and come back often

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Related posts: 

1. Inner Voice of Trading: a lesson on ego and risk.

2. Nassim Taleb and Stan Druckenmiller on coming crisis (Bloomberg interviews). 

3. Lessons from Hedge Fund Market Wizards: Steve Clark (full post series).

Charts: potential new uptrends in CREE, DLB

Looking at a potential change in trend for CREE, maker of LED lighting products. 

I've done up the chart in the manner of Vic Sperandeo's "1-2-3" trend change guide. As you can see, CREE has broken out above the trend line. The lowest low preceding the breakout provides a test floor or boundary and the previous minor rally high acts as the ceiling which CREE must break through to define the change in trend. 

Right now we have a possible change in trend. If CREE tests that upper boundary and then breaks out above that previous high, we'll have a defined trend change and a new uptrend in place, according to Sperandeo's method. 

Also, a recent break above a year-long downtrend line and a successful fill of a prior downward gap at the 37.60 level may be a sign of a positive trend for Dolby (DLB). 

I have to say I'm not as familiar with the current fundamental picture on Dolby. Of course, they are a leader in film sound technology and surround sound, etc. for home entertainment. 

A bit more research will have to be done here (and I'll also take a look at IMAX and RLD), but I think it's safe to say we all know that...

"You don't do heavy metal in Dubly, y'know..." "She means Dolby." - Spinal Tap.

5 predictions from 'Trader Vic' Sperandeo

Victor Sperandeo makes 5 "Frightening Market Predictions", as well as a few policy prescriptions for the USA in this Real Clear Markets piece. Here's a taste: 

"...1. The U.S. is going into recession.

This is being entirely caused by the woefully misguided fiscal policies of the Obama administration.

Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline..." 

Recession is not the only thing on Trader Vic's mind. Head on over for a few thoughts on gold, the future of the EU, hyperinflation, and the global bubble in debt. 

Plus, a few key changes that may help the US fix its problems and change our course for the future (only wish Victor had some more time and space to really flesh these out). Check it out. 

Trader Vic and Market Wizards on Scribd

I've recently updated the Finance Trends "Classic Trading Books" collection on Scribd to include two personal favorites from Victor "Trader Vic" Sperandeo and Jack Schwager.

You'll now find Sperandeo's, Trader Vic: Methods of a Wall Street Master, along with the first volume of Schwager's classic interview series, Market Wizards in the collection.




You can find the scanned e-books and pdf downloadable versions by clicking on the titles in the Trading Books collection widget (RSS readers may need to visit our site to see the Scribd widget) or by visiting the collection shelf at the text link above.

You'll also find a widget embed code included, so feel free to grab it and paste it onto your site or your Facebook page. The widget will be updated automatically to show all newly added titles in the Trading Books collection.

For those of you who'd like a hard copy or Kindle version of these classic texts, visit Amazon (see title links above) to order Sperandeo and Schwager's books. Enjoy!

Victor Sperandeo warns of hyperinflation

"Trader Vic" Sperandeo is on CNBC describing the historical pattern for the onset of hyperinflation, and says the conditions for such a runaway inflation are now here in the US.

We're getting more familiar with these types of extreme forecasts as our economy drifts into unchartered territory. It seems market watchers are almost growing accustomed to hearing predictions about a coming hyperinflation or a looming deflationary depression.

Still, it should be noted that Sperandeo is a serious guy and a very serious researcher (my observations based on reading his work and listening to his interviews). His knowledge of economic history and the nature of money creation and business cycles is profound. So while the forecasted event is an extreme and rare event, don't dismiss Vic as "just another scaremonger".

It is striking to note that while Vic is arguing his case for the likelihood of hyperinflation, in effect the spiralling collapse of a society and an economy, he is interrupted by the CNBC girl who wants to know "what the trade is" in this scenario. Cable TV never ceases to amaze.

Related articles and posts:

1. Dying of Money: causes of inflation - FSN broadcasts via Finance Trends.

2. Interview: Victor Sperandeo on hyperinflation - Tischendorf.com.

Russell: Dow Theory signals bullish market

Quick note: I was catching up with Richard Russell's Dow Theory Letters last night, and Russell made prominent mention of the fact that the Dow Transports and Dow Industrials had both moved above their previous June highs, thereby signaling a bullish confirmation under Dow Theory.

Prieur du Plessis at Investment Postcards has more to say about the Dow Theory bull market signal.

Those who've followed this blog for some time know that your author is an interested follower of Richard Russell's newsletter and a student of Dow Theory, but certainly not an expert in this area.

Excellent introductions to the subject of Dow Theory can be found in Victor Sperandeo's book, Methods of a Wall Street Master, and John Murphy's Technical Analysis. You may also wish to consult the original works of the Dow Theory pioneers (Hamilton, Rhea, etc.) listed in Russell's historical overview.

Related articles and posts:

1. New bull market? - Tim Wood at Financial Sense.

2. Charting the markets: S&P 500 - Finance Trends.

3. A rally with serious muscle (?) - Finance Trends.