Global Market Comments
March 13, 2023
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON MARCH 14-16)
(MARKET OUTLOOK FOR THE WEEK AHEAD, or WASHED UP ON THE BEACH)
(SPY), (TLT), (TSLA), (NVDA), (BRK/B)
CLICK HERE to download today's position sheet.
Sometime in the next week, the following headline will cross the wires: “Body of Silicon Valley Bank Risk Manager Washes up on California Beach.” It will be noted that the face was severely bruised, and not from the pounding it took from coastal rocks or some fish.
This was no suicide but in many respects, it was. To invest the bank’s principal assets from 1982 onward into long-dated Treasury bonds from 1982 to 2020 was a great idea when prices soared, and yields plunged from 13% to 0.33%. It was positively suicidal from March of 2020 when the (TLT) dove from $180 to $92.
I always wondered which sucker was buying all those billions of dollars worth of bonds I had been selling short all those years.
Now I know.
If you had guessed why Silicon Valley Bank might go under someday, you might have thought the extension of loans to too many fragile and untested technology and biotech startups was the cause. This was not the case. It was pure bad management by the bank, which deservedly wiped out all the equity investors in a mere 48 hours.
This is not a systemic risk, nor will it lead to a financial contagion. You can thank Dodd-Frank for that which assured that America’s top banks are as solid as the Rock of Gibraltar, with leverage ratios under 10.
The FDIC is currently holding an auction of (SVB) and the outcome will be announced Sunday night. A hundred banks would love to take over (SVB)’s franchise. The $175 billion in deposits will be made who immediately, most of whom are not insured because they exceed the FDIC ceiling of $250,000 per account. The incident will be shortly forgotten about.
But when you’re in combat and a bullet passes so close to your face that you can feel the heat and the sound of an angry bee, you don’t dismiss it lightly. Maybe next time, you won’t be so lucky.
I have been inundated by calls all weekend from subscribers on what to do about Silicon Valley Bank. If the sale goes through as planned, stocks should be up 500 points on Monday morning and you should do nothing but watch in awe. If the sale fails, stocks will plunge 1,000 points and you should be loading the boat with new longs, especially banks, which will be on fire sale.
Panic, crisis, I love it. The debacle even took Berkshire Hathaway (BRK/B) down on Friday because of its copious holdings of big bank shares. It all gives me a reason to get up in the morning.
However, this does put a serious dent in stock market psychology. When the country’s 17th largest bank goes bust, it doesn’t exactly spur you to bet the ranch on growth stocks with your retirement funds.
A test of the December market low is now firmly on the table, if not the October low. That’s especially true if Fed governor Jay Powell wants to go with the full 50 basis point rate rise on March 22.
At least the crisis finally got the Volatility Index ($VIX) out of the sub $20 doldrums, at one point pegging an intraday of $29 on Friday. We also got the Mad Hedge Market Timing Index to a six-month low of 17.
That means it is now the time to explore the wonderful world of 90-day Treasury bills, whose yields are now pushing 5.0%. That’s pretty competitive in a world where stocks yield on 2% and the potential principal risk is real.
These are issued every Wednesday with 17-week maturities and are backed by the full faith and credit of the US government. It’s as close to safety and a guaranteed return you will ever get. You buy them at a discount, and they mature at par.
If you buy a T-bill today at $98.75, it matures at $100 in three months, you get an effective annualized yield of 5.0%. You can buy these directly from the US Treasury, from your local banks, or securities houses.
Brokers never recommend T-bills because the commission is nil. They want you to keep your money in their bank which might pay 1%....or nothing at all and involve real credit risk. Just ask former MF Global customers who had to wait three years to get their money back.
Don’t expect to get a bond in the mail like you used to. All government securities have been digital since 2011. To learn more about T-bills, please click here.
I am told by the insiders who know that platinum (PPLT) could be the big precious metals play of 2023. The white metal has become the principal metal used in the manufacture of catalytic converts for conventional internal combustion cars of which 15 million a year are still made in the US.
