Gundlach was on CNBC yesterday talking about how he sees commodities as being a good buy for 2018. He compared it to the runup in commodities in the 1970s, 1990s, 2011, etc (his reference to Stan Chart was pretty hilarious) For those of us who read the Market Wizards books, we all know the story of how Michael Marcus made untold riches in the 1970s commodity bull market, going from 30k to $100 million The question is, how did he do it, given that: - cotton went from something like 25 cents to 75 cents/lb - soybeans went from $2.50 to $6.80/bushel - wheat went from $2 to $6/bushel, etc which are 2-3x over 10 years (1970 to 1980), compared to his track record of delivering returns over 2500x at Commodities Corp.? eg. Let's say commodities have a major runup, and nat gas goes from $2.60 to $7 (2-3x multiplier). How would Michael Marcus trade this into a 2500x return?
Gundlach didn't pick, he made it sound like a macro basket play (talked abt GSCI commodities index vs S&P market cap ratio at historic standard deviation, etc) Let's say everything goes up, some by 2-3x, some by 3-4x, etc -- the real question is, how would Michael Marcus trade it to a 2500x return? My guess is his trading technique mattered a lot more to his riches than relative value analysis among a basket in the commodities boom, just sayin'
perhaps he traded futures with high leverage. Talk about soya bean futures from CME. since 2014, it has been trading with very narrow range between 845 and 1200 level. Peak was in 2012 at 1800 level. It needs big disaster to bring up the bean futures. I wonder which commodities he is talking about.
%% MM learned money management from Ed Seykota; wikipedia noted- most likely right. Something i remembered he shared with Jack Schwager; amazing, he lost money on all his CA real estate except one, if i remember it right ?? Said it was emotional RE trading .LOL Amazing trader.......................................................................................