Interview by Jim Puplava
Excerpts:
FSN: Martin, you have a wide following with investors and host large conferences around the globe. What are you telling investors right now?
FSN: Martin, you have a wide following with investors and host large conferences around the globe. What are you telling investors right now?
“Well, I think the best thing to do is clearly stay in the United States right now. Get out of any emerging markets because what you are going to have is: China is rattling its sabers against Japan and South East Asia; you have all kinds of turmoil in Eastern Europe; and I think you’re going to probably see that start to pick up quite sharply after September. So you don’t want to be involved in those types of assets. I would stay home clearly.”
FSN: What about the market itself? What are you predicting going forward?
“The U.S. stock market, although it sounds a bit crazy, it’s liable to go up very dramatically. I would think we could go up 50% at least. But it’s going to depend upon when the capital flows start coming in very dramatically, and they’ll come when you start to see those types of geopolitical problems [along with]…economic problems from Europe. But, I mean, there will be more dips—one more little crash first—and then it’s going to take off.”
FSN: Can you explain a little bit more?
“Capital has been flowing to the United States. The top end real estate in New York, Florida, CA, is booming. Why? It’s mostly foreign money coming in. So that supports the dollar. And if you then have more geopolitical problems with Russia, etc., money is going to pour here again, the same way it did with WWI and WWII. If you’re blowing everything up and banks aren’t safe, you put your money on the first ship and you bring it over here… We’re really the only game in town and that capital will come here as the geopolitical movement develops.”
FSN: What are your thoughts on what’s going on with Russia and its recent attempts to expand into Ukraine?
“Putin…truly believes in old-school Empire. In other words, a country is as powerful as the amount of land it controls—not its economy. He doesn’t get it. You know, Japan is a very small country island, but it rose to the second largest economy in the world. Why? Because the people are its wealth. Not land… What is happening in Russia is the economy is collapsing. Russia’s economy is half the size of Japan’s on a bad day. Russia—you see, the uneducated masses are saying that this is good: Russia is getting bigger. They think size is something, rather than the economy. Well, we got a lot of land. Okay, big deal. What are you going to do with it?”
Insider Trading & Manipulations
COMMENT: I can also tell you from my personal experience that what you are writing about insider trading is false. I worked in the same office as Steve Cohen way back in the 80′s when he was just starting out. This was in lower Manhattan before he moved Uptown and later to Connecticut. His first big score was in the General Foods buyout by Phillip Morris. He had a lawyer working on the deal feeding him info through one of the retail brokers there. He leveraged that model to become one of the wealthiest men in the World. The business model was : hire only people who had an ” edge ” through a personal relationship – i.e. a lawyer, banker, analyst. blocktrader, columnist, news wire employee,corporate cfo, etc.
There is no shortage of events to front- run daily : Earnings, analyst rating changes, corporate events, takeovers etc.,,,
Well, I could go on, but I really just wanted prevent you from printing something obviously erroneous to anyone in the industry.
REPLY: This is “insider trading” as defined by the SEC. Yes, the hedge fund industry got way out of hand and I hired a guy 20 years ago Robert Howe who worked for one of the big firms in NYC. He confirmed precisely what you are talking about albeit a different firm. He was told to get guaranteed trades to keep his job. He came to use because he did not want to get involved and that was the early 1990s.
That is not my point. This type of activity is NOT illegal in currencies or commodities because they are not regulated by the SEC. I qualified what I wrote excepting takeover activity. This type of behavior has been going on for decades. This is precisely guaranteed trades. Mere phone calls about something that is not a guaranteed trade is used by the prosecutors as if it were. There are a number of cases like that. I can name some firms that did precisely the same thing as SAC.
I was constantly being approached by the money center trading banks to join in on manipulating deals. I always refused. I would never trust them for two seconds. The reason they were always trying to buy into our firm or get me into the fold was to then have Princeton put out false forecasts so they could trade against the clients. I stood up in our March 1999 Tokyo World Economic Conference and warned the Japanese that they were being targeted again. I told them how to defeat the manipulation and the bankers lost billions.
