A Long Weekend in NYC

Walking around midtown was hot, sweaty, and fun. [The Rude Awakening] July 17, 2023 [WEBSITE]( | [UNSUBSCRIBE]( A Long Weekend in NYC - A lot is going on in the world, particularly vis-a-vis the USG. - But I walked most of it off in NYC this weekend. - I’ll take you around for a little tour before we engage with the real news. [External Advertisement] Abandon the S&P, Dow and Nasdaq - and Own... [Click here to learn more]( [The "Next Major American Index"]( It's Designed to [Automatically Buy Stocks]( When They're Proven to Go Up... And [Reduce Your Exposure]( to Stocks When They're Proven to Go Down [Click Here To Learn More]( [Sean Ring] SEAN RING Good morning on this fine Monday in NYC! The last thing I want is for you to think the Rude is an unserious publication… that it’s just a bit of frippery with your morning coffee. Joke Biden just bribed Turkey to get them to vote Sweden into NATO. That pisses me off. Again, Biden mobilizing troops in an escalation to a failing Ukraine offensive is offensive in and of itself. And the BRICS/Gold situation is starting to get commented on from all over the place. Those will be Tuesday’s, Wednesday’s, and Thursday’s Rudes. But since my little travelogues in the past have gotten such positive feedback, I started to write one this weekend and want to get it in front of you first. So let me take you around The City before we get to more serious subjects later in the week. Where Am I? I’m staying in the Midtown Hilton this year. Rather than Downtown, Midtown doesn’t feel like it’s a rat’s nest. It’s thriving, really, and I was surprised to see that. The Museum of Modern Art (MoMA) is just across Sixth Avenue from my hotel. I hadn’t been to the new one yet - though it’s not so new anymore - and I wanted to see one of the Picasso paintings they exhibit. A Stroll Down 5th Avenue I decided to keep going for now and turn down Fifth Avenue. I can't tell you how nice Fifth Avenue looks. I took a picture of St. Patrick’s Cathedral because it looks so wonderful. [SJN] St. Patrick’s Cathedral; Credit: Sean Ring There’s something great about strolling around the big city on a Friday when everybody else is working. I noticed the Barnes & Noble across the street and had to pop in. I love searching for books. Funnily enough, I was looking for the books Byron King recommended while we were in Jekyll Island, The Forgotten Depression and The Panic of 1907. Unfortunately, they were out of stock. But I picked up a book called Becoming Supernatural by Dr. Joe Dispenza. Sure, it may be a bit of “woo woo,” but maybe there’s a clue. I went upstairs to the second floor to sit at the Starbucks. They have one inside the Barnes & Noble. Barnes & Noble’s are better than libraries and have tastier coffee. As I found myself in front of the New York City Public Library, I decided to walk around it. Much to my undisguised glee, Le Pain Quotidien is on that block. Le Pain Quotidien (“The Daily Bread” in French) is one of my favorite bakeries. When Micah was a baby, Pam and I frequently visited the LPQ in Pacific Place Mall in Hong Kong. The staff was always so sweet to us. Though we loved that, the food was what really made us go back. I devoured a Chicken Cobb Salad and washed it down with grapefruit juice. It was fab. (I’d return Thursday for their outstanding almond croissants and coffee.) After finishing up at LPQ, I headed back to MoMA. [Exposed: Biden’s 2022 mistake to cost him election?]( [Click here to learn more]( Will this ugly scandal doom Biden in 2024? In February 2022, [Joe Biden made the most dangerous mistake]( any President has made in the past 150 years. If it all plays out like Jim Rickards is predicting… Biden’s blunder will soon cost good Americans EVERYTHING. There’s still time to protect your money. But you can’t wait. [>>See Biden’s terrible mistake here<<]( [Click Here To Learn More]( MoMA Mia! I finally got into MoMA and saw Les Demoiselles d’Avignon by Picasso. It’s a painting I wrote a paper about after I got dragged into my fine arts requirement at Villanova. When I first saw the painting in the mid-90s, it looked enormous. I couldn’t believe how big it was. Les Demoiselles d'Avignon is a famous painting created by Pablo Picasso in 1907. It’s considered a groundbreaking and influential work of art that marked a significant departure from traditional artistic conventions and played a crucial role in the development of Cubism. More on Cubism in a bit. The painting depicts five female figures in a brothel in the red-light Barcelona district known as Avignon Street (Carrer d’Avinyó). The figures are presented in a highly abstract and fragmented manner, showcasing the influence of African and Iberian art on Picasso's style during that period. [SJN] Les Demoiselles d’Avignon by Pablo Picasso, on the wall at MoMA; Credit: Sean Ring Les Demoiselles d'Avignon is notable for its radical reinterpretation of the human form. Picasso broke away from traditional notions of beauty and idealized representations, depicting the raw and primal aspects of human sexuality. In other words, he made the hookers ugly—especially the one on the lower right. I don’t fancy yours much! Unsurprisingly, the painting shocked and confused the artsy-fartsy when it was first exhibited due to its departure from established artistic conventions. It challenged the notion of perspective, presented a fractured composition, and rejected the idea of a single fixed viewpoint. Les Demoiselles d'Avignon is one of the most important works in developing Cubism and modern art. It paved the way for further experimentation