Real Talk on China, Snapchat, SALT and Ponzi Schemes

May 15 2017 | 11:20am ET

Today, we discuss the China Silk Road, the Snapchat IPO, the SALT Conference, and new punishments for operating Ponzi Schemes.

Hair of the Dog

Shot: Apple price target climbs to $170 at Goldman Sachs

Chaser: Third Point LLC dissolves share stake in Apple, Goldman Sachs

Quotes of the Day

"Americans currently conceive of power in almost exclusively military terms, which is ironic, because we claim to believe in the power of markets to shape events, and the Belt and Road Initiative relies on markets."

Former U.S. Assistant Defense Secretary Chas Freeman discussed China’s forum to launch its New Silk Road program with NBC. In the words of Joe Biden, this is a “big F-n deal.”

The $1.4 trillion initiative would connect Asia, Africa and Europe by land and sea to create modern trading routes. It’s 11 times larger than the U.S. led Marshall Plan after World War II.

Freeman argues that the concept would shift the balance of power, jobs and economic might to the East if the U.S. doesn’t take this seriously.

The countries involved represent 55% of global GDP, 70% of the global population, and 75% of attainable oil and gas reserves. The on-land portion will travel through China, Kyrgyzstan, Uzbekistan, Iran, Iraq, Syria, Russia, and Italy. The sea route would include major hubs in Vietnam, Indonesia, Tanzania, Djibouti, Pakistan and Greece.

Luckily, not one of the countries involved has any history of corruption, bribery or property confiscation to meet their regime’s goals. HA!

Here’s the weird part about this plan. China is indoctrinating its people to embrace its massive infrastructure project. The government has released a children’s bedtime story called

 "The Belt and Road Initiative." 

Here’s how NBC describes a portion of the story: "Once upon a time, several routes led from China to Central Asia to Europe. It was called the Silk Road. ... Ships traveled from China through Southeast Asia to Africa, and they'd bring things back to China like giraffes. ... China's president, Xi Jinping, proposed making new routes like the old routes. But even bigger. It's called the Belt and Road Initiative."

Exit question: Is this all just a big ruse to bring more giraffes to China?

"On Snap we saw a lot of interest immediately following the IPO. Now we don't see as much trading in Snap. Millennials seem to be holding Snap stock."

Wall Street is a place where smart people come up with ways to take away money from dumb people.

This year’s prime example of this exercise was the Snapchat IPO.

And there was no dumber money than that of millenials, who were suckered into buying this overpriced, unprofitable, poorly managed, cavalier organization that is getting its butt kicked by Facebook.

TD Ameritrade’s J.J. Kinahan said that millennial investors were signing up in droves so they could purchase SNAP stock

Robinhood, a platform that caters more to millennial investors, lists SNAP as its third most popular stock.

We tried to warn them in our April issue of Modern Trader.

They didn’t listen. They didn’t listen.

People have to keep in mind that hedge funds are not designed to outperform bull markets. But when looking at all of the evidence, macro funds have not been able to outperform given their size and exposure.”

That’s Malachite Capital co-founder Jacob Weinig, who took part in an interview with Finalternatives and Modern Trader. On Fridays, the Daily Alpha will feature an interview with money managers making headlines.

This interview appears in the June issue of Modern Trader’s annual hedge fund issue, which includes a wealth of original content on the challenges and opportunities and additional interviews with top influencers in the industry.

Finalternatives will be attending the annual SALT Conference this week in Las Vegas and scheduling interview with managers. If you’d or someone you know would like to participate this week or in the future, contact our editors here.

And look out for regular updates LIVE from SALT starting tomorrow night.

Moumen encouraged dozens of clients, including many who were nearing retirement age, to liquidate their other investments and retirement accounts, and invest with him. Moumen did not tell investors that he actually had no experience managing a hedge fund, had a history of losing money in the securities market, and was relying on investor money to support his lifestyle and pay personal expenses.”

Advisor News reports that a terrible person masquerading as a hedge fund manager stole money from retirees and gave them fake statements. Tamar Moumen, 39, stole retirement savings from more than 50 people and bought a $1 million home and a Tesla – with virtually no fear that he would get caught.

In the post-Madoff era, this is the prime example of where any proposed self-regulation of the money management industry should include the word “defenestration” in all of its punishments.

Monday’s Reading List

·      Barron’s: Don’t Buy the VIX—Buy the VIX’s Owner Instead

·      CNBC: Hedge fund manager Tepper exits JCPenney stake: Filing

·      Business Insider: A UK hedge fund made a $500+ million bet on Wells Fargo

·      Reuters: Hedge fund Passport nurses fresh losses as assets shrink

·      Fox Business: Whole Foods Gets Breathing Room

Grab the Newsletter 

The Daily Alpha is published on Finalternatives.

Signup here for the daily FINalternatives Newsletter, which includes the Daily Alpha.

Follow @FINalternatives 

Be sure to check out the award-winning Modern Trader and a very special offer for first-time readers and follow @moderntradermag. 

You can also pick up a copy of the June Hedge Fund issue at Barnes & Noble.

Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon. 


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