There is rising demand from hydrogen fuel cells and the green hydrogen movement. The world’s second largest producer of platinum is Russia, whose supplies have been cut off. As a result, there is expected to be a 556,000-ounce shortage this year after two years of surpluses.
Just thought you’d like to know.
While markets crashed, investors have been jumping out of windows, and the world appeared to be ending, and the rain continuing incessantly, Mad Hedge continued on up tear with March up +3.37%.
My 2023 year-to-date performance is now at an eye-popping +29.23%. The S&P 500 (SPY) is up +1.56% so far in 2023. My trailing one-year return maintains a sky-high +85.09% versus -13.13% for the S&P 500.
That brings my 15-year total return to +626.32%, some 2.98 times the S&P 500 (SPX) over the same period. My average annualized return has recovered to +47.56%, another new high.
My short positions in (TSLA) and (NVDA) kicked in big time last week, even though some said I was “Mad” to do these. In the meantime, my longs barely budged. That leaves me 20% long, 40% short, and 40% in cash.
Nonfarm Payroll Report hot at 311,000. The Headline Unemployment Rate rose from 3.5% to 3.6%, still at a 53-year low. The broader U-6 “discouraged worker” came in at 6.8%. Leisure & Hospitality were up 175,000, and Health Care 54,000. Revisions for the past two months were -34,000. All in all, the market viewed this as a slightly positive report. That’s one big number off our backs with the inflation report due on Tuesday.
Jay Powell Lays an Egg, at least if you own stocks. Say goodbye to the soft landing and a 50 basis point hike is now looking like a sure thing. Good thing all my longs are double-hedged.
JOLTS Jolts, at 10.8 million for February, much hotter than expected. That's how many job openings remained unfilled, some 7% of the total workforce. It sets up a potentially frightening Nonfarm Payroll Report on Friday.
ADP Comes in Hot, creating 242,000 private sector jobs in February. Leisure & Hospitality led with 83,000, followed by Financials at 62,000. Brace yourself for Friday.
Some 60% of Stocks Above 200-Day Moving Average, proving that we are already six months into a new bull market. The next big dip is the one you buy. Give this selloff another week and I will start looking for more long side plays to max out my portfolio. The Armageddon crowd is going to be driving Uber cans by summer.
The Great Retirement Flight Inland is Continuing. Retirees on the coasts are selling homes and buying new ones for cash in the Midwest and south and still have enough money left over to never work again. Those in the top 10% of income earners can save $347,000 with the “retire and relocate” strategy. The problem is that locals are getting prices out of their own markets. The trend is turning red states into purple ones, as has already happened in Nevada and Arizona, which are no longer cheap.
Used Car Prices are Soaring Again, up 4.3% in January and February, the largest such gain in 2009, according to Cox Automotive. Is this setting up a scary inflation print for March 14? The stock market thinks so.
China Set’s Hot 5% Growth Target for 2023, as “zero covid” ends and herd immunity takes over. It may cost 4 million lives, but it’s worth it. Most importantly, China announced hope for a peaceful reunification with Taiwan, which takes war off the table for this decade. It’s another nail in the coffin of American underbears proclaiming a lost decade.
Oil Companies are Playing the Short Game, milking their companies for all the profits they can get at the expense of long-term capital investment, and ignoring massive tax subsidies to do so. Last year oil companies reaped a stunning $128 billion in profits, juiced by the Ukraine War which took Texas tea prices to $132 a barrel. That’s what you do when your industry may disappear in a decade. But if there is no US recession and China’s reopening accelerates, we may have to visit $100 a barrel. Buy (UNG) on dips, up 40% in two weeks.
EV Makers Running Up Against Supply Shortages. To meet ambitious production forecasts metals production has to triple quickly. I’m talking copper, aluminum, silver, chromium, and lithium. Tesla has already locked up much of the existing long-term supply because it knew ten years ago it would be someday producing 20 million cars a year. The others didn’t.
Tesla Cuts Prices Again, for the second time in a month, dropping the Model X below $100,000 for the first time. The goal is to drive EV competition out of business before they gain a foothold on Tesla’s 64% market share. What Tesla loses in profits, it can make up in volume.