with form, space, and multiple perspectives, influencing subsequent generations of artists and reshaping art history. After 30 years, it hasn’t overwhelmed me in the same way. And thanks to living in Italy, its classical art completely spoils me. Now, to Cubism. Cubism is the nonsense that Picasso and Georges Braque invented to shock people in the early 20th century. It’s not meant to be beautiful, and it isn’t. It’s characterized by depicting objects from multiple viewpoints, using geometric forms, fragmented shapes, and flattened perspectives. Artists sought to represent the subject matter more abstractly and analytically, breaking it down into basic geometric shapes such as cubes, cylinders, and cones. This approach allowed them to simultaneously represent different facets and perspectives of an object within a single artwork. Honestly, I think most of it is ugly as all hell. Good Christian art tends to illuminate and uplift us. Modern art is meant to punch us in the face to make sure we’re still alive. A Final Stop on Saturday I consider myself a bibliophile. I still don’t know how I missed it for nearly a half-century. I’m utterly embarrassed to say it. But on Saturday, I took my first steps into the Strand Book Store on the corner of Broadway and 12 Street. It’s simply the most incredible bookstore I’ve ever been to. I’m not sure I’d have been able to leave the New York metro area in 1999 had I known about it. [SJN] Inside the Strand Book Store; Credit: Sean Ring You can buy books. You can sell books. It’s cavernous. There are leather-bound editions. Old Folio Society and Easton Press books. I was in heaven. Most people bring empty suitcases to NYC to stuff them with new clothes for the return journey. I’m bringing one to stuff with books from this store. The Last Stop Last night I ate dinner with my good friend and teaching colleague, The Monsignor. The restaurant was a random choice, as he was returning from Mass, and I was walking from my hotel. Next time you’re in New York and fancy proper American cuisine in a cozy American restaurant, try [P.J. Clarke’s](. [SJN] Credit: [P.J. Clarke’s]( Sometimes a burger and a beer are just what the doctor ordered. And the prices weren’t outrageous, either. I highly recommend the Clarke’s burger. I put bleu cheese on it instead of ketchup. What a treat! Wrap Up Ok, tomorrow I’ll get back to the fundamental topics of the day. Think Joke Biden gave up some F-16s for Turkey’s acquiescence? Find out tomorrow. In the meantime, have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( In Case You Missed It… Hedge Funds: Everything You Need to Know [Sean Ring] SEAN RING Happy Friday! I’m going to recycle an important Rude from nearly two years ago. The topic is hedge funds. I’ve broken them down by strategy. You’ll have a better idea of what they’re trying to accomplish… and perhaps why they’re failing badly at the moment to capture the elusive “alpha.” Alpha is the return above the benchmark the hedge fund uses to measure its performance. Enjoy! What are alternative investments? Before we get into hedge funds, let’s complete a schematic of the alternative investment universe. It’s pretty simple. Alternative investments are, in alphabetical order, commodities, hedge funds, infrastructure, private equity, and real estate. Only high net worth individuals (HNWIs), ultra-high net worth individuals (UHNWIs), and financial institutions such as pension funds, sovereign wealth funds, insurance companies, and endowment funds invest in this asset class. (Except real estate, of course.) Why do private bankers sell hedge funds to their clients? Rich people have rich people problems. Those problems are so much better than poor people’s problems. But they are problems, nonetheless. Those problems are portfolio management, tax liabilities, succession/estate planning, philanthropy, and asset protection. From a portfolio management perspective, hedge funds make a lot of sense. In theory, hedge funds enable investors to increase their returns without increasing risk. However, prices are still rising. Just slower than they once were. [SJN] Credit: TheStreet.com Does this always happen? Of course not. Of the 10,000 hedge funds in existence, only the upper quartile of hedge funds are worth investing in. The rest are trash. [Urgent Notice From Paradigm CIO Zach Scheidt!]( [Click here to learn more]( Hi, Zach Scheidt here… I’m the Chief Income Officer at Paradigm Press. With inflation raging (and showing no signs of coming to an end any time soon), almost everyone in America is feeling the pain in a big way. Which is why, several months ago, I set out on a big mission… my goal was to create a [complete, step-by-step plan to surviving and beating inflation]( one that anyone could take advantage of. Today, after hundreds of hours of research, I’m revealing all of my findings. [Simply click here now to see how to survive America’s deadly inflation crisis](. [Click Here To Learn More]( What are hedge funds? From the [July 8th edition of the]( When Alfred Winslow Jones, an Australian who’d partied with Hemingway and Fitzgerald in Paris, finally moved to New York in 1949, he started his hedge fund. The Investment Company Act of 1940 stipulates that you must register it with the SEC if you have a fund with more than 100 investors. He thought, “I’ll just get 99 or fewer wealthy people, so I don’t have to register.” Was Jones’s hesitance to register for some nefarious reason? No. Registered funds are not allowed to short the market. Jones thought shorting some stocks was an intelligent hedge against being long some