Stocks are sliding more aggressively today.  Wall Street and the media always have a need to assign a reason when stocks move lower.  There have been plenty of negatives and uncertainties over the past seven months — none of which put a dent in a very strong opening half for stocks.

​But markets don’t go straight up.  Trends have retracements.  Bull markets have corrections.  And despite what many people think, you don’t need a specific event to turn markets.  Price can many times be the catalyst.

If we look across markets, it’s safe to say it doesn’t look like a market that is pricing in nuclear war.  Gold is higher, but still under the highs of a month ago.  The 10 year yield is 2.21%.  Two weeks ago, it was 2.22%.  That doesn’t look like global capital is fleeing all parts of the world to find the safest parking place.

​Now, on the topic of North Korea, the media has found a new topic to obsess about– and to obsessively denounce the administration’s approach.  With that, let’s take a look at the Trump geopolitical strategy of calling a spade a spade.

​As we know, Mexico was the target heading into the election.  Trump’s tough talk against illegal immigration and drug trafficking drew plenty of scrutiny.  People feared the protectionist threats, especially the potential of alienating the U.S. from its third biggest trading partner.  We’re still trading with Mexico.  And the U.S. is doing better.  So is Mexico.  Mexican stocks are up 11% this year.  The Mexican currency is up 13% this year.

​China has been a target for Trump.  He’s been tough on China’s currency manipulation and, hence, the lopsided trade that contributed heavily to the credit crisis. Despite all of the predictions, a trade war hasn’t erupted.  In fact, China has appreciated its currency by 5% this year.  That’s a huge signal of compliance.  That’s among the fastest pace of currency appreciation since they abandoned the peg against the dollar more than 12 years ago (which was China’s concession to threats of a 30% trade tariff that was threatened by two senators, Schumer and Graham, back in 2005). And even in the face of a stronger currency (which drags on exports, a key driver of the economy), stocks are up 5% in China through the first seven months of the year.

​Bottom line:  It’s fair to say, the tough talk has been working.  There has been compromise and compliance.  So now Trump has stepped up the pressure on North Korea, and he has been pressuring China, to take the side of the rest of the world, and help with the North Korea situation – and through China is how the North Korea threat will likely get resolved.

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June 2, 2017, 3:30pm EST               Invest Alongside Billionaires For $297/Qtr

Join the Billionaire’s Portfolio to hear more of my big picture analysis and get my hand-selected, diverse stock portfolio following the lead of the best activist investors in the world.As we end the week, we have some remarkable market and economic conditions.  U.S. stocks printing new record highs by the day.  Yields today broke down. The 10 year yield now trades 2.15%.  Oil is under $50.We’re set up to massively stimulative fiscal policies launch into an economic environment that is about as primed as it can possibly get.The stock market is at record highs. The unemployment rate is 4.3%.  Inflation is low. Gas is cheap ($2.38), and stable.  Mortgage rates are under 4%, and stable.  You can borrow money at 2% (or less) to buy a car. This has all put consumers in as healthy a position as they’ve been in a long time. As I’ve said, the two key tools the Fed used to engineer a recovery was housing and stocks.  That restores wealth, which restores confidence, which gets people spending, hiring and investing again.  So stocks are at record highs. And housing (as you can see in the chart below) continues to climb back toward pre-crisis levels. As a result, we have well recovered and surpassed pre-crisis levels in household net worth, and sit at record highs … What is the key long-term driver of economic growth over time?  Credit creation.  In the next chart, you can see the sharp recovery in consumer credit (in orange) since the depths of the economic crisis.  This excludes mortgages.  And you can see how closely GDP (the purple line, economic output) tracks credit growth. So credit is back on track.  Meanwhile, consumers have never been so credit worthy.  FICO scores in the U.S. have reached all-time highs. With all of this said, the consumer looks strong, but the big missing link and structural drag on the economy in this story has been wage growth.  What’s the solution?  A corporate tax cut.  The biggest winners in a corporate tax cut are workers.  The Tax Foundation thinks a cut in the corporate tax rate would double the current annual change in wages. So think about this backdrop.  If I told you at any point in history that these were the conditions, you would probably tell me that the economy was already in, or will be in, an economic boom period.  I think it’s coming.  And it will drive earnings significantly, which will make the valuation on stocks cheap. What stocks are cheap?  Join me today to find out what stocks I’m buying in my Billionaire’s Portfolio. It’s risk-free.  If for any reason you find it doesn’t suit you, just email me within 30-days.

