Big Time

Wow. A swift overnight move in currencies has left Flash Rabbit with a very big grin on his fat, greedy face. It's been a rocky couple of days - if the market is preparing for some seismic shifts there are bound to be earth tremors but the payoff from this earthquake looks set to be very significant indeed.

Flash's fund is now up 175%. That's right, 175% from a February start. I wonder if any of the major hedge funds have managed that rate of return? OK, Flash is only trading in pennies but this just shows what is possible...

Interestingly it's been in the currency trades where Flash has had the most success. His conviction call - that the euro is headed for a fall and that the dollar is poised for a comeback - worked beautifully, especially after he spotted what seemed like a top in EUR/JPY and it tumbled spectacularly during Trichet's press conference yesterday, and hasn't looked back...

The 'what ifs': -

what if he'd stayed up just an hour later last night, spotted the big currency moves gathering pace, and doubled up his currency positions? He'd probably have been up 300% by now.

what if he'd held his nerve on some of his earlier calls, rather than chickening out at the first sign of trouble - for had he held the original short GBP/USD position at a mere £1 a point from 19995 or thereabouts he would be £600 better off by now. As for EUR/USD, well...from 15700 to here would be a total monster.

It's not been comfortable - when this happens:
















or this happens and you're on the wrong side of the trade (Flash was on the right side, being short EUR/JPY, but got the shock of his life, having just doubled up on short AUD/USD when this happened - however he recovered his composure and held it together...).




















And if the markets do manage a sustainable bounce (hence being long of both FTSE and Dow - positions which he doubled up this morning, and added an S and P long) then Flash sees no reason for these macro trends to continue on the back of a downward adjustment in commodity prices as the developed world heads if not for outright recession, at least a considerable slow-down. And a slowdown, in Flash's book at least = reduced demand, reduced consumption and some cooling in the commodities bubble. Add to that a general drive for energy efficiency/waste reduction and you have a considerable challenge for the commodity bulls. Hence Gold's spectacular fall from grace. And if some of the hot money comes out of oil the test for it will come at around 100 a barrel, where Flash's guess is that there will be a pile of hedging and it might signal a bit of a leg back up for commodities. That's the point he will close down all but a small short gold position. But the dollar's rise will take some of the pressure out of the oil price too.

Shares going remarkably well too. Currently Flash is long of Workspace Group, Lonrho and Tribal (all making a comeback?); Woolworths (up 15% in the last two days!); Intel (a big winner over the last couple of weeks); Kingfisher (a play on some recovery in retail and a bottoming out of the property market?) - up from 119 to around 132 in a couple of weeks); Barclays from 261 (this has been a monster); BA - up around 30%; D1 Oils - has doubled from Flash's entry point of 17p. Plus the two Powershares Global Water and Water Resources ETFs.

The wobbly shares - Crocs (what was he thinking?); Axeon Holdings; Blacks Leisure Group; Man Group (has ridden out the dips well but is now dipping just as the rest of the market seems to be recovering); BT; Stanelco.

The plan is to hold just like this; and to ride this out. It's a big adjustment - especially in currencies - and if the euro goes, his guess is that it will go in style, all the way back down to dollar parity or thereabouts. And that would signal a complete realignment - but that's about right given how bad the economic news coming out of europe is at the moment.