stocks. Hence, Jones wanted a “hedged fund.” Of course, Americans love nothing more than murdering the Queen’s English, so they dropped the “d” and started calling those funds “hedge funds.” Jones’s fund is the earliest example of an equity long-short hedge fund, still the largest class of hedge funds in existence. In short, hedge funds are lightly regulated, open-ended investment schemes that invest in the market using different methods than retail or long-only investors. Hedge funds can short the market and leverage their fund by multiples, neither of which long-only funds can do. Hedge funds may also use derivatives such as futures, options, and swaps to express their market views. How do they operate? Hedge funds require a large deposit from investors. The well-known and most renowned may charge a $5 million initial investment. Some may charge only $100,000. Private banks also pool HWNI money under the bank’s name to lower the entry investment. Hedge funds then charge “2-20.” That’s 2% on the year-end assets under management (AUM) and 20% on the fund’s performance. For example, if a fund grew over one year from $80 million to $100 million, the fees would be as follows: 2% x $100 million = $2 million AUM fee 20% x $20 million = $4 million performance fee That’s a total fee of $6 million. This is a simple example. Some funds charge less, and some charge more. Also, keep in mind that a “high watermark” will be in effect. So if our fund drops down to $80 million the following year, it can’t charge performance until it goes back over $100 million again. This leads to some unethical fund managers closing down their funds and reopening the following year—dirtbags. What are the different types of strategies? Below is a schematic of hedge fund styles. There are three big groups: high to low market exposure and nine classes below them. [SJN] Credit: Alpha Development Opportunistic These directional strategies take a leveraged view on market trends, currencies, or other market-based opportunities. Long/Short Like Alfred Winslow Jones’s hedge fund, this one is long the stocks it likes (underpriced, in its view) and short the stocks it doesn’t like (overpriced, in its opinion). Usually, they are net long. Global Macro These funds are based on interpreting significant macroeconomic events on a national, regional, and global scale. Most notably, famous hedge funds such as Bridgewater, Brevan Howard, and Tudor Fund Management are built on this strategy. The main strategies involve currencies, rates, and stock indexes. CTAs Sometimes files under global macro, commodity trading advisors (CTAs) use futures contracts to achieve their trading objectives. Systematic and discretionary trading are two of the strategies CTAs use. Systematic trading refers to putting all the fund manager’s knowledge into an algorithm and letting the computer take care of the trading. Dunn Capital is notable for this style. Discretionary trading lets the fund manager decide what to trade after reviewing his research. That is, trades are made at the manager’s discretion. Relative Value A relative value fund is an actively managed hedge fund that seeks to profit from temporary differences in the prices of related securities. Market Neutral Regardless of an upward or downward market environment, market-neutral funds aim to profit through paired long and short positions or derivatives. These funds can mitigate market risk as they seek to generate positive returns in all market environments. They aim to eliminate beta (or market risk) and profit from their excellent stock-picking skills (alpha). Convertible Arbitrage Convertible arbitrage involves taking a long position in a convertible bond and a short position in its underlying stock simultaneously. The idea is to capture the pricing difference between the convertible bond (or preferred stock) and the underlying common stock. Capital Structure Arbitrage Capital structure arbitrage refers to strategies hedge funds use to take advantage of the relative mispricing across different security classes (both debt and equity) issued by the same company. Fixed Income Arbitrage Fixed income arbitrage is an investment strategy that aims to profit from the minor differences in interest rates between fixed income securities. When using a fixed-income arbitrage strategy, the investor assumes opposing positions (long-short) in the market while limiting interest rate risk. Event-Driven An event-driven strategy attempts to take advantage of temporary stock mispricing, which can occur before or after a corporate event. Hedge funds use it because the method requires the expertise to analyze corporate events for successful execution. Examples of corporate events include restructurings, mergers/acquisitions, bankruptcy, and spinoffs. Merger Arbitrage Merger arbitrage involves exploiting market inefficiencies before or after a merger or acquisition. Merger arbitrage traders focus on the probability of the deal being approved and how long it will take to finalize it. Since there is a probability the merger may not be approved, merger arbitrage carries some risk. Distressed Distressed debt trading involves purchasing bonds that are trading at a distressed level in anticipation of reselling them over a relatively short period at a higher valuation, generating a profit. Wrap Up And there you have it—a 1,200-word introduction to hedge funds. I hope you find it helpful to navigate through the investing world or the business newspapers. Have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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