Dollar testing highs against the Canadian Dollar as Canada struggles with identity crisis

Is Canada a "real" country?  What is a "real" country anyway?  Is a "country" defined by ethnic lines, borders, corporations, or what the United Nations says?  Is Kosovo a country?  Some say yes, some do not agree:

Kosovo, self-declared independent country in the Balkans region of Europe. Although the United States and most members of the European Union (EU) recognized Kosovo"s declaration of independence from Serbia in 2008, Serbia, Russia, and a significant number of other countries—including several EU members—did not.

Well Canada is lucky to have self-declared itself as a country during a period where many breakaway regions and colonies became countries (let"s not get into the debate about USA because America Inc. is an artificial country, actually it is a corporation).  But the point here is that, as we explain in Splitting Pennies - Understanding Forex - A COUNTRY IS A CURRENCY.  Yes, this means that Germany, Italy, and others - have given up their sovereignty for the chance to participate in the Euro.  This point is one of the main reason nationalists throughout the European Union rally for its demise.   

But what about Canada?  One of the ex-colonial British states which still is part of the "commonwealth" Canada enjoys the best of both worlds - independence but protection from two big brothers; USA and the UK.  And at least for the time being, Canada is really a real country, at least more than EU nation states are.  Canada is not part of a "super state" although a "super alliance" called the Commonwealth is similar, London doesn"t directly control Canada"s monetary supply (vis a vis the currency) so for now, Canada is really an independent country.

Take a look at recent FX activity in the "loonie" USD/CAD pair:

For those new to FX, the above chart shows USD vs. CAD which means that the US Dollar is UP against the Canadian dollar.  This area of 1.36 has been a top at least for 2017 and the latter part of 2016; a break here could signify a bull run where there"s no further technical resistance until the Jan 2015 high of 1.47.

The loonie as the CAD is called (because of the bird, not because of lunatics in Canada) is considered a commodity currency due to oil and other resources up there.  Another reason that it"s time the US just annexed Canada and made it the 51st state (much better than Puerto Rico, me thinks).  Here"s a list of reasons the US should invade Canada as explained in a previous article exclusively on ZH by Global Intel Hub.

What"s the FX trade here?  Simple; place limit orders above and below the several day range; whichever way USD/CAD breaks out (up or down) it will break hard, as Canada struggles to establish its own identity as a real G8 Currency.

Of course, if you"re in one of the 50% of publicly listed companies that doesn"t hedge FX (don"t see=don"t exist), this is a potential risk if you do business in or with Canada (and thus have CAD exposure).  

If all this is confusing, you can always invest in futures strategies and forget it.

For a detailed play by play breakdown of how to trade such an event; checkout Fortress Capital Trading Academy, or Splitting Pennies the Book.

Trumpocalypse: Liberal Ivory Tower of Academia collapsing

Universities in America have typically been dominated by a liberal
bias.  Why is that?  Because, working for a University is sort of
like working for the Government.  There is reason for the expression,
those who can"t do - teach.  Grow a 2nd brain - understand why by reading THIS BOOK. 

The mindset of employees at such insitutions is quite different
than one might think.  We"re not going to name any names in this essay; this
isn"t about a person or individual University.  It"s about the
intellectual class, really the only public intellectual class in America with
any respect; the Ivory Tower.  If you haven"t heard this expression
before, it refers to the high brow raised lip attitude class of University
Professors and their associates.  They have influence on every aspect of
society.  They are like Adam Smith"s hidden hand - the subtle advisors who
are secretly directing politics, big business, technology, and culture.
 Fortunately however, they don"t have any power, and don"t really control
society, like the Illuminati do.  Their influence however should be noted;
they"ve influenced Presidents of the United States, Bankers, the Media (most
notably) and literally every aspect of human life in America.  I mean, who
doesn"t trust and respect a University Professor?  They know what they"re
doing - right?

From Google:

a state of privileged seclusion or separation from the facts and
practicalities of the real world.

"the ivory tower of academia"

Now to be fair, not all University Professors are alike, we shant
"profile" them, as they profile individuals who have ideas they don"t like.
 There"s do-ers out there, especially around Silicon Valley where many
have left their Ivory Tower positions to join startups or start them
themselves.  But the Ivory Tower class remains; and it remained until the
Trump victory in November - a major influence on society and hallmark of
American culture.  But all that"s been shattered.  Their hidden
influence on the media, should be noted by readers of Zero Hedge and other
sites, people "in the know".  Because they shape public opinion, possibly
more than the CIA with all of it"s domestic mind-control operations.
 Venues like "NPR" and even "The Simpsons" are
carefully crafted with leftist messages, agendas for open expansion of foreign
affairs, expansion of government, anti-male value systems, and other
"progressive" ideas are implanted like seeds, waiting to grow like weeds when
the next rain comes.  