Tesla Is Remaking the Car Insurance Market, charging drivers on their actual driving history, which they collect already. If you drive like a little old lady, it can run as little as $180 a month. If you drive like Mad Max, it’s more, but not as much as a conventional car insurance company. Rates change monthly depending on your driving record. Parked in a garage gives you a perfect score of 90 and it drops from there. It’s all about reducing the total cost of a Tesla car. Not such a bad deal if you let their computer do all the driving. What will Tesla disrupt next?
Was Q4 2022 the Bottom of the Real Estate Market? That’s what Compass CEO Robert Reffkin thinks. Bidding wars came back with a vengeance in January and a lot of markets were cleaned out of inventory. Mortgage interest rates losing an unusual 200 basis point premium over US Treasuries would really set this market on fire.
Biden Budget Rattles Wall Street Cage, proposing to take capital gains up from 20% to 35% and tanking the market. It’s a total unwind of the Trump tax cuts and then some, which added $2 trillion to the national debt. Most of this is a pipe dream and I would be amazed if it rose above 22%. Most interesting is the Defense spending rise to $880 billion, which is nearly the GDP of Russia, causing them to sweat bullets there. During the last 40 years, $50 trillion in wealth has moved from the bottom 80% to the top 1% according to a Rand Corporation think tank study mostly tax free, the largest and fastest such wealth transfer in human history.
Can I please get my local real estate tax deduction back, which Trump picked from my pocket in 2018?
My Ten-Year View
When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.
Dow 240,000 here we come!
On Monday, March 13 at 7:00 AM EST, Consumer Inflation Expectations are out.
On Tuesday, March 14 March 14 at 8:30 AM EST, the Core Inflation Rate and CPI for February are announced.
On Wednesday, March 15 at 7:00 AM EST, the Producer Price Index and Retail Sales are released.
On Thursday, March 16 at 8:30 AM EST, the Weekly Jobless Claims are announced. So are February Building Permits.
On Friday, March 17 at 8:30 AM EST, the University of Michigan Consumer Sentiment Indicator is released.
As for me, working in Japan as a journalist during the early 1970s a lot of the principal figures of WWII were still living and I got to meet some pretty amazing people.
One of the most fascinating was Tokyo Rose, whose real name was Iva Toguri, and who I was invited to interview during a book tour of Japan for her memoirs. By then, she was in her 60s and the weight of the years had clearly shown upon her.
Tokyo Rose was notorious as the radio personality who broadcast propaganda on radio to US troops in the Pacific to demoralize them and encourage them to stop fighting.
Both my dad and uncle Mitch were regular listeners on Guadalcanal and Bougainville. I can testify that even today, entertainment choices on these remote islands are still minimal. The men said they listened because the music was good, which our own Armed Forces Radio lacked.
Toguri was a second-generation Nisei born in California to Japanese immigrant parents. She graduated from UCLA intending to become a medical doctor. When a relative in Japan became ill, she traveled there to care for her. The Japanese attacked Pearl Harbor shortly after she arrive and she was trapped.
Initially, she was harassed by the secret police as a potential spy as she refused to give up her American citizenship. She couldn’t even speak Japanese or use chopsticks. Locals threw rocks at her. Even her parents couldn’t help because they had been sent to an internment camp at Gila Bend, Arizona.
It was starvation that drove her to respond to an ad in the newspapers looking for a native English speaker for NHK, the Japanese national broadcast radio.
It wasn’t long before the highly educated and intelligent Toguri had her own one-hour program broadcast nightly called “Zero Hour.” Along with the latest jazz records, she announced American ships sunk, planes shot down, battles lost, and anything else to show the futility of war with Japan.
The show was so popular that NHK ramped it up to a major effort. They hired a dozen “Tokyo Roses” and broadcast on multiple high-powered frequencies from Tokyo, Manila, and Shanghai.
When US troops landed in Tokyo after the war, she was one of the first arrested. In and out of jail, she wasn’t allowed to return to the US until 1949. On arrival, she was promptly arrested by the FBI for treason. The radio commentator Walter Winchell had launched a national campaign against her with backing from the American Legion and from former US POWs in order to boost ratings.
