Global Market Comments
June 30, 2025
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE LOOKING GLASS MARKET)
(SPY), (GLD), (CRCL), (CRWD), (PANW), (FTNT), (ZS), (AVGO), (DHI), (KBH), (LEN), (PHM), (MSTR), (TSLA), (BA), (WPM), (AAPL), (TLT), (QQQ), (SPY)
We all read Alice in Wonderland when we were kids. In it, Alice enters a strange world where everything is the opposite of reality. Chess pieces can walk, and cats can talk.
Traders these days can be forgiven for believing that they have also stepped through the looking glass and entered a strange world where up is down, expensive is cheap, and IPO’s which offer zero added value see their shares rocket on the first day.
The big conundrum is how high a market can go when the economy is clearly headed into a recession. The short answer is that stocks can go up quite a lot in a looking glass world.
Try as I may, it is tough to find positive data points on the economy. Real estate is in free fall, agriculture looks like a Great Depression replay, and international tourism has virtually disappeared. Foreign trade is a disaster area. If you work in construction or restaurants, your life is hell. The 14%-15% earnings growth reported in Q1 will likely drop to zero by year-end. But if you are in a Bitcoin business, it is boom times.
The 23% rally we have seen off the April 9 (SPY) 4,800 bottom has been one of the most dramatic in history. It has also been one of the narrowest. The bull was led really by just 50 technology stocks we all know and love. The other 450 companies in the S&P 500 are still down on the year, with the indexes at all-time highs.
The “Wall of Worry” has crumbled and disappeared.
Erratic government policies are to blame for this extreme volatility, which changes by the day, if not by the hour. One minute, there is a 145% tariff on imports from China and a complete cutoff of rare earth supplies to US technology companies; the next minute, there isn’t.
My old friend Ken Griffin at Citadel tells me this has been the most difficult trading year in his company’s 25-year history because the swings in basic economic assumptions have been so wide and violent. Same-day options are driving the market, greatly increasing any downside volatility, like we saw in 1987, 2000, and 2025.
I agree.
Most concerning is the flow of money into crypto plays, which are sucking in much of the speculative money in the market. That’s why gold (GLD) has sold off 5% in the past two weeks, with hot money moving over to more fashionable digital plays.
Some of the recent crypto IPO’s have been laughable in their pretensions. Circle International Group (CRCL) promises to issue stablecoins based on US dollars. In other words, you are taking on the credit risk of a small startup to own a US dollar just so it can be cheaply transferred. Yet the shares soared from $31 to $300 after it went public, giving it a market capitalization of an eye-popping $50 billion.
This will end in tears.
When the entire crypto industry was worth only $2 trillion, it could have all gone to zero and not have much effect on the economy, which it almost did. It was mostly Millennials who got wiped out, betting their life savings on hopes and prayers and then finding themselves in court, vainly trying to get their money back.
Now, the total crypto market is worth $7 trillion and is growing rapidly. If it gets much bigger and then all that money gets lost, it could trigger another Great Depression. Past periods of uncertainty brought a flight to safety. Now there is a flight to crap.
It all underlines the extreme short-termism of the modern business. It’s become a “take the money and run” economy. Tough luck for your retirement fund if you forget to sit down when the music stops playing.
It all sets up a trading range for the S&P 500 for the rest of 2025 of 5,500 to 6,500. I expect some kind of weakness in the summer. Then we get a grind up to year-end.
AI stocks will be the leaders and will dominate the global economy for the next decade. That’s why investors are willing to look through trade wars, the Iran War, and a war on immigrants, and hope for the best. Financials will follow on the promise of future deregulations, which will assure another financial crisis down the road.
Cybersecurity will be another big frontrunner. Algorithms are becoming so sophisticated that enormous expenditures will be required to keep the bad guys at bay. Cybersecurity spending could be an incredible 10X AI spending. Morgan Stanley estimates that spending will increase from $15 billion in 2021 to $135 billion by 2030. CrowdStrike (CRWD), the current leader, has become a big winner for Mad Hedge this year.
The Cybersecurity industry is made up of 4,000 players, most of which are small and private. Five big companies dominate: CrowdStrike (CRWD), Palo Alto Networks (PANW), Fortinet (FTNT), Zscaler (ZS), and Broadcom (AVGO), and will eventually gobble up the rest, leading to trillion-dollar market valuations. It’s the old concentration play again.
An interest rate cut from the Fed by year-end to get the US out of recession is another stimulus for traders. That brings me to a sector I abandoned last October and left for dead, the homebuilders. With rate cuts a certainty by May 2026 at the latest, you might start thinking about buying bombed-out homebuilders’ names now. Investors are dying to pick up any sector that hasn’t doubled in the last three months, which has growth potential. I’m talking about (DHI), (KBH), (PHM), and (LEN).
My June performance rocketed up to +15.32%, taking us to new all-time highs on all metrics. That takes us to a year-to-date profit of +45.01%. My trailing one-year return exploded to a record +100.46%. That takes my average annualized return to +51.14%, and my performance since inception to +796.90%. These are all non-compounded numbers.