Here"s one example, how Academia helped the Media with their war
against Trump.  Have you been hearing recently "Studies show
that.." .. "Obamacare is more popular after the election"
 or some such nonsense.  Who are they polling?  They claim their
polls aren"t biased, they are scientific.  But these are the polls and methods that had
Trump losing by a landslide!

What does this all mean?  We"re experiencing a
major paradigm shift, (this is an Ivory Tower word, from Thomas Kuhn"s "The
Structure of Scientific Revolutions - a must read for investors).

As a bright example take
a look at what Brian Nosek is doing to crack the glass bubble surrounding the Ivory Tower:

Sometimes it seems surprising that science functions at all. In
2005, medical science was shaken by a paper with the provocative title “Why most published research findings are false.” Written by John Ioannidis, a professor of medicine at Stanford
University, it didn’t actually show that any particular result was wrong.
Instead, it showed that the statistics of reported positive
findings was not consistent with how often one should expect to find them. As Ioannidis concluded more recently, “many published research findings are false or exaggerated, and an
estimated 85 percent of research resources are wasted.”  It’s likely that
some researchers are consciously cherry-picking data to get their work
published. And some of the problems surely lie with journal publication
policies. But the problems of false findings often begin with researchers
unwittingly fooling themselves: they fall prey to cognitive biases, common
modes of thinking that lure us toward wrong but convenient or attractive
conclusions. “Seeing the reproducibility rates in psychology and other
empirical science, we can safely say that something is not working out the way
it should,” says Susann Fiedler, a behavioral economist at the Max Planck
Institute for Research on Collective Goods in Bonn, Germany. “Cognitive biases
might be one reason for that.”  Psychologist
Brian Nosek of the University of Virginia says that the most common and
problematic bias in science is “motivated reasoning”: We interpret observations
to fit a particular idea. Psychologists have shown that “most of our reasoning
is in fact rationalization,” he says. In other words, we have already made the
decision about what to do or to think, and our “explanation” of our reasoning
is really a justification for doing what we wanted to do—or to believe—anyway.
Science is of course meant to be more objective and skeptical than everyday
thought—but how much is it, really?  I
was aware of biases in humans at large, but when I first “learned” that they
also apply to scientists, I was somewhat amazed, even though it is so obvious.  Whereas the falsification model of the
scientific method championed by philosopher Karl Popper posits that the
scientist looks for ways to test and falsify her theories—to ask “How am I
wrong?”—Nosek says that scientists usually ask instead “How am I right?” (or
equally, to ask “How are you wrong?”). When facts come up that suggest we
might, in fact, not be right after all, we are inclined to dismiss them as
irrelevant, if not indeed mistaken. The now infamous “cold fusion” episode in
the late 1980s, instigated by the electrochemists Martin Fleischmann and
Stanley Pons, was full of such ad hoc brush-offs. For example, when it was
pointed out to Fleischmann and Pons that their energy spectrum of the gamma
rays from their claimed fusion reaction had its spike at the wrong energy, they
simply moved it, muttering something ambiguous about calibration.

The implications for politics and the broader economy are huge.
 Studies, focus groups, corporate funded research retreats, are one of the
Establishment"s, and the Ivory Tower"s biggest tools.  The election was a
crack in the dam - it"s a proof that you can"t manipulate public opinion to fit
your own.  But it"s far from the only crack, just the most obvious one.  What"s
happening is a major system-wide Ivory Tower Psychosis, the most basic form of
mental illness - but it"s happening at a class level, as a group.
 Emotionally injured leftists are fleeing to Canada, or promoting
secession for California (which is really a good idea by itself, who needs a
Federal government).  Reality is crashing down on them, as it doesn"t fit
with "their reality" - but "their reality" was artificially created for
decades, depending on how you calculate.. For decades, Establishment leaders like
George Bush created their own reality with their power, and even called it the "Reality Based Community" that is, people who live in
the bubble of the Ivory Tower:

The aide said that guys like me were "in what we call the
reality-based community," which he defined as people who "believe
that solutions emerge from your judicious study of discernible reality."
... "That"s not the way the world really works anymore," he
continued. "We"re an empire now, and when we act, we create our own
reality. And while you"re studying that reality—judiciously, as you will—we"ll
act again, creating other new realities, which you can study too, and that"s
how things will sort out. We"re history"s actors…and you, all of you, will be
left to just study what we do."