After a lengthy trial, she became only the seventh person convicted of treason in US history and was sentenced to 10 years in prison. She was released in 1955.
She received a presidential pardon from President Gerald Ford in 1976 after it was shown that most of the evidence presented against her at trial had been fabricated by the US government. She had been the victim of inflamed postwar emotions. Tokyo rose was more a concept than a real person, and the term was never actually broadcast on Japanese radio.
I have met a lot of people like Iva Toguri over the years, in the wrong place at the wrong time, or just plain unlucky. She was used and abused by the establishments in both Japan and the US. It’s a lesson on the capriciousness of life.
Iva Toguri passed away in 2002 in Los Angeles at the age of 90.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Tokyo Rose then and Later When I met Her
“You have to keep learning if you want to become a great investor. When the world changes, you must change” said Warren Buffet partner, the 99-year-old Charlie Munger.
Mad Hedge Technology Letter
March 10, 2023
Fiat Lux
Featured Trade:
(TECH FUNDING TAKES A HIT)
(SIBV), (SI)
The famous bank for tech startups, Silicon Valley Bank, is creating a bit of chaos, triggering a large selloff in banking shares on Thursday.
Friday has been up and down, and the volatility has overflowed into today’s trading.
It won’t trigger a larger credit event, but shows investors the perils of mismanagement at an institution that was hailed as the lifeblood of small tech firms in California.
My bet is that boutique banks like Silicon Valley Bank (SIBV), exposed to startups that don’t make money, could get dragged into this risk-off move.
The big banks should be just fine, which is why this could present a nice buy-the-dip moment.
Silicon Valley Bank was founded in 1983 and over the decades became the habitual financial institution for startups.
Today, it’s a household name in Bay Area finance, deeply entrenched in tech companies’ networks and infrastructure.
The commotion about the company is more or less about a routine bank run as many cash burn heavy tech investors started to pull funds from SIBV to cover the losses of other tech companies.
The bank was too leveraged with other capital tied up in longer duration bonds and at the worst possible time, they had an insurmountable liquidity requirement which they are having trouble meeting.
Of course, tech investors don’t want to be the last investors withdrawing funds.
The bank is now looking at selling its carcass to bigger hitters that can easily save this bank.
The bank only needs $2 billion in capital to stay solvent, which is a drop in the bucket to the likes of bigger banks like JP Morgan or Bank of America.
SIVB disclosed a $1.8 billion loss showing the treacherous nature of being the famous lender to tech startups in Silicon Valley at a time when this type of business is doing poorly.
Rising interest rates have left banks laden with low-interest bonds that can’t be sold in a hurry without losses. So if too many customers tap their deposits at once, it risks a vicious cycle.
A key takeaway from growth tech stocks is to avoid buying and holding for the time being because in the light of possible contagion to the subsector, the weakest of the names get hit the hardest. Any position should be a quick in and out, taking profits before positions sway violently the other way.
This also highlights the ongoing problems in the start-up scene, with tech ideas not getting funded because the debt markets aren’t offering the same type of incentive they used to.
Leverage can be good or bad and in this case, when assets aren’t matched on par with liabilities, these types of credit events or liquidation occurrences happen especially amid the negative backdrop we find ourselves in.
Remember that crypto bank Silvergate (SI) just liquidated after a roaring contagion in the crypto sector.
SI customers pulled their money in the panic that followed the 2022 collapse of the cryptocurrency exchange FTX. Silvergate said in January that it had realized losses of $886 million from selling securities as deposits fell.
This also validates my thesis that we are squarely in a trader's market with volatility working for and against traders and their trades.
The time of buy and hold with a vanilla tech ETF with the traditional tech titans is long gone, and if this isn’t a wake-up call then I don’t know what is.
Right now counting on my expertise as a trader is a must if you plan to survive these hostile and unpredictable markets.
On the bright side, this could offer a timely entry point into some other more solid tech names as I don’t believe this contagion will spread to the heavyweight tech stocks.
