When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
August 13, 2020
Fiat Lux
Featured Trade:
(RAISING MY TESLA TARGET TO $5,000),
(TSLA)
(TESTIMONIAL)
The bad news about Tesla (TSLA) is that it may take several months, if not a year to digest the massive ten-fold leap in Tesla shares that has taken play over the past year.
The good news is that I am raising my long term target from the $2,500 that I held for the last decade to $5,000 over the next five years. Remember, I first recommended the stock at $16.50, right after the IPO went bust.
I knew I was on the right track when the salesman told me that the customer who just preceded me for a Tesla Model X 100D SUV was the Golden Bay Warriors star basketball player, Steph Currie.
Well, if it’s good enough for Steph, then it’s good enough for me.
Last week, I received a call from Elon Musk’s office to test the company’s self-driving technology embedded in their new vehicles for readers of the Diary of a Mad Hedge Fund Trader.
I did, and prepare to have your mind blown!
I was driving at 80 MPH on CA-24, a windy eight-lane freeway that snakes its way through the East San Francisco Bay Area mountains. Suddenly the salesman reached over and flicked a lever on the left side of the driving column.
The car took over!
There it was, winding and turning along every curve, perfectly centered in the lane. As much as I hated to admit it, the car drove better than I ever could. It does especially well at night, a valuable asset for senior citizens whose night vision is fading fast.
All that was required was for me to touch the steering wheel every two minutes to prove that I was not sleeping.
The cars do especially well in rush hour driving, as it is adept at stop and go traffic. You can just sit there and work on your laptop, read a book, or watch a movie on the built in 4G WIFI HD TV.
When we returned to the garage, the car really showed off. When we passed a parking space, another button was pushed, and we perfectly backed 90 degrees into a parking space, measuring and calculating all the way.
The range is 290 miles, which I can recharge at home at night from a standard 220-volt socket in my garage in seven hours. The chassis can rise as high as eight inches off the ground so it can function as a true SUV.
The “ludicrous mode,” a $10,000 option, takes you from 0 to 60 mph in 2.9. However, even a standard Tesla can accelerate so fast that it will make the average passenger carsick.
Here’s the buzzkill.
Tesla absolutely charges through the nose for extras.
The 22-inch wheels, the third row of seats to get you to seven passengers, the premium sound, the leather seats, and the self-driving software can easily run you $30,000-$40,000.
A $750 tow hitch will accommodate a ski rack on the back. There is a $1,000 delivery charge, even if you pick it up at the Fremont factory.
It’s easy to see how you can jump from an $84,990 base price to a total cost of $162,500, including taxes, for the ultra-luxury Performance model with every option the company offered.
It's my company that the car will be purchased under, thanks to the incredible tax breaks afforded to the wealthy by the Trump tax bill.
This allowed me to deduct the entire $162,500 cost of the vehicle upfront, plus the maintenance and insurance costs for the entire life of the car. However, I will have to maintain a mileage log as a hedge against any future IRS audits.
It looks like I’ll have to buy yet another Tesla this year as tax breaks for the rich are soon to become a thing of the past.
As for “drop dead’ curb appeal, nothing beats the Model X. Buy the stock on every 20% dip. The days of young ladies writing their phone numbers on post-it-notes under the windshield wipers so they can get a ride are not over.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Mad Hedge Technology Letter
August 12, 2020
Fiat Lux
Featured Trade:
(PUT THE KIBOSH ON TECH STOCKS?)
($COMPQ)
Whether Russia has actually produced a vaccine or not takes a backseat to the upcoming uncontrollable avalanche of media content about delivering a North American vaccine that news wires will disseminate.
It could be the case that the tide rises all boats in the equity world, but the pathway for a serious rotation into laggards is the more likely case.
Russian President Vladimir Putin claimed Russia has become the first country in the world to grant regulatory approval to a virus vaccine after less than two months of human testing.
Establishing an initial marker for a vaccine being realized is bullish for the overall stock market, but tech stocks might participate less in the rally as the capital is funneled into the catch-up trade.
At the very minimum, tech stocks, short term, are at risk of being slightly discounted to the overall market as the “shelter in place” trade that has benefited the strongest cloud plays has a weaker case than it did before.
Expect a bevy of upcoming announcements from North American and European pharma firms describing their unique pathway to a vaccine.
The European and North American scientific community will not want to be outdone by the Russians.
Don’t forget that the Nasdaq is at market tops and it's normal to have a phase of digestion.
Naturally, the Russian vaccine news has been met with a wave of general skepticism concerning its efficacy.
Putin chose to give a personal anecdote citing his daughter’s involvement with the trials as concrete evidence that she is fully vaccinated from the coronavirus.
The development of the vaccine has been put on an accelerated schedule raising concerns among some experts at the speed of its approval, but the Russian business conglomerate Sistema has said it expects to put it into mass production by the end of the year.
Regulatory approval is the precursor to mass inoculation of the Russian population and the government is desperate to revive the economy after a synchronized health crisis, economic crisis, and oil crisis wrapped into one.
The vaccine will be marketed under the name 'Sputnik V' in foreign markets and is already been offered for sale to other countries.
The jury is still out on this potential vaccine and a larger trial involving thousands of participants, commonly known as a Phase III trial hasn’t started yet meaning the approval is quite premature.
Such trials, which require a certain rate of participants catching the virus to observe the vaccine's effect, are normally considered essential precursors for a vaccine to receive regulatory approval.
“You need a large number of people to be tested before you approve a vaccine,” said Peter Kremsner from the University Hospital in Tübingen, Germany currently testing biopharmaceutical company CureVac's vaccine in clinical trials.
So aside from the uncertainty that this could be a ploy to generate revenue for the Russian state, what does this mean for tech stocks?
A real vaccine that will save people from the dreaded coronavirus would mean the “re-opening trade” is alive and well.
A fake vaccine means rhetoric about finding a vaccine which is also positive for the tech market too.
Capital will rotate into the neglected industries of hospitality, retail, transport, and energy.
It’s been a meteoric rise up in 2020 for cloud, software, and tech’s monopolistic juggernauts.
This was due to happen at some point just like the elevated virus risk will eventually dissipate whether it takes six months, two years or five years.
My base case is that tech will be spared from any major carnage and will be range bound in the short to medium term with few catalysts to take them higher.
Earnings certainly isn’t the force multiplier for tech it once was pre-virus.
This Russian vaccine could be indeed a head fake as well leading to another “buy the dip” moment that is so ingrained in the current psyche.
Portfolio managers have a hard time dumping tech stocks full stop because they are hard to get back into on the next move up.
Not to mention they should already be the cornerstone out of any major portfolio and that the opportunity cost of missing out on tech’s supercharged run-ups will limit any broad-based selling and far outweighs the risk of downside price action.
This wasn’t the greatest news for tech stocks, but it could have been worse.
Ultimately, the secular bull market in tech is as healthy as ever.