It"s like the Media"s recent admission that it"s the media"s job
to control what people think.  Well, not exactly.

The Ivory Tower Bubble has popped; and we"re seeing the casualties
on a daily basis.  It"s certainly not the last establishment-class that
we"re going to see crack from the pressure of reality.

To
learn how the Elite manipulate the news which in turn manipulates markets,
checkout Splitting Pennies - Understanding Forex for only $6.11 on Amazon, also
now available on your iPhone via Smashwords.

Zero Hedge readers get 35% off Fortress Capital Trading Academy type
coupon code spring17 when checking out, at www.fctradingacademy.com learn how
the "real" world works.

The valuation of financial knowledge

How does one value financial knowledge? Finance as both a topic and industry has been holding huge secrets guarded by the most rich and powerful in the world for hundreds of generations. Why don’t they teach these secrets to the masses? It’s the same reason a magician doesn’t reveal his tricks. But just like children are fascinated with the skilled magician pulling the rabbit out of a hat, adults are fascinated with the financial wizardry of financial experts. We show you in our simple to follow introductory course that finance and investing is not magic. Just like the magician, financial experts simply are well trained, and follow a financial philosophy of their choosing (there are several) such as “Value Investing.” Due to the internet, obtaining this knowledge is possible for anyone in any place at any time. It’s not necessary to go to an expensive Business school like Harvard or Wharton anymore (although, you won’t make high level connections anywhere else) to gain financial knowledge. You can do it in the comfort of your own home.

The study of knowledge is known as Epistemology, roughly defined as:

Epistemology studies the nature of knowledge, justification, and the rationality of belief. Much of the debate in epistemology centers on four areas: (1) the philosophical analysis of the nature of knowledge and how it relates to such concepts as truth, belief, and justification, (2) various problems of skepticism, (3) the sources and scope of knowledge and justified belief, and (4) the criteria for knowledge and justification.

This definition provides a great template of how to understand what is financial knowledge and how to value it. If one knows how to take a dollar and turn it into two – this certainly is priceless. But there’s a big spectrum of financial knowledge, ranging from Wall St. genius to understanding personal finance and how to properly file taxes. The problem of the valuation of an investment strategy for example, it is binary – either it works, or it doesn’t. The difference between a 15% return and a 17% return is not statistically significant. But how to look at the mathematics of a return, and determine the difference between Bernie Madoff and George Soros? That’s priceless.

The importance is to understand the ‘gestalt’ of what markets are, how finance works, that is – practically. Any system can be analyzed and understood by looking at its components and how they behave together. The specialization of finance has confused the larger view, with experts teaching micro-subjects like how to trade Candlestick patterns, or ‘how to make money’ using these simple tools. Making money is sometimes easy – many people stumble upon good luck and money falls into their hands. Not losing money, that is very difficult – something very few rich people and businesses can achieve. Only a full understanding of how markets operate globally, will make you a great trader – as well, will protect you from losing. Not losing is the big secret to financial success. It’s why investors are so concerned about risks. If one can simply not lose, ultimately what’s left will be profits and growth. Tools such as understanding risk, and even quantifying risk (as much as possible) are priceless.

Building a financial knowledgebase is like building a house; the first step is to make a blueprint (usually by hiring an architect) and laying a strong foundation. By having a strong foundation, the building materials of your knowledge (wood, stone, clay) are not as important. With a ‘basement’ which is the modern day equivalent of a bunker, you’ll be able to withstand any tornado or storm that may rock the markets and the economy. Having a defense line, financially speaking – is the most important tactic in any personal finance strategy. For businesses too, but most business does this intuitively (not relying on a single customer or single product line). Tools like hedging, even if simple – can be extremely powerful. Preppers take things to the extreme but provide a great living example of how everyone should act regarding their financial portfolio – hope for the best and prepare for the worst. A portfolio should be like a castle – capable of withstanding any disaster, war, or siege.

It’s true that the world’s Elite engineer financial disasters like stock market crashes to seize the wealth of the growing middle class. It’s like culling the herd for fresh competition. But the good news, seeded into this system are the tools to protect you and even profit. For the first time in history, anyone can access the same tools the Elite have used for centuries to maintain their wealth and seize the wealth of others. This knowledge can also help you in your career, in your business, in your portfolio, or for your retirement.

There’s never been a better time than now to build financial knowledge for yourself. Whether you are wealthy and want to protect your wealth, or are not and want to grow your portfolio and become wealthy – a solid financial understanding of business and the markets is the first step towards achieving real financial self-actualization.