“When I was in college, I wanted to be involved in things that would change the world. Now I am.” – Said Founder of Tesla Elon Musk
Global Market Comments
March 10, 2023
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON MARCH 14-16)
(MARCH 8 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (TLT), (UUP), (FXY), (FXB), (FXE), (FXA), (UNG), (BOIL), (AAPL), (TSLA), (WW), (BHP), (NVDA), (RIVN), (FCX)
CLICK HERE to download today's position sheet.
Below please find subscribers’ Q&A for the March 8 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, CA.
Q: Do you think the US dollar will drop this year?
A: Absolutely it will drop; in fact, the drop started in October last year. We’re actually six months into a bear market for the US dollar (UUP), and bull market for the yen (FXY), the British pound (FXB), the euro (FXE), and the Australian dollar (FXA). However, the rate-cutting scenario is on vacation, and when it comes back from that vacation, then we will see very sharply dropping interest rates, soaring bond prices, and a weak dollar. That scenario is certain to happen by year-end, probably by 10 or 20% —quite a lot. If you just want to buy the basket for foreign currencies, you can sell short the Invesco DB US Dollar Index Bullish Fund (UUP).
Q: Can stocks (SPY) and bonds (TLT) go up at the same time?
A: Well, they shouldn’t, and usually they don’t. But this time it’s different now because we’re all beholden to the interest rate decisions of the Fed. All asset classes are moving together like synchronized swimmers, which means that on days when the market believes that Powell is finished raising rates, you get big bull moves in stocks, bonds, commodities, precious metals, and beanie baby collectibles. And on the bad days like yesterday, where Powell really reiterates how tough his stance is on inflation is unchanged, everything falls in unison. It’s really become a liquidity/confidence/inflation on-off type market. We have been playing that like a maestro for the last six months and have made a ton of money. I hope it continues that way. “If it’s working, don’t fix it” is my philosophy on trading, which is constantly changing.
Q: Do small caps underperform or overperform in a rising rates era?
A: They always do poorly because small caps have fewer cash reserves, more leverage, and more exposure to interest rates, as opposed to large caps which, in the tech area, don’t borrow at all. They’re actually net creditors to the system so they make more money when interest rates go up. I imagine the interest income at Apple this year has to be absolutely gigantic. That said, small caps always lead recoveries because of their excess leverage, so that's why people are piling into small caps on dips right now. Going from terrible to just bad often generates the best stock returns.
Q: How long will “steering wheel falling off” news tank Tesla?
A: Well, it was worth a $6 dollar drop today in an otherwise weak market. First of all, if there are any actual problems with Tesla, they fix them immediately for free, and most of the fixes can be done with a software upgrade which they do at midnight the day of the recall. Second, a lot of these stories about Tesla problems are false, planted there by the oil industry, trying to head off their own demise. Third, when you go from making several thousand to several million cars a year, scaling up to mass production always uncovers some sort of manufacturing flaws. Tesla can fix them faster than anyone else. I remember when the first Model S came out 13 years ago, we had a hot day and all the sealants on the windows melted. They said they didn’t know because it doesn’t get that hot in Fremont California where they build the cars. They sent out a truck the next day and installed all new sealants on our windows. So that is part of living with Tesla, which seems bent on taking over the world. And I’m working on a major update on Tesla report. I listened to the whole 3.5-hour investors day, and I'll get that out when I get all the snow shoveled. Full disclosure: Elon Musk personally gave me a free $12,800 Tesla Powerwall three years ago. It’s the red one.
Q: I just bought the United States Natural Gas Fund (UNG) 14/15 2025 LEAP for $0.20 with UNG down 3%.
A: I’m going to share that LEAPS with all the Global Trading Dispatch members tomorrow. So far, only the Mad Hedge Concierge members have seen it. We’ll go into great detail in tomorrow’s letter about why you want to buy natural gas here and how you want to play it.
Q: It seems the Fed won’t be happy unless there’s a recession; am I reading this wrong?