May 15, 2017, 4:00pm EST               Invest Alongside Billionaires For $297/Qtr

Last week we discussed the building support for a next leg higher in commodities prices.  China is clearly a very important determinant in where commodities go. And with the news last week about cooperation between the Trump team and China, on trade, we may have the catalyst to get commodities moving higher again.​It just so happens that oil (the most traded commodity in the world) is rebounding too, on the catalyst of prospects of an OPEC extension to the production cuts they announced last November.​In fact, overnight, Saudi Arabia and Russia said they would do “whatever it takes” to cut supply (i.e. whatever it takes to get oil prices higher).  Oil was up big today on that news.When you hear these words spoken from policy-makers (those that can dictate outcomes), it should get everyone’s attention.  Those are the exact words uttered by ECB head Mario Draghi, that ended the bond market assault in Spain and Italy that were threatening the existence of the euro and euro zone.  The Spanish 10-year yield collapsed from 7.8% (unsustainable borrowing rate for the Spanish government, and threatening imminent default) to 1% over the next three years — and the ECB, while threatening to buy an unlimited amount of bonds to push those yields lower, didn’t have to buy a single bond.  It was the mere threat of ‘whatever it takes’ that did the trick. ​As for oil: From the depths of the oil price crash last year, remember, we discussed the prospects for a huge bounce.  Oil prices at $26 were threatening to undo the trillions of dollars of work central banks and governments had done to stabilize the global economy.  Central banks couldn’t let it happen.  After a series of coordinated responses (from the BOJ, China, ECB and the Fed), oil bottomed and quickly doubled. Also at that time, two of the best oil traders in the world were calling the bottom and calling for $70-$80 oil by this year (Pierre Andurand and Andy Hall).  Another commodities king that called the bottom: Leigh Goehring. Goehring, one of the best commodities investors on the planet, has also laid out the case for $100 oil by next year. He says he’s “wildly bullish” oil in his recent quarterly investor letter at his new fund, Goehring & Rozencwajg. ​Goehring argues that the IEA inventory numbers are flawed. He thinks oil the market is already over-supplied and is in a draw, as of May of last year.   With that, he thinks the OPEC cuts will ultimately exacerbate the deficit and send prices aggressively higher. He says “we remain ‘wildly’ bullish and believe that there is a very high probability of oil prices reaching triple digits in the first half of 2018.” Follow This Billionaire To A 172% WinnerIn our Billionaire’s Portfolio, we have a stock in our portfolio that is controlled by one of the top billion dollar activist hedge funds on the planet. The hedge fund manager has a board seat and has publicly stated that this stock is worth 172% higher than where it trades today. And this is an S&P 500 stock!Even better, the company has been constantly rumored to be a takeover candidate. We think an acquisition could happen soon as the billionaire investor who runs this activist hedge fund has purchased almost $157 million worth of this stock over the past year at levels just above where the stock is trading now.So we have a billionaire hedge fund manager, who is on the board of a company that has been rumored to be a takeover candidate, who has adding aggressively over the past year, on a dip. Join us today and get our full recommendation on this stock, and get your portfolio in line with our BILLIONAIRE’S PORTFOLIO.

November 21, 2016, 6:30pm EST

Stocks hit new record highs again in the U.S. today.  This continues the tear from the lows of election night.  But if we ignore the wild swing of that night, in an illiquid market, stocks are only up a whopping 1.2% from the highs of last month — and just 8% for the year. That’s in line with the long term average annual return for the S&P 500.