With our system as a whole, top-wards down approach, you’ll learn to understand your business better, by understanding where money comes from, how it’s exchanged, how it’s valued, loaned, securitized, packaged and repackaged. Money has become the most virulent electronic commodity in the world and is the least talked about. Learn FX, and learn how all markets work, and the foundation underpinning the global economy, at Fortress Capital Trading Academy www.fctradingacademy.com

Spring into trading special:  35% OFF your first course – use coupon code spring17 to get 35% off.

Building a financial defense line strategically

This important topic we cover in our book Splitting Pennies is possibly THE MOST importact topic in teaching personal finance, and probably the most misleading concept peddled by Wall St. 

Let"s face it - Wall St. has a reason to mislead investors, especially retail investors - because they"re on the other side of the trade!  That"s right.  When you lose - they win.  And due to hedging, they can"t actually lose.  

The secret world of hedging - Wall St. doesn"t want you to know about because like the insurance industry, it allows investors to protect themselves.  "Options" are thought of as "Risky" which is a highly potent meme that is reinforced by the regulators:

THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD

THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF

YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE

SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING:

IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM

AND OF ALL TRANSACTION COSTS.

IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT OR SELL A COMMODITY OPTION

OR ENGAGE IN OFF-EXCHANGE FOREIGN CURRENCY TRADING YOU MAY SUSTAIN A TOTAL LOSS

OF THE INITIAL MARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THAT

YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE

MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO

DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN

ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS

WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL

BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT.

UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO

LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A “LIMIT

MOVE.”

THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A

“STOP-LOSS” OR “STOP-LIMIT” ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE

INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE

SUCH ORDERS.

A “SPREAD” POSITION MAY NOT BE LESS RISKY THAN A SIMPLE “LONG” OR “SHORT” POSITION.

THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST

TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO

LARGE LOSSES AS WELL AS GAINS.

IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES

FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT

ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID

DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A

COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE

COMMODITY TRADING ADVISOR.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS

OF THE COMMODITY INTEREST MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS

DISCLOSURE DOCUMENT AND COMMODITY INTEREST TRADING BEFORE YOU TRADE,

INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT.

THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROM ACCEPTING FUNDS IN THE

TRADING ADVISOR’S NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOU MUST

PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURES

COMMISSION MERCHANT OR RETAIL FOREIGN EXCHANGE DEALER, AS APPLICABLE.

Whoa- where do I sign?  This is an example of how regulators manipulate the presentation of options in order to mislead investors away from something which can protect them from disaster.

Financial tools like options are like any tools, they can be used like insurance, or they can be used as weapons.  Take simple construction tools.  A hammer can be used to build furniture, or destroy furniture.  A hammer can break a window, kill someone - but also it can be used for decades to build fine woodwork (if you are a craftsman).  

Building a financial defense line

This is the personal finance equivalent of hedging.  Hedging with options for example - should be used like an insurance policy.  It"s better to have it and not need it than need it and not have it.  

Your financial defense line can be a property that"s paid for cash that you can live on for the rest of your life, it could be if you are in the car business an inventory of valuable used cars, it could be a pile of gold bars.  Preppers are one group that understands this concept well - it"s the underlying ethos of prepping.  

But the majority of Americans are one paycheck away from disaster.  They "spend money on things they don"t need, with money they don"t have - to impress people they don"t know"

And of course, the problem with writing such an article is the paradox of education.  Those who understand this concept, are already doing it, and those who don"t understand - they don"t believe that they need to know it - they have another opinion!  Such thinking is never without punishment in the markets.  

Hedging is all about paying for something you do not need, but may need one day, should an unexpected event happen.  It"s a form of insurance.  

There"s one kind of insurance that takes this concept too far - life insurance.  But that"s a topic for another article.  Common insurance like homeowners insurance, professional insurances like directors" liability insurance, and others; are a type of financial defense line.  For example, did you know in large class action cases where big corporations are involved in fraud - shareholders are settled financially primarily through insurance claims made by plaintiffs attorneys?  Commonly it"s thought that companies pay out these big settlements but actually, it"s mostly insurance companies.  Wall St. is a huge user of insurance, and hedging - which is why at companies like AIG, the lines between derivatives trading, opaque contracts, and insurance - was widely blurred.

But you don"t need a Wall St. bank in order to create a financial defense line, it can be as simple as investing in something for cash that you may need one day "just in case" but don"t need right now, like a property, a container full of canned food - whatever it is to you.