A: I think Powell is striving for perfection—killing off inflation and lowering interest rates without a recession. I actually am hoping for a recession myself, even if it’s just for one quarter because that greatly increases market volatility and makes my bond long look like a stroke of genius. And let’s see if he can pull it off. He’s coming facing so many unprecedented challenges to the economy, like the pandemic, the end of liquidity, and the extreme worker shortage. It’ll be really interesting to see what happens. Multiple PhD theses in economics begging to be addressed in there.
Q: Will artificial intelligence cause another bubble?
A: Absolutely, yes. And if you’ve been in the market long enough, you become a bubble collector like me. Just off the top of my head, 3D printing, cold fusion, bitcoin, portfolio insurance, Nifty 50, eyeballs,—if I spent more time, I could come up with an endless list. And this is how Wall Street makes their money—they create bubbles by manufacturing compelling, irresistible stories that can be sold to the masses. Some of these like cold fusion, I know immediately won’t work for 20 years because of my physics background, and definitely not now. Some of these other ones are just flashes in the pan and never work. You just get used to an endless series of bubbles. AI is new only if you haven’t been watching. The share prices of Google, Amazon, Apple, have already had gigantic moves in the last 20 years, largely because of their use of artificial intelligence. So those are your plays—those and (NVDA), which provides the essential chips for artificial intelligence, and we’re active in all of these, both on the long and short side.
Q: Is climate change a hoax or a bubble?
A: If you think it’s a hoax, will you please come over to Incline Village and get the 12 feet of snow off my damn roof before the house collapses. I already can’t close any doors in the house because the weight of the snow is buckling the house and bending the door frames. If you finish the roof, then you can get to work on my deck which also has about 8 ft of snow and is at risk of collapsing, like many in town already have. This has never happened before. The climate has changed.
Q: How come there’s never mention of demographic shift in other parts of the world when there is in the US?
A: The US is the only country in the world where you can earn enough money to retire early. If you live on the coasts, you can sell your house for cash, move inland and never work again, no matter your age. There is no other country where you can do that. Maybe there will be in the future, but definitely not right now. People who complain about how awful the economy is here forget that this is the best economy in the world and has been so for a very long time. I go with the Warren Buffet outlook on this, which is “Never bet against America.”
Q: How about an Entry point for Freeport McMoRan (FCX)?
A: It’s lower. You don’t want to touch it while the entire commodity sector is selling off in fears of higher interest rates in a recession. Once that’s over it goes to $100.
Q: What is the best way to play Natural Gas?
A: I’ll send an extended report tomorrow, but the short answer is United States Natural Gas Fund (UNG) and ProShares Ultra Bloomberg Natural Gas (BOIL), which is a 2x long day trading NatGas ETF.
Q: Are we entering LEAPS territory for Rivian (RIVN)?
A: Yes, just wait for the current selloff to end and then go to the longest possible expiration. This thing will have a multiple move 2x, 3x, or a 10x out the other side of any recession. The CEO is brilliant and people love the cars.
Q: What happens to housing prices when interest rates on mortgages are at 7%?
A: Well, they should go down 10-20%. What they’re actually doing is going sideways, and they’re still going up in the cheaper neighborhoods because of the structural shortage of 10 million houses in the US. The all-cash buyers are still out there buying. There is tremendous inventory shortage in the housing market now; every broker I know got cleaned out of all their inventory in January when we had a brief 100 basis point dip in rates back then, which has since gone away. I think we go sideways in housing until the end of the year, and then big interest rate cuts will be obvious by then, and the market takes off and we have another 10-year bubble. If you think housing is expensive now, go visit Sydney Australia or Shanghai, China and you’ll see how expensive housing can really get.
Q: How how high would Fed funds have to get to cause a real recession?
A: My guess is 6%. We might actually get there in the second quarter. That might trigger enough of a recession to start unemployment rising just enough to let them cut interest rates. My attitude is: rip the Band-Aid off, raise by 75 basis points on March, and get it over with. But Jay Powell is a very gradualist type of guy, even though he’s brought the sharpest interest rate rise in history.
Q: Should I chase Apple (AAPL) here at $150 a share?