And while yields have ripped higher since November 8th, we still have a 10 year yield of just 2.32%. Mortgages are under 4%.  Car loans are still practically free money.   That’s off of “world ending” type of levels, but very far from levels of an economy and markets that are running away (i.e. you haven’t missed the boat – far from it).

Despite this, we’re starting to see experts come out of the wood works telling us that the economy has been in great shape for a while.  That’s what this is about – what’s with all the fuss?  Not true.

Remember, it was just eight months ago that the world was edging toward the cliff again, as the oil price bust was threatening to unleash another global financial crisis.  And that risk wasn’t emerging because the economy was in great shape.  It was because the economy was incredibly fragile — fueled by the central banks ability to produce stability, which produced confidence, which produced some spending, hiring and investment, which produced meager growth.  But given that global economic stability was completely predicated on central banks defending against shocks to the system, not on demand, that environment of stability was highly vulnerable.

Now, of course, we finally have policies and initiatives coming down the pike that will promote demand (not just stability).   If have perspective on where markets stand, instead of how far they’ve come from the trough of election night, we’re sitting at levels that scream of opportunity as we head into a new pro-growth government.

When the economic crisis was in the early stages of unraveling, the most thorough study on past debt crises (by Reinhart and Rogoff) found that delevering periods (the time after the bust) took about as long as the leveraging period (the bubble building period before the bust).  With that, it was thought that the deleveraging period would take about 10 years.  History gave us the playbook, in hand, from very early on in the crisis.

With that in mind, the peak in the housing market was June of 2006.  That would put 10 years at this past June.  The first real event, in the unraveling of it all, was the bust of two hedge funds at Bear Stearns in mid 2007.  That would put the 10 year mark at seven months out or so.

That argues that we’re not in the late stages of an economic growth cycle that was just unfortunately weak (as some say), but that we should just be entering a new growth phase and turning the final page on the debt crisis.  And that would argue that asset prices are not just very cheap now, but will be for quite some time as a decade long (or two) prosperity gap closes.

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September 2, 2016, 12:00pm EST

This time last month, the famed oil trader—and oil bull—Andy Hall was dealing with a sub-$40 oil market again. And he was again explaining losses to investors in his multi-billion dollar hedge fund.

A guy that has made a career, and hundreds of millions of dollar in personal wealth, picking tops and bottoms in oil, had entered 2016 coming off his worst year ever. And 2016 started even worse.

I’ve talked about the oil price bust extensively, at the depths of the decline in January and February. While most were glorifying the benefits of a few extra bucks in the pockets of consumers from low gas prices, we walked through the ugly outcome of persistently low oil prices. It would be another global financial crisis, as failing energy companies and defaulting oil producing countries would crush banks, and the dominos would fall from there. Unfortunately, the central banks don’t have the ammunition to pull the world back from the edge of disaster for a second time.

With that, central banks stepped in with more easing in the face of the oil price threat, and oil bounced sharply.

Hall’s fund bounced sharply too, running up nearly 25% for the year, by the end of June. But he gave a lot of it back by the time July ended. And now, again, oil is closer to $40 than $50. Thanks to a report yesterday, that oil supplies were bigger than expected, the price of crude has fallen 10% since Friday of last week.

Hall was the Citigroup C +0.13% oil trader who made billions of dollars for the bank energy trading arm, Phibro, in the early-to mid-2000s. He was one of the first to load up on oil futures in 2002, when oil was sub-$30, on the thesis that a boom in demand was coming from China.

So he’s a guy that has been very right about turning points, and big trends. And he’s been pounding the table for much higher oil prices. He thinks oil prices are in for a “violent reversal” (higher). With an important OPEC meeting scheduled for later this month, Hall, in a past investor letter, reminded people how powerful an OPEC policy shift can be. In 1986, the mere hint of an OPEC policy move sent oil up 50% in just 24 hours.