When you HAVE the financial defense line IN PLACE - THEN and ONLY THEN can you go out into the risky market and take risks.  There"s a phenomenon that"s difficult to quantify, but the fact that you have the defense line, it seems that those investors usually don"t lose on the risks they take in the market.  The only analogy that can explain this is a Sierra Club study about bears and men carrying guns; it seems that men who hike in the mountains who carry loaded guns are almost never attacked by bears - but also they never shot any bears, which means the men must emit a pheromone that the bears can sniff.  

Practically, it"s better not to enter the market and take risks if you don"t have a defense line.  Another example is "investing money you can afford to lose" - many advisors recommend investing only a percentage of a portfolio (like 5% or 10%) that if the investment is wiped out, the portfolio will remain intact.  There"s a few demographics that understand this other than preppers - Texas Oil Investors and Silicon Valley VCs.

In Oil Investing, 9 out of 10 wells may be dry, or just barely break even.  But 1 out of 10 can be a gusher - 1,000% returns, which make up for the dry and average wells.  

Average investors, even if you don"t have any retirement or pension, can build a financial defense line - it can mean getting an extra job, doing something for extra income (like selling stuff online) or applying for a research grant you always dreamt of.  It"s a myth that you need money to invest.  In fact, most startups are started with 99% persperation and 1% inspiration.  Without money though, you"ll have to put MAJOR WORK into your project to really build equity.  In a simple example of a housing project, that means doing the labor yourself which can be 60% - 70% of the costs.  In a business, it means you"ll have to do 10 jobs, instead of hiring an accountant, a webmaster, and other things.

Fortress Capital provides hedging, alternative investments, and portfolio consulting - visit www.fortresscapitalinc.com to learn more.

Or checkout Fortress Capital Trading Academy to learn how to build a defense line, specifically.

Hey - it"s better than sticking a crayon up your nose.  Extended warranty?  How can I lose?

Slow death of the hedge fund era

2016 was a bad year for hedge funds, pension funds, and university endowments.  In fact, the last several years have been horrible.  But until now, there haven’t been many alternatives.  Hedge Funds became popular for investors who wanted to achieve more than the 4% or 6% offered by traditional managed investments like mutual funds.  Although their history evolved from the idea of ‘hedging’ the market (hedge funds could sell AND buy, can you imagine?) this quickly evolved into an asset class where managers employed strategies based on mathematics in order to achieve above than average and above than expected returns.  And some private funds such as Renaissance do very well year in and year out – continued to this day.  But the majority suffer from strategy fatigue, and failure to bring in a new generation of ‘quants’ that can do anything more than copy, paste, and cold call.  If we skip all the Soros bashing about how he manipulates politics (which, on the surface, is not a bad investing strategy if you have the money to do it, and to control both sides – this is a Rothschild invention not a Soros invention) – the Soros family of funds outperformed their peers by a significant multiple.  These funds were trading the markets, unlike what some may want us to believe.  Some of their policies to ‘influence’ foreign markets (historically, from the 80s) may have been seen as unethical – and it may be.  But the returns have always been spectacular.  We’ll see soon if Robert can continue the family legacy of great returns – it looks like – yes he can!  

But the few examples of extraordinary funds with consistent returns like Renaissance, they’re an anomaly.  The industry in general has suffered from poor returns, which when combined with the standard 2/20 fee model – can be disastrous for investors’ confidence.  Bloomberg ran a story recently with verbage such as "The year Big Money ditched Hedge Funds:

“There has been a massive blowback from public pension funds and private endowments,’’ said Craig Effron, who co-founded his Scoggin Capital Management nearly 30 years ago. An investor told him recently that many chief investment officers are so fed up that they would prefer to entrust their cash to a trader who charged no management fee, over one who did, even if they expected the latter to make them more money.

Public retirement plans from Kentucky to New York, New Jersey and Rhode Island have decided to pull money from hedge funds. So did a state university in Maryland and other endowments. MetLife Inc. and other insurers followed suit. Money-losing firms were forced to reduce their fees. Client withdrawals ($53 billion in the last four quarters) drove some managers out of business, including veteran Richard Perry, who until recently had managed one of the longest-standing and better-performing firms.

It"s not surprising that investors - especially institutional investors, are abandoning such strategies.  As they say in trading, "you"re only as good as your last trade."  According to Barclay Hedge Fund Data, 2016 is a little better than 2015, but not much:

4.89% is a good return, but it"s not much better than you can acheive with traditional mutual funds or tax free munis.  Certainly it"s not a compelling reason to drain your IRA from the markets and invest with hedge funds.  But, this is just an average, there are strategies out there that overperform this index, such as this one.

In the Pension Fund world, Calpers which is a head above its peers, hemorrhaged more than $30 Billion in losses due to poor strategy management:

The California Public Employee Retirement System (CalPERS) is about to report the world’s largest public employee pension suffered an actuarial investment loss of $30.8 billion last year.