A: In this kind of market, you never chase anything. Only buy Apple at $150 if you think happy days are here again and you think we’re going up forever. To me on the chart it looks like we’re double topping and may actually get a lower low, which you then buy. You may even want to do a LEAPS on Apple if we get down into the $130s or $120s again.
Q: Isn’t it hard for the economy to really tank when seniors and savers are now generating income again for their retirement, giving them more income to spend?
A: Well not only that but workers have had 10-20% pay increases also, and they have more money to spend. It’s really hard to see a severe recession in any kind of scenario, barring another pandemic, and that’s why we’re saying buy the dips—we are in fact in a new bull market that started in October. When you get these market reversals, you often don’t get confirmation on the charts for up to a year, and we’re in one of those periods now. That's why there are still a lot of non-believers in the bull scenario and no confidence.
Q: Would you buy Tesla LEAPS?
A: Yes, under $150 on Tesla shares. And, given its record of volatility, we may actually get there, because this is a $1,000 stock easily in 5 years. I'll send you a report giving you all the details of why. Detroit is basically screwed, someday it’ll just be reduced to building Teslas under license from Tesla and painting them different colors and giving them different names or something like that.
Q: What’s a buy-on-dip?
A: Sorry, but no easy answer here. It’s unique to every stock depending on the historic volatility and ranges of the stock. It’s going to be 1% for a stock, it can be 10% for an option, it could be 20% for a stock like Tesla. It’s vague but it really is unique to every single stock. A good rule of thumb is that after you execute a trade and then throw up on your shoes you’ve just done a great trade.
Q: I see from your pictures that you lost weight? How do you do it?
A: I got COVID last May. I lost 20 pounds in two weeks because I couldn’t eat while I was sleeping 20 hours a day. I just woke up long enough to send out trade alerts. All of a sudden, a 40-year collection of expensive designer pants fit. My kids now call me Captain Fancy Pants. When I go through airport security now and take my belt off they fall down so I’m always careful to wear my best underwear, the ones with the dollar sing all over them.
Q: What’s the best way to play obesity drugs?
A: Unfortunately, There is no pure play on obesity drugs. It will be a $150 billion market that will grow very quickly. I will talk about it at length next week in the summit at the Biotech & Health Care webinar, which you’ll get registration links for tomorrow. Weight loss drugs are small pieces of very large drug companies, so the effect gets diluted by everything else they’re doing. The purest play may be Weight Watchers (WW). If you just need to go to Weight Watchers just to get a shot, that could be really good for them. The stock just doubled in one day on this.
Q: Commodity-based foreign stocks are the best bet on inflation protection; should I get involved?
A: Yes, use the current selloff to get into the whole commodity space (except for maybe food) because not only are they a commodity play, they’re a weak dollar play and that way you get a combined double leverage effect on prices, which I've seen happen many times in my life. So yes, look at foreign-type commodity stocks, and of course, the biggest one out there is Broken Hill Proprietary (BHP), which I always watch very closely. It’s the largest stock in Australia owned by virtually everybody in Australia who has any money, with great volatility, and which has recently just had a selloff.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, or TECHNOLOGY LETTER, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.
Good Luck and Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
2015 in Ouarzazate Morocco
“Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never,” said Warren Buffet partner, the 99-year-old Charlie Munger.
International Women’s Day
March 8, 2023
Hello everyone,
International Women’s Day has rolled around again. Women across the world use this day to come together to celebrate and rally for equal treatment and representation. It is also a day to celebrate female achievement, to encourage and inspire one another, and to thank the women in our lives for their contribution to society.
The day’s origins date back to 1908, when thousands of women marched through New York City, demanding better working hours and pay. A year later, the Socialist party of America declared a Women’s Day.
While some glass ceilings have been shattered, others remain.
Let’s look at the achievements of women in U.S. history.