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We’ve talked a lot about oil, the rebound of which has probably led to the trade of the year.  If you recall back on February 8th, we said policymakers finally got the wake up call on the systemic threat of the oil price bust when Chesapeake Energy, the second largest oil and gas producer, was rumored to be pursuing bankruptcy.

This is what we said:

“The early signal for the 2007-2008 financial crisis was the bankruptcy of New Century Financial, the second largest subprime mortgage originator.  Just a few months prior the company was valued at around $2 billion. 

On an eerily similar note, a news report hit this morning that Chesapeake Energy, the second largest producer of natural gas and the 12^th largest producer of oil and natural gas liquids in the U.S., had hired counsel to advise the company on restructuring its debt (i.e. bankruptcy).  The company denied that they had any plans to pursue bankruptcy and said they continue to aggressively seek to maximize the value for all shareholders.  However, the market is now pricing bankruptcy risk over the next five years at 50% (the CDS market).

Still, while the systemic threat looks similar, the environment is very different than it was in 2008.  Central banks are already all-in.  We know, and they know, where they stand (all-in and willing to do whatever it takes).  With QE well underway in Japan and Europe, they have the tools in place to put a floor under oil prices. 

In recent weeks, both the heads of the BOJ and the ECB have said, unprompted, that there is “no limit” to what they can buy as part of their asset purchase program.  Let’s hope they find buying up dirt-cheap oil and commodities, to neutralize OPEC, an easier solution than trying to respond to a “part two” of the global financial crisis.” 

Chesapeake bounced aggressively, nearly 50% in 10 business days.  

And on February 22nd, we said, “persistently cheap oil (at these prices) has become the new “too big to fail.” It’s hard to imagine central banks will sit back and watch an OPEC rigged price war put the global economy back into an ugly downward spiral.  And time is the worst enemy to those vulnerable first dominos (the energy industry and weak oil producing countries).”

As we’ve discussed, central banks did indeed respond.  The BOJ intervened in the currency markets on February 11, and that (not so) coincidently put the bottom in oil and global stocks.  China followed on February 29, with a cut on bank reserve requirements, then ECB cut rates and ramped up their QE and the Fed joined the effort by taking two projected rate cuts off of the table (we would argue maybe the most aggressive response in the concerted central bank effort).

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From the bottom on February 8th, Chesapeake shares have gone up five-fold, from $1.50 to over $7.  Oil bottomed February 11 and is up 77%.  This is the trade of the year that everyone should have loved.  If you’re wrong, the world gets very ugly and you and everyone have much bigger things to worry about that a bet on oil and/or Chesapeake.  If you’re right, and central banks step in to divert another big disaster (a disaster that could kill the patient) you make many multiples of your risk.

We think it was the trade of the year.  The trade of the decade, we think is buying Japanese stocks.

Overnight the BOJ made no changes to policy.  And the dollar-denominated Nikkei fell over 1,200 points (more than 7%).

As we said yesterday, two explicit tools in the Bank of Japan’s tool box are: 1) a weaker yen, and 2) higher stocks.  I say “explicit” because they routinely have said in their minutes that they expect both to contribute heavily to their efforts. So now Japanese stocks and the yen have returned near the levels we saw before the Bank of Japan surprised the world with a second dose of QE back in October of 2014.  So their efforts have been undone. And they’ve barely moved the needle on their objective of 2% inflation during the period.  In fact, the head of the BOJ, Kuroda, has recently said they are still only “halfway there” on reaching their goals.

So they have a lot of work left.  And if we take them at their word, a weak yen and higher stocks will play a big role in that work.  That makes today’s knee-jerk retreat in yen-hedged Japanese stocks a gift to buy.

U.S. stocks have well surpassed pre-crisis, record highs.  German stocks have well surpassed pre-crisis, record highs.  Japanese stocks have a long way to go.  In fact, they are less than “halfway there.”

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2/8/16

When housing prices stalled in 2006 and then collapsed over the next three years, the subprime lending schemes quickly became exposed.

