Once again, the BAM Model has rewarded us for having the courage to follow a fundamentally ‘baseless’ trading idea.

What I’m referring to is the wheat market and our purchase of wheat during the recent Twitter Campaign.

The model’s September prediction of a “melt-up” in the wheat market was followed by what analysts in a Bloomberg article today called “the biggest October rally in at least 50 years.”

However, for investors bold enough to follow the BAM Model’s prediction (buying into a multi-year low) the move had a more direct impact–one they saw reflected in their accounts.  Case in point is the tweet we received from a Twitter follower on October 21st saying “@Baminvestor per your suggestion, lightened up on Dec wheat today, sold a few contracts for a 950% profit, looking for the dip to re-enter.”

We’re glad the position worked out so well (we still own it ourselves) but our interest in bringing this post to you all is in simply pointing out the unpredictable nature of Mother Nature.

It turns out that the “experts” (the guys bearish wheat prices) were caught off guard when “recent weather patterns delayed planting.”  It was that quote–blaming the largest rally in 50 years on weather–that prompted this posting.

You see, one of the calls that first grabbed the eye of the hedge fund I eventually went to work for was a prediction in the OJ market back in 2004.

It was May of 2004 to be exact and Orange Juice had been in a brutal 13 year bear market from 1991 to 2004.   Adding to the brutality–as well as the certainty–of the decline was the fact that the nation was caught in the grips of a diet mania known as the “Atkins Diet.”  Some of you may recall that “low-carb” fad and, as we all know, orange juice is about as high in carbs as any drink out there.  Anyway, long story short, people did as they always tend to do, they moved heavily into an investment position at exactly the wrong time–shorting orange juice aggressively right into May of 2004.

The BAM Model on the other hand, was screaming bullish and alerting us to an immediate upside price reversal that would–if the market tracked the model–lead to an EPIC melt-up.

All of my friends thought I was crazy and they ignored the model’s call, choosing instead to follow the adage “the trend is your friend.”

Guess what happened next?

Four devastatingly strong hurricanes ripped directly through the orange groves of Florida.  In fact, Polk county–ranked first in citrus production–was the only county in the state to feel the eyewall of three of the four major hurricanes–Charley, Frances, and Jeanne.

What followed next was a 220% move in OJ that not only caught the eye of that hedge fund I referred to, but proved to me without a doubt that cycles in human behavior tend to peak opposite the cycles of mother nature.

It also taught me to never question the predictive nature of the BAM Model–no matter how seemingly outrageous those predictions might seem.

Click HERE for the full Bloomberg article.

JG Savoldi