March 31, 1776: In a letter to her husband, Founding Father John Adams, future first lady, Abigail Adams makes a plea to him and the Continental Congress to “remember the ladies and be more generous and favourable to them than your ancestors…”
July 19-20, 1848: In the first women’s rights convention organized by women, the Seneca Falls Convention is held in New York, with 300 attendees, including organizers Elizabeth Cady Stanton and Lucretia Mott. Sixty-eight women and 32 men sign the Declaration of Sentiments, which sparked decades of activism, eventually leading to the passage of the 19th Amendment granting women the right to vote.
January 23, 1849: Elizabeth Blackwell becomes the first woman to graduate from medical school and become a doctor in the U.S. Born in Bristol, England, she graduated from Geneva College in New York with the highest grades in her entire class.
Dec 10, 1869: The legislature of the territory of Wyoming passes America’s first woman suffrage law, granting women the right to vote and hold office. In 1890, Wyoming is the 44th state admitted to the Union and becomes the first state to allow women the right to vote.
October 16, 1916: Margaret Sanger opens the first birth control clinic in the United States. Located in Brownsville, Brooklyn, her clinic was deemed illegal under the “Comstock Laws” forbidding birth control, and the clinic was raided on October 26, 1916. She closed the clinic eventually after further threats and eventually founded the American Birth Control League in 1921 – the precursor to today’s Planned Parenthood.
April 2, 1917: Jeanette Rankin of Montana, a longtime activist with the National Woman Suffrage Association, is sworn in as the first woman elected to Congress as a member of the House of Representatives.
August 18, 1920: Ratification of the 19th Amendment to the U.S. Constitution is completed, declaring “the right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.”
May 20-21, 1932: Amelia Earhart becomes the first woman, and second pilot ever to fly solo nonstop across the Atlantic.
December 1, 1955: Black seamstress Rosa Parks refuses to give up her seat to a white man on a bus in Montgomery, Alabama. The move helps launch the civil rights movement.
May 9, 1960: The Food and Drug Administration (FDA) approves the first commercially produced birth control pill in the world, allowing women to control when and if they have children.
June 10, 1963: President John F. Kennedy signs into law the Equal Pay Act, prohibiting sex-based wage discrimination between men and women performing the same job in the same workplace.
July 2, 1964: President Lyndon B. Johnson, signs the Civil Rights Act into law; Title VII bans employment discrimination based on race, religion, national origin, or sex.
June 30, 1966: Betty Friedan, author of 1963’s The Feminine Mystique, helps found the National Organisation for Women (NOW), using grassroots activism to promote feminist ideals, lead societal change, eliminate discrimination, and achieve and protect the equal rights of all women and girls in all aspects of social, political and economic life.
January 22, 1973: In its landmark 7-2 Roe v. Wade decision, the U.S. Supreme Court declares that the Constitution protects a woman’s legal right to an abortion. In June 2022, the Supreme Court overturned the ruling.
July 7, 1981: Sandra Day O’Connor is sworn in by President Ronald Reagan as the first woman to serve on the U.S. Supreme Court. She retires in 2006, after serving for 24 years.
June 18, 1983: Flying on the Space Shuttle Challenger, Sally Ride becomes the first American woman in space.
July 12, 1984: Democratic presidential nominee Walter Mondale names U.S. Rep. Geraldine Ferraro (N.Y) as his running mate, making her the first woman vice presidential nominee by a major party.
March 12, 1993: Nominated by President Bill Clinton, Janet Reno is sworn in as the first female attorney general of the United States.
January 23, 1997: Also nominated by Clinton, Madeleine Albright is sworn in as the nation’s first female secretary of state.
January 4, 2007: U.S. Rep. Nancy Pelosi becomes the first female speaker of the House. In 2019, she reclaims the title, becoming the first lawmaker to hold the office two times in more than 50 years. She stepped down from the leadership role in 2022.
January 24, 2013: The U.S. military removes a ban against women serving in combat positions.
July 26, 2016: Hillary Clinton becomes the first woman to receive a presidential nomination from a major political party.
January 20, 2021: Kamala Harris is sworn in as the first woman and first woman of colour vice president of the United States.
I think we have come a long way, but there is still a long journey ahead.
Challenges are many, and change will be incremental.
Women need to stay the course.
Enjoy your week.
Cheers,
Jacque