Mortgage defaults led to a banking crisis. Due to the highly interconnectedness of banks globally, the problems quickly spread to banks around the world. A banking crisis led to a global credit freeze. When people can’t access credit, that’s when it all hits the fan. Companies can’t meet payroll, don’t have the liquidity to make new orders. Jobs get cut. Companies go bust. Finally, the microscope on overindebtedness of consumers and corporates, turns to countries. Deficits leads to debt. Debt leads to downgrades. Downgrades leads to defaults.

For the most part, defaults were averted because central banks and governments stepped in, in a coordinated way, to backstop failing banks, failing companies and failing countries. From that point, continued central bank stimulus has 1) enabled banks to recapitalize, 2) foiled additional shock events, and 3) restored confidence to employers (to hire), to investors (to invest) and to consumers (to spend again).

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As we’ve discussed in the past two weeks, persistently low oil prices represent a risk on par with the housing bust. And in recent days we’re seeing the signs of another global financial and economic crisis creeping uncomfortably closer to a “part two.”

As we’ve said, this time would be much worse because governments and central banks have exhausted the resources to bailout failing banks, companies and countries. But central banks, namely the Bank of Japan and/or the European Central Bank do have the opportunity to step-in here, become an outright buyer of commodities (particularly oil), as part of their QE programs, to avert disaster. But time is the oil industries worst enemy and therefore a big threat to the global economy. The longer policymakers drag their feet, the closer we get to the edge of global crisis — a crisis manufactured by OPEC’s price war.

Unfortunately, there are the building signs that the market is beginning to position for the worst outcome…

Key bank stocks in Europe are trading at levels lower than in the depths of both the global financial crisis (2009) and the European sovereign debt crisis (2012).

Source: Reuters, Billionaire’s Portfolio

The credit default swap market for key industries is sending up flares. This is where default insurance can be purchased against a company or country – and the place speculators bet on a company’s demise. Billionaire John Paulson famously made billions betting against the housing market via credit default swaps. Now the fastest deteriorating companies in Europe are banks. And the fastest deteriorating companies in North America are insurance companies (a sector that tends to have investments in high yield debt … in this case, exposure to the high yield debt of the oil and gas industry).

Source: Markit

The early signal for the 2007-2008 financial crisis was the bankruptcy of New Century Financial, the second largest subprime mortgage originator. Just a few months prior the company was valued at around $2 billion.

On an eerily similar note, a news report hit this morning that Chesapeake Energy, the second largest producer of natural gas and the 12th largest producer of oil and natural gas liquids in the U.S., had hired counsel to advise the company on restructuring its debt (i.e. bankruptcy). The company denied that they had any plans to pursue bankruptcy and said they continue to aggressively seek to maximize the value for all shareholders. However, the market is now pricing bankruptcy risk over the next five years at 50% (the CDS market).

Still, while the systemic threat looks similar, the environment is very different than it was in 2008. Central banks are already all-in. On the one hand, that’s a bad thing for the reasons explained above (i.e. limited ammunition). On the other hand, it’s a good thing. We know, and they know, where they stand (all-in and willing to do whatever it takes). With QE well underway in Japan and Europe, they have the tools in place to put a floor under oil prices.

In recent weeks, both the heads of the BOJ and the ECB have said, unprompted, that there is “no limit” to what they can buy as part of their asset purchase program. Let’s hope they find buying up dirt-cheap oil and commodities, to neutralize OPEC, an easier solution than trying to respond to a “part two” of the global financial crisis.

Bryan Rich is a macro hedge fund trader and co-founder of Forbes Billionaire’s Portfolio, a subscription-based service that empowers average investors to invest alongside the world’s best billionaire investors. To follow the stock picks of the world’s best billionaire investors, subscribe at Forbes Billionaire’s Portfolio.

1/27/16

The Fed met today—and they made no change to policy. As we all know, their words will be parsed endlessly. But the fact is, the Fed, at this point, is a side show. It’s two other central banks (BOJ and ECB), and likely policy makers in China that will dictate what stocks do, what commodities do and what the global economy does for the next year (or few).