CalPERS manages the defined pension plan investments and record keeping for 3,007 California state and local government entities. The pension plan is also responsible for paying the pension benefits to 611,078 retirees and will eventually be responsible for paying retirement benefits to another 868,713 active and 335,908 inactive government workers.

Despite Governor Jerry Brown last summer demanding CalPERS immediately “lower its investment risk and volatility of returns” by reducing its “assumed” annual investment return from 7.5 percent to 6.5 percent, the CalPERS board voted 7- 3 on November 15, 2015 only to slowly reduce the investment return expectation over the next decade.

Practically, the slow death of the hedge fund industry is merely a milestone in its evolution.  Just like robotic strategies are now replacing traditional managers with a suit and tie, the structure of investments is evolving, too.  Hedge Funds aren"t going to go away anytime soon, but how they are structured, how the fees are charged, and the strategies that they use, will rapidly change in 2017.  For example, some strategies such as managed accounts have a fee structure that charges only a percentage of profit, called "performance fee" - with no other fees.  See one example the Magic FX strategy, for QEP/ECP US investors only - which charges a 30% performance fee from the profit.  In this model, if the strategy doesn"t perform for investors, there is no fee.  This type of pay for performance model has been around for years, but will become more useful in a climate of diminishing returns and investors angry at paying fees for getting no results or even losing money.  It really is crazy, why investors should pay managers millions of dollars for losing money - it just shows how programmed investors are by traditional media, as we explain in Splitting Pennies the book.

Bloomberg also notes that, while assets have only trickled out - this may be a sign of a larger trend:

While clients have only pulled a net 2 percent of assets so far, Tony James, the president at Blackstone Group, the largest investor in hedge funds, predicted in May that the industry would shrink by roughly a quarter over the next year. Hedge fund closures (782 in the first nine months) are on track to be the most since 2008, and startups (576) the fewest.

Any manager still standing applauds a smaller industry. Less money under management means fewer crowded trades and more chances to find the elusive alpha. Interest rates on the rise in the U.S., while still near zero or negative in the rest of the world, should also help. The Trump presidency, which promises less regulation, more infrastructure spending and the potential return of prop trading by banks, could also be a boon.

Where will the assets go?  The alternative investment industry is large - institutional funds, pension funds, hedge funds, are but a small part.  According to Barclay Hedge, there are 342 Billion in Managed Futures:

And, although the change from Q2 to Q3 of 2016 is a small percentage of @ $9 Billion, it is a positive figure, and shows that managed futures is one place funds are flowing into.  CTAs, CPOs, and other types of managed investments that have a track record should all benefit from the poor performance of traditional managers, especially those which don"t charge a management fee.  But in any scenario, investors only started to loathe the management fees when performance suffered.  When performance is good - who doesn"t mind paying for it?

And finally - it may shed light on the still standing FX manager industry.  While these hedge funds have suffered volatile returns, losses, and fee congestion - some FX managers have continued to perform year in and year out with the use of complex algorithms, that work in FX but not in other markets.  Now may be the time for institutional investors to take another look at such algorithmic FX strategies.

To get an education about the benefits of FX investing, checkout Fortress Capital Trading Academy.

Here"s a list of books to add to your bookshelf to get started:

read some of these books and articles:

Wall Street and the Bolshevik Revolution.  

Armand Hammer: The Untold Story

A People"s History of the United States

Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich

Russia is a 3rd World Country - 13 SECRET FACTS EXPOSED

Since publishing exclusively on Zero Hedge our expose on Russia in order to "counterbalance" the propaganda out there from the deep state, we"ve learned that there is a deep FACT VOID about this mysterious culture and place called RUSSIA and requires a series of articles.  This is a topic not being covered elsewhere!  And as we explain in our best-selling FX book - the world isn"t 

Anyone who has ever been to Russia, that is - outside of a 5 star hotel in Moscow which isn"t any different than a 5 star hotel anywhere else - you don"t need to read an article like this to agree, that Russia is a 3rd world country, or debate about how big their missiles are.  Being a 3rd world country isn"t a bad thing.  And of all the third world, Russia is the fastest growing.  Remember, Russia was born in 1990, and is a capitalist market economy.  Russia has grown by huge leaps and bounds in the past 25 years.  But they lack the cultural background to make the switch to a fully market economy.  What does that mean - in other words?  There is a mentality that was programmed into their brains, during the Soviet Union, that still lives in Russia and with that mentality, having anything but the Soviet system is difficult or impossible.  The new generation of iphones and consumerism, albeit vulgar, will have better chances at adapting to a global market economy which is what Russia hopes to be.  The communist hardliners are dead and dying, and not being replaced.  In a system where everyone saved and money sometimes didn"t exist (such as during Perestroika, where workers were paid with tickets, not money - which could be bartered with neighbors for example if one family didn"t drink alcohol, vodka tickets could be traded for more meat, making Russians develop a natural talent for trading in dark pools).