It was a week when the market ground up every day except for Friday. I stopped out of my long in gold (GLD) for a small loss. I then jumped into another short position in (TSLA), which then immediately fell apart. That leaves me with 90% cash and 10% short Tesla. The June 20 option expiration saw us bring home maximum profits in (MSTR), (TSLA), (BA), (WPM), (AAPL), (TLT), (QQQ), AND (SPY).
Some 63 of my 70 round trips in 2023, or 90%, were profitable. Some 74 of 94 trades were profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.
Try beating that anywhere.
My Ten-Year View – A Reassessment
We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.
On Monday, June 30, at 8:30 AM EST, the Dallas Fed Manufacturing Index is printed.
On Tuesday, July 1, at 7:30 AM, the Jolts Job Openings Report is announced.
On Wednesday, July 2, at 1:00 PM, we get the Challenger Job Cuts.
On Thursday, July 3, we get Weekly Jobless Claims. We also get the Nonfarm Payroll Report for June.
On Friday, July 4, the US has a National Holiday. All markets are closed.
Punitive Tariffs Return on July 9, possibly bringing the stock rally to a grinding halt. Yes, that would include the 145% tariff for China. Countries are hesitant to sign deals without knowing how these sectoral levies will impact them, and some, like India, are pushing for commitments from Washington that any deal will match the best agreement offered to any other nation.
Consumer Sentiment Improves, in June to a four-month high, with the final June sentiment index increasing to 60.7 from 52.2 a month earlier. Consumers expect prices to rise 5% over the next year, down from 6.6% in May, and they see costs rising at an annual rate of 4% over the next five to 10 years. Despite the improvement in sentiment, consumers remain anxious about the potential impact of tariffs, and their views are still consistent with an economic slowdown and an increase in inflation to come. It’s really very simple: rising share prices make people more confident.
US Equity Funds See Sixth Weekly Outflow, as of June 25, as investors took profits near record highs and stayed on edge ahead of key growth and inflation data. According to LSEG Lipper data, investors withdrew a net $20.48 billion from U.S. equity funds during the week, posting their largest weekly net sales since March 19.
Bitcoin Buying Firms are Multiplying. Over the past year, the number of bitcoins held by companies has jumped nearly 170 per cent. A total of about 130 listed firms hold a combined $87bn of bitcoin, equivalent to about 3.2 per cent of all the bitcoins that will ever exist. MicroStrategy (MSTR) started the trend and now holds a heart-stopping $33 billion in Bitcoin. Among those pivoting to a “bitcoin treasury” strategy is the Trump family media firm. While some firms’ main focus is on buying bitcoin, others are hoarding it while still running other, larger business lines.
As for me, to say that I was an unusual hire for Morgan Stanley back in 1983 was an understatement, a firm known as being conservative, white shoed, and a paragon of the establishment. They normally would not have touched me with a ten-foot pole, except that I spoke Japanese when they wanted to get into Japan.
Of 1,000 employees, there were only three from California. The other two were drop-dead gorgeous Stanford grads, daughters of the president of the Philippines, hired to guarantee the firm’s leadership of the country’s biannual bond issue.
When the book Liar’s Poker was published, many in the company thought I wrote it under the pen name of Michael Lewis. Today, the real Michael lives a few blocks away from me, and I kid him about it whenever I bump into him at Whole Foods.
At one Monday morning meeting, the call went out, “Does anyone have a connection with the Teamsters Union? I raised my hand, mentioning that my grandfather was a Teamster while working for Standard Oil of California during the Great Depression (it was said at the time that there was never a Great Depression at Standard Oil. It was true).
It turned out that I was virtually the only person at Morgan Stanley who didn’t have an Ivy League degree or an MBA.
My boss informed me that “You’re on the team.”
At the time, the US Justice Department had seized the Teamsters Pension Fund because the Mafia had been running it for years, siphoning off money at every opportunity. I made the pitch to the Justice Department, a more conservative bunch of straight arrows you never saw, all wearing dark suits and white business shirts.
It was crucial that we won the deal as Barton Biggs was just starting up the firm’s now immensely profitable asset management division, and a big mandate like the Teamsters would give us instant credibility in the investment community.
We won the deal!
Once the papers were signed, the entire Teamsters portfolio was dumped in my lap, and I was ordered to fly to Las Vegas to investigate. It didn’t hurt that I was half Italian. It was thought that the Teamsters might welcome me.
The airport was still a tiny, cramped affair, but offered an abundance of slot machines. Steve Wynn was building The Mirage Hotel on the strip. Howard Hughes was still holed up in the penthouse of the Desert Inn. Tom Jones, Frank Sinatra, Siegfried & Roy, Wayne Newton, and Liberace had star billing.
It turned out that the Teamsters Pension Fund owned every seedy whorehouse, illegal casino, crooked bookie, and drug dealer in town. If you wanted someone to disappear, they could arrange that too. As Lake Powell has dried up, missing persons started reappearing.
