A Personal Note From The Editor:
In 1995, James Moore, the creator of the Moore Inflation Predictor died and I began publishing the Financial Trend Forecaster newsletter in paper form. Every month in the 25+ years since then, I’ve published an update to the Moore Inflation Predictor©.
Financial Trend Forecaster specializes in analyzing and predicting trends and profit opportunities in Inflation, the Stock Market, Gold, Bonds, and New Technologies. In January of 2003, we created InflationData.com to specialize in all forms of information about the nature of Inflation. In 2009 we added Elliott Wave University to help teach you the principles of Elliott Wave analysis.
Personal Financial Background
I began investing in the stock market at the age of 15. At the time, my grandfather subscribed to several “Hard Money” newsletters, so I earnestly began reading them and was steeped in admiration for Gold and an aversion for “Public Debt”. My grandfather was an old German who had lived through the hyperinflation days and was a firm believer in a strong currency, Gold, and Swiss Banks.
By the time I graduated from High School, I had invested my college money in South African gold stocks (long before South Africa had achieved prominence in the popular press, and investing there became “politically incorrect”). These stocks paid off handsomely over the next four years, and the dividends earned returned many times the original principal invested. So the dividends paid for a good education at a private engineering college in New York. By the time I graduated with a Major in Management and a Minor in Engineering, the value of my stock and my hard money education had grown significantly.
One Christmas, while still in college, I made my first foray into options trading. I sold some covered call options against some Canadian gold stocks I owned (in addition to the South Africans) because I firmly believed the price of Gold was temporarily headed down. I successfully picked up a few hundred dollars for Christmas presents that year and was able to keep my stocks intact.
Over the years, I’ve had many successes and a few failures, but I’ve always tried to learn from my mistakes. Anyone who claims never to have had a loss is either a liar or has never made a trade. The key to investing is knowing your investment, maximizing your gains, limiting your risk, and keeping your losses small.
On the day of the crash of 1987, I made several thousand dollars shorting the market, but my most spectacular success to date has been in the currency arena. A friend who used Elliott waves to predict market turns told me to watch for the Yen peak against the dollar. So when I thought it was about to fall off a cliff, I “splurged” and bought about $400 worth of put options on the Yen and put them away.
I didn’t watch the market too closely because sometimes it makes you too jumpy and so you “leave too much profit on the table”. In general, I knew the Yen was heading down but didn’t follow the day-to-day fluctuations. I only had $400 to lose, so I just let it ride.
As the options neared expiration, I checked on their price, and my meager $400 investment was up a whopping 1500% or now worth $6000. At first, I thought there must be a misprint in the paper. But after a bit of checking, I realized it was correct, so I entered a sell order. The day I sold was the exact top of the market, and somehow I received more than the highest quote in the paper. According to the “Wall Street Journal,” I should have received a maximum of $7200. But instead, my account was credited almost $10,000!
So in three months, I had made 2,500% and turned $400 into $10,000!!! By the time I sold, these options were extremely far “in the money” and therefore were exceptionally thinly traded. I assume someone wanted to close out a position very badly, and I probably couldn’t have done the same thing on a large number of contracts.
Another time, in 1991, the Moore Inflation Predictor© was predicting a significant drop in Inflation, so I decided to invest heavily in bonds. Rather than take a conservative approach and invest in a bond fund (which eventually made about 24%), I found an individual bond (Unisys) trading at a steep discount to Par. The computer industry was currently “out of favor,” and Unisys was not doing well financially, but the company could easily cover the small bond issue out of petty cash. The bond had a short maturity, so it truly was a very low-risk trade. By the end of the year, however, Unisys was back in favor, the bonds were at Par, and interest rates had fallen like a rock. So instead of making 24%, I had made close to 40% on my money.
Since then, I have seen extremely hot markets and market crashes. In 1997 I began looking for a top in the market and told my subscribers that the market was taking on the proportions of a mania. And although the market continued upward for another year and a half, the resulting crash is now epic. My philosophy is to let someone else have the first 10% and the last 10% of any given rise, and I will take my 80% out of the middle.
I have now been actively studying the market for over 45 years. I have read hundreds of investment newsletters and scores of books. Over the years, I have traded Stocks (foreign and domestic), Bonds, Mutual Funds, Currencies, Options, and Metals. In addition, I have been licensed by the National Association of Securities Dealers to sell Securities and Mutual Funds. (I received a 92% and a 98% score on my first try on two exams that many professionals require two or three attempts to pass.)
I gave up my Securities License because I did not like what I saw in the Securities Industry. It was early 1987, and the industry wanted dealers to get their customers to Buy, Buy, Buy! The market was HOT! I felt it was TOO HOT and customers should be selling and taking their profit, but the industry wouldn’t let me say that, so I quit.
I spent the next few years as a licensed Microsoft Professional learning the skills necessary to computerize my investment models and developing web publishing skills. All the while, I was installing computer networks around the world in exotic places like Ecuador, Thailand, Germany, Kenya, Ivory Coast, S. Korea, Guatemala, Zimbabwe, Hong Kong, Brazil, and London. All this traveling gave me a broad perspective on the world. Throughout this time, I continued to hone my investment skills and publish Inflation and Investment trend information at Financial Trend Forecaster and eventually devoted full time to publishing helpful investment information.
I hope you find our information helpful.
Tim McMahon, Editor
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