For those who will argue about "what is a third world country" let"s use this article as a base guideline, Russia certainly meets the definitions here.

If everything in and of the state is basically and profoundly corrupt (which naturally prompts the question if there is any political state in the world that is not corrupt and thus Third World?).

If nothing really works but there is always ‘a way’.

If you have to pay the authorities when entering or leaving the country. If you have to do both you’re actually in a Fourth World country!

If the price of taxis are either totally negotiable or strictly determined by government regulations — amounting to the same.

If there’s always a taxi and a willing driver to be found.

If there are no ways of proving whether you’ve been drinking and/or speeding behind the wheel.

If the government doesn’t care whether you’ve been drinking and/or speeding.

If road patrols routinely consist of heavily armed military.

If the paint on the bathroom walls have been allowed to stain the shower tiles as well. In this particular respect, Italy, Spain and France would easily qualify as ‘Third World countries’. The Greeks and the peoples of the Balkan countries, on the other hand, don’t do this. I guess they admire the Germans and have to some degree been influenced by them.

If painting the doors also on the inside is considered an unnecessary expense.

Before claiming yourself a self-professed "Russian Expert" you should either be 1) from Russia or 2) speak Russian language fluently, and have lived there for a number of years or 3) have extensively studied all things Russian.  If you are none of these, and want to have a quick education on the subject, here"s a few places to start:

A History of Russia: New, Revised Edition - This is a MUST READ for any Russophile, student of Russia, or someone who wants to do business in Russia.  Probably, the reason this is one book written objectively that offers fresh perspectives is for the simple reason that it was written by a Russian intelligentsia in the United States, while at Yale University:

Vernadsky took a novel approach to Russian history, presenting it as a continuous succession of empires, starting from the Scythian, Sarmatian, Hunnic, and Gothic; Vernadsky attempted to determine the laws of their expansion and collapse. His views emphasized the importance of Eurasian nomadic cultures for the cultural and economic progress of Russia, thus anticipating some of the ideas advanced by Lev Gumilev.

Vernadsky became the leading American exponent of depicting Russia as much Asian and European, if not more so. He pointed out many strong cultural differences between Russia and Europe, and praised the success of Russian development along an independent path that revealed his own unique character. Vernadsky was a geographical determinist like his Yale colleague Ellsworth Huntington. They assumed that the characteristics of a land defined the character of the people and indeed of their government as well. For that reason Vernadsky was able to identify the roots of Russian culture in an ancient period long before the Slavic groups arrived. He thereby undercut the standard claim that modern Russia emerged from Kievan Rus. He emphasized the importance of the Mongol period (1238-1471), as the horde united the vast Eurasian plain under a single ruler. This gave tsarist Russia a strong centralized government as well as the deep distrust of Europe. Vernadsky was annoyed that Peter the Great tried to Westernize Russia, thereby distorting its natural character. He said Peter only succeeded in polarizing Russia into a Western oriented elite that stood in profound conflict with the Eurasian peasants. Indeed, Vernadsky argued that this polarization was one of the main weaknesses of the tsarist regime, making it incapable of dealing with the revolutionary movements of the early twentieth century. He celebrated the collapse of the European style parliamentary regime in the October Revolution of 1917 that brought the Bolsheviks to power. Vernadsky was not a liberal, nor was he a Communist sympathizer, but he did admire the Bolsheviks for rebuilding a strong Russia on non-European lines.[1]

Unnatural Deaths in the U.S.S.R.: 1928-1954 - This is a historical chronicle about the "real" deaths during this time period:

Who was worse, Hitler or Stalin?  In the second half of the twentieth century, Americans were taught to see both Nazi Germany and the Soviet Union as the greatest of evils. Hitler was worse, because his regime propagated the unprecedented horror of the Holocaust, the attempt to eradicate an entire people on racial grounds. Yet Stalin was also worse, because his regime killed far, far more people, tens of millions it was often claimed, in the endless wastes of the Gulag. For decades, and even today, this confidence about the difference between the two regimes—quality versus quantity—has set the ground rules for the politics of memory. Even historians of the Holocaust generally take for granted that Stalin killed more people than Hitler, thus placing themselves under greater pressure to stress the special character of the Holocaust, since this is what made the Nazi regime worse than the Stalinist one.