With that, the real event is tomorrow night. The Bank of Japan will decide on their next move. And the BOJ holds many, if not all of the cards for the U.S. stock market and the global economy. Today we’re going to talk about why that’s the case.

As we said yesterday, the consensus view is that the BOJ will do nothing this week. That sets up for a surprise, which Japanese policymakers like and want. It gives their policy actions more potency.

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We talked yesterday about the role central banks have played in the long and slow global recovery. To put it simply, central banks have manufactured the global economic recovery. Without the intervention, there would have been a global economic collapse and blood in the streets, still. It was all led by the Fed. They slashed interest rates to zero. They rolled out the unprecedented bond buying program that pinned down mortgage rates (putting a bottom in the housing market), and helped to recapitalize the big banks that were drowning in defaulted debt, withering deposits and an evaporation of loan demand. They opened up currency swap lines (access to U.S. dollars) with global central banks so that those central banks could fend off collapse in their respective banking sectors.

Most importantly, with all of the intervention, and after spending and committing trillions of dollars in guarantees, backstops and bailouts, the Fed clearly communicated to the public, by their actions, that they would not let another shock event destabilize the world economy. Europe was next to step up, to do the same.

When the weak members of the European Monetary Union were spiraling toward default, which would have destroyed the euro and Europe all together, the leading euro zone nations stepped in with a bailout package.

Still, a year later, bigger trouble was brewing, as big countries like Italy and Spain were on the precipice of default. That’s when the European Central Bank (ECB) went “all–in”, effectively guaranteeing the debt of Italy and Spain by saying they would do “whatever it takes” to save the euro (and the euro zone).

Those were the magic words: “whatever it takes.”

That statement meant that the central bank would buy the debt of those countries, if need be, to keep them solvent, for as much and as long as needed…”whatever it takes.” That was the line in the sand. If you bought European stocks that day, you’ve doubled your money will little–to–no pain.

Similarly, Japan read from Draghi’s script a few months ago (late September of 2015) when global stocks were falling sharply and threatening to destabilize the world again. Japan’s Prime Minister Abe was in New York, and in a prepared speech, said they would do “whatever it takes” to return Japan to robust sustainable growth. Once again, the magic words put a bottom in global stocks and led to a sharp rebound.

“Whatever it takes” means, if need be, they print more money, they will support government debt markets, they will outright buy stocks, they will devalue currencies, they will do whatever it takes to promote growth and to prevent a shock that would derail the global economy. Why? Because they know the alternative scenario/the negative scenario is catastrophic.

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Not surprisingly, in the past six days, with global stocks in turmoil, Draghi stepped in again. This time, he conjured up some new magic words. He said there are no limits to what the ECB can buy (as part of their QE program). Guess who followed his lead? The head of the BOJ sat in front of a camera the next day and said the exact same thing. This tells me stocks are fair game. We already know that’s the case for the BOJ. They are already outright buying stocks. But it also tells me commodities are fair game. And high yield corporate debt. Anything that is threatening to destabilize global markets and threatening to knock the global economic recovery off path—it’s fair game for the ECB and BOJ to put a floor under (i.e. by buying up assets with freshly printed currency).

What does it all mean? It means the ECB and the BOJ are now at the wheel. They relieved pressure from the Fed, allowing the Fed to begin the path of removing the emergency policies (albeit very slowly) of the past nine years. The Fed only makes this move because they believe the U.S. economy is robust enough to handle it. And, more importantly, they only start this path because they know that two other major central banks in the world will continue to provide fuel for the global economy and defend against shocks through their aggressive policies.

Now, within this monetary policy dominated world, where everyone is all–in, the policy actions have simply kept the global economy alive and breathing, they have done nothing to address the major structural problems the world is enduring: Massive debt and slow–to–no growth.

What’s the solution? There hasn’t been one. Until Japan unveiled their massive stimulus program in 2013. The potential solution: A massive devaluation of the Japanese yen.