The rolling manipulations of all sorts of markets would surprise you. They paid bribes to Russian officials to recall platinum to take an inventory. They even manipulated rhodium. The control of warehouses in commodities has been a game for decades. In 1980, they managed to get the COMEX to increase the margin require for longs but not shorts. The games have been countless. However, these are not equity and thus has been exempt from the criminal law. That is my point. Not to excuse SAC, but to point out this is a one-sided issued that is limited to the SEC. As far as front-running, this is the plague in futures and has always been. Trading with banks in bonds resulted in them keeping track of who had what positions all to trade against. It is just not consistent because we have too many regulators instead on just one.
This type of conduct is not acceptable. You would be surprised but in NYC in the terrorist cases, lawyers hired good-looking paralegals to sleep with the opposite side to get inside info for the case. My point is, this is standard operational procedure in NYC even in a court of law. When I say they practice law different in NYC, I really mean it is outrageous. Yes, you are correct, they were still officially Connecticut based.
More Insider Trading Nonsense – Where’s the Beef?
Michael Steinberg was sentenced to 3.5 years in prison for insider trading on Friday emerging from the destruction of the hedge fund SAC. This is WHY the firm was prosecuted because it was not NYC based. Secondly, this helps the SEC and DOJ pretend they prosecute Wall Street when they do not.
Insider Trading is the biggest nonsense of all. It is ONLY a crime in equities – not futures, currencies, or bonds. If it were, you might as well put a fence around Manhattan and call it a day.
Law is NEVER made by the people actually in Congress. It is the product of prosecutors and judges. Congress NEVER passed a law that said Americans must pay taxes on worldwide income even if they have never lived in America but had one American parent. You can thank judges for that. They reasoned that Congress did not expressly say only the territory of the USA like everyone else, so it should apply to everything earned everywhere. The problem here with this legal interpretation is that this reasoning transforms Americans into economic slaves.
The Revolution was against Monarchy. If you were English and killed someone in Paris, the French could not prosecute you. They had to send you in chains back to your king who owned you. The American Revolution was against Monarchy and thus was born TERRITORIAL Jurisdiction. The law became you were prosecuted where the crime took place – not based upon who owned you. Therefore, the judicial reasoning for worldwide taxation is UNCONSTITUTIONAL for it defies territorial jurisdiction that is recognized by every other nation in tax law except the USA and Japan. Try to resign your citizenship. They want you to pay taxes on future income for the next 10 years. This proves they view you as property to produce taxes – it is not about paying “your fair share” because you received something. You owe them the day you are born and you are NOT free to just leave. If someone beat a slave to death, he had to pay the owner of that slave for the loss of his property. Nothing has changed.
Insider Trading emerged from the Great Depression. Directors withheld news that the company was broke to sell their stock first and then made the announcement. It was Rudy Giuliani who flipped the definition in order to prosecute Michael Milken. He claimed that merely having inside info allowed you to make a profit and the FRAUD was that others were denied the same opportunity to make money. This is a classic communist theory and it is inconsistent with a free market for to apply this theory EXCLUSIVELY to equities is a denial of EQUAL PROTECTIONof the law and a denial of one’s civil rights. This is tantamount to saying it is a crime to jaywalk only if you wear a suit.
Insider Trading, as Giuliani redefined it to further his career, is fundamentally flawed. NO serious trader relies upon a single fact or piece of information. Prosecutors, who never understand trading, presume if someone called you and said GM was going to introduce a car that flew and you bought stock after looking at the charts, etc, they isolate only that piece of information. In a bear market, even good news is ignored. Professionals know that reality. I have NEVER seen any professional fund manager EVER rely upon a single piece of info. The only such thing is a guaranteed takeover big. Other than that, this theory is bogus. It should be relegated to what it originally meant when it was FRAUD only because the directors withheld that news until they sold their shares first. That can never happen these days.
We do not need the Illumiati or Bilderbergs, we have unelected bureaucrats who make their own laws and alter society for something a lot more concrete than world domination – personal career enrichment. Outlawing the Bilderbergs and Illuminati will not save our future. We need REAL political reform – end the career politicians and regulate the bureaucrats and eliminate judges and prosecutors who do not strictly follow the law enacted by the people – that is a real democratic reform.