This is just a good start.  If you really want to know any culture - the only way is to go there, live there, do business there.  But for those with a short attention span, that enjoy throwing objects at their TV when the reporters tell them something they don"t like, here we go:

SECRET FACTS - RUSSIA IS A 3RD WORLD COUNTRY

1. 80% or more of the Russian economy is unknown.  This is because it all happens "under the table" to avoid taxes.  This will change probably, but as of now, workers are paid "white" and "black" salaries.  You can read about this here.  Auditors and government workers are bribed, wined and dined, when they inspect the books.  It"s a system everyone likes, that just "works" - but it is impractical to make economic forecasts for such a system.  This system is also on the highest levels, as oligarchs wealth is often owned by dead people.  Of course, this practice isn"t heavily documented, because the whole idea of this under the table system is to not leave any paper trail!  Businesses even keep a full set of "white books" and "real books" like the mob used to do.  Yes - this is business in Russia!  

2. Bankruptcy doesn"t exist.  There is no concept of bankruptcy.  There are even banks that offer really high interest loans (there are no usury laws) that will hire strong men to "scare" you into paying, which might include breaking a leg, burning down your shed or in extreme cases, maybe holding a relative in their "office" - yes this goes on and it"s not done by the MAFIA it"s done by the BANKS!  

3. Russian healthcare system is "not to Western standards" although it is "developing."  25% of males die before they are 55 years old, mostly due to alcohol.

4.  The primary currency used is physical rubles, that means PAPER.  When local people believe the Ruble will depreciate in value, they will exchange their paper Rubles for physical US Dollars or Euros and literally - keep them under the mattress.

5. You have never seen roads in such poor conditions.  Around the Kremlin, and in rich areas of Moscow, roads are OK.  Outside of this area, harsh Russian winter wreacks havoc on roads that were never built to European or US standards, as they would be in Chicago or Boston.  See this road in Volgograd:

This is why invading Russia has historically been impossible.  Of course, not all roads are like this - but many are.  

6. Only in Russia meme - Just google "Only in Russia" or checkout this article.

(Letters say "We watch you! - You must be 18+ to use this game)

7. Russia is not a pleasant country to live in.  The weather in winter is worse than in Canada, Wisconsin, Maine, or your average US northern city.  Only Alaska is comparable to Russian climate.  

8. Putin is not a dictator - he is just VERY popular.  But anyway, 3rd world countries usually have a "Putin" or "Castro" which is almost more than a President - a cultural leader.  Putin meets this criteria.  People keep photos of Putin on their walls.  They sell them, along with small busts of his head at every Metro station.  Russian people are simply crazy for Putin.  To understand this better here"s a WAPO article on the topic.

9. In Russia there is not such a thing as "consumer rights".  Grocery stores sell spoiled food.  There"s no "return policy."  

10. Corruption is just considered part of government life (see example here).  Finding a government official that was not corrupt, would be unusual.  For example, in a small town the government decides to "renovate" streets and parks, so they assess a special tax to residents (normally, there is no real estate tax in Russia).  But 90% of the collected money goes into the pocket of the officials, and little is left to clean up the streets.

11. The average pension in Russia is $148 USD.  The average Russian pension is paid IN CASH by Government official on a monthly basis, at the property of the pensioner.

12.  24% of the entire population HAS A BANK ACCOUNT.  In the USA about 95% of eligible persons (excluding children, illegal immigrants) have bank accounts.

13. If using the income disparity guage of what is third world, experts say in this report from CNBC that RUSSIA IS THE MOST UNEQUAL country in the WORLD - even MORE than the Arabs.  What happened after the collapse of USSR, the Russian Elite allowed the seizure or "privatization" of state assets by individuals who became "Oligarchs" which are the US equivalent of "Robber Barons" that literally inherited state owned assets because they were really, really, really, really, really, really lucky.  But the practical fact is that an Oligarch class is needed for any Capitalist society to flourish.

Russia has grown by huge amounts.  They have produced some of the world"s leading thinkers, scientists, artists, writers, composers, and other talent.  Now, the global Russian oligarch class challenges mainstream Western business.  But keep it all in perspective, Russia has a long way to go.  In the meantime, don"t worry about Russian hackers breaking into your home office.  They have problems of their own to solve.

Don’t believe us – read some of these books and articles:

Wall Street and the Bolshevik Revolution.  

Armand Hammer: The Untold Story

A People"s History of the United States

Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich

To learn how the global financial system works, checkout Fortress Capital Trading Academy - or checkout SPLITTING PENNIES FOR ONLY $6.11