Japan, unlike many other major central banks (including the Fed), has all of the right ingredients to achieve its inflation goal via the printing press—it has the biggest debt load in the world (which can be inflated away by yen printing), it has persistent deflation (which can be reversed by printing), and it has decades of economic stagnation (which can be reversed with hyper easy money and improvements in the global economy).

In short, they can do all of the things that other powerful central banks/economies can’t do—and it can result in a huge benefit not just in Japan but for fueling a recovery in the global economy (as capital pours out of Japan). In a world with few antidotes to the structural economic problems, this is a potential solution for everyone. So perhaps the most important ingredient for a successful campaign in Japan°they have the full support/hope/wishes of the major global economic powers (US, Europe, UK).

The Bank of Japan is targeting to run their aggressive QE program at full tilt until they can produce a target of 2% inflation in their economy. Their latest inflation data is closer to zero than 1% (still very far from 2%). So they still have a lot of work to do. They completed two years of their big, bold plan—and two years was the timeline they projected to achieve their goal. Clearly, they haven’t met the inflation goal. And they have since, as we’ve said, committed to do whatever it takes to do it, and for as long as it takes. With that, we expect more expansion to their QE program (possibly this week). And, importantly, a huge part of their success is (and will be) dependent upon higher Japanese stocks, and a weaker yen. They have explicitly said so. It’s part of their game plan.

Japan’s Prime Minister Abe was elected on his aggressive plan to end deflation. That was, and is, his priority. He hand-selected the Bank of Japan governor to carry out his plan.

Here’s the quick and dirty summary: With free–falling oil and depressed commodity prices threatening widespread defaults across the energy sector, which would soon be followed by sovereign debt defaults from oil producing nations (like Russia), don’t be surprised if we see the BOJ (and maybe the ECB) step in and gobble up dirt cheap commodities as a policy initiative. It would put a floor under stocks, commodities, and promote stability and growth.

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Business, Finance, Stocks, Stock Markets, Investor, Economy, Fed, Central Banks, Money,

1/23/16

The legendary billionaire investor, Warren Buffett, lost 12.3% in 2015. That was his worst year since 2008.

Meanwhile, the average hedge fund lost 3%. The average mutual fund lost 2.7%. And stocks broadly finished the year down too (before dividends), for the first time since 2008. Even most of the biggest and best known professional investors had a bad 2015. Still, one of the lesser known, but one of the best in the world, defied the gravity of stocks and posted an 8.3% gain for the year.

It was billionaire Andreas Halvorsen. He runs Viking Global, the ninth largest hedge fund in the world at $31 billion in assets under management.

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Halvorsen started his fund in 1999, after training under the legendary billionaire investor Julian Robertson. He’s a former Norwegian Navy Seal and a Stanford MBA.

Halvorsen extracted more than $2.5 billion from the markets in 2015, as a stock investor, in one of the more difficult stock picking environments in a long time. And last year was not an anomaly. Viking has one of the best track records of any hedge fund over the past 16 years. Since inception in 1999, the fund has returned 23% annualized (before fees) vs. a 4% annualized return for the S&P 500.

Halvorsen’s stock picking abilities have produced returns at a factor of 3.5 times better than Buffett’s since he’s been at the helm of Viking. And he’s done it with much smaller drawdowns. In fact, Viking has only had two losing years since 1999. The fund lost 0.9% in 2003 and lost just 0.9% in 2008, a year when almost all stock investors were crushed. Buffett lost 31.5% that year.

The following are Viking’s top positions: Allergan (AGN), Walgreen’s (WBA), Google/Alphabet (GOOGL), Amazon (AMZN) and Broadcom (BRCM).

In addition, in Halvorsen’s most recent investor letter, he said his fund had doubled down (added more) on a very controversial stock in their portfolio. At Billionaire’s Portfolio we curate a portfolio of the best stock picks of the world’s best billionaire investors – our subscribers follow along. To find out what stock Viking Global is adding to after a big decline, subscribe today.

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