I returned to New York and wrote up my report. I asked Barton to sign off on it, and he said, “No thanks, you own this one.”
So it was with a heavy heart that I released a firmwide memo stating that employees of Morgan Stanley were no longer allowed to patronize the “Kit Kat Lounge”, the “Bunny Farm”, the “Mustang Ranch”, and 200 other illicit businesses in Nevada.
I never lived down that memo.
I actually knew about some of these places a decade earlier because they were popular with the all-male staff of the Nuclear Test Site, where I had once worked an hour north of Las Vegas as a researcher and mathematician.
Then later in the early 2000’s I had to drive my son from Lake Tahoe to the University of Arizona, and we drove right past the entrance to the Nuclear Test Site. The “Kit Kat Lounge”, the “Bunny Farm” were long gone, but the Site access had improved from a dusty, potholed dirt road to a four-lane superhighway.
That’s defense spending for you.
Even today, 40 years later, my old Morgan Stanley friends kid me if I know where to have a good time in Vegas, and I laugh.
But whenever I ride the subway in New York, I still get on at the front of the train, just to be extra careful. Accidents can happen.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty,” said the late British Prime Minister, Winston Churchill.
Global Market Comments
June 27, 2025
Fiat Lux
Featured Trade:
(A BUY WRITE PRIMER),
(AAPL)
I have a feeling we are going to do a lot of buying in 2025, so it’s time to refresh your knowledge about “Buy Writes.”
There is always a way to make money in the stock market. Get the direction right, and the rest is a piece of cake.
But what if the market is going nowhere, trapped in a range, with falling volatility? Yes, there is even a low-risk, high-return way to make money in this kind of market, a lot like the one we have now.
And that’s the way markets work. It’s like watching a bouncing ball, with each successive bounce shorter than the previous one. Thank Leonardo Fibonacci for this discovery (click here for details).
Which means a change in trading strategy is on order. The free lunch is over. It’s finally time to start working for your money.
When you’re trading off a decade low its pedal to the metal, full firewall forward, full speed ahead, damn the torpedoes. Your positions are so aggressive and leveraged that you can’t sleep at night.
Some 16 months into the bull market, not so much. It’s time to adjust your trades for a new type of market that continues to appreciate, but at a slower rate and not as much.
Enter the Buy Write.
A buy write is a combination of positions where you buy a stock and also sell short options on the same stock against the shares at a higher price, usually on a one-to-one basis.
“Writing” is another term for selling short in the options world because you are, in effect, entering into a binding contract. When you sell short an option, you are paid the premium the buyer pays, and the cash sits in your brokerage account, accruing interest.
If the stock rallies, remains the same price, or rises just short of the strike price you sold short, you get to keep the entire premium.
Most buy writes take place in front-month options, and the strike prices are 5% or 10% above the current share price. I’ll give you an example.
Let’s say you own 100 shares of Apple (AAPL) at $140. You can sell short one August 2021 $150 call for $1.47. You will receive the premium of $147.00 ($1.47 X 100 shares per option). Remember, one option contract is exercisable into 100 shares.
As long as Apple shares close under $150 at the August 20 option expiration, you get to keep the entire premium. If Apple closes over $150, you automatically become short 100 Apple shares. Then you simply instruct your broker to cover your short in the shares with the 100 Apple shares you already have in your account.
Buy writes accomplish several things. They reduce your risk, pare back the volatility of your portfolio, and bring in extra income. Do these writes, and it will enhance the overall performance of your portfolio.
Knowing when to strap these babies on is key. If the market is going straight up, you don’t want to touch buy writes with a ten-foot pole as your stock will be called away and you will miss substantial upside.
It’s preferable to skip dividend-paying months, usually March, June, September, and December, to avoid your short option getting called away mid-month by a hedge fund trying to get the dividend on the cheap.
You don’t want to engage in buy writes in bear markets. Whatever you take in with the option premium, it will be more than offset by losses on your long stock position. You’re better off just dumping the stock instead.
Now comes the fun part. As usual, the are many ways to skin a cat.
Let’s say that you are a cautious sort. Instead of selling short the $150 strike, you can sell the $155 strike for less money. That would bring in $79 per option. But your risk of a call away drops too.
You can also go much further out in your expiration date to bring in more money. If you go out to the January 18, 2022, expiration, you will take in a hefty $6.67 in option premium, or $667 per option. However, the likelihood of Apple rising above $150 and triggering a call away by then is far greater.
Let’s say you are a particularly aggressive trader. You can double your buy-write income by doubling your option short sales at the ratio of 2:1. However, if Apple closes above $150 by expiration day, you will be naked short 100 shares of Apple.
It is likely you won’t have enough cash in your account to meet the margin call for selling short 100 shares of Apple, so you will have to buy the shares in the market immediately. It’s something better left to professionals.
How about if you are a hedge fund trader, have a 24-hour trading desk, a good in-house research department, and serious risk control? Then you can entertain “at-the-money buy writes.”
In the case of Apple, you could buy shares and sell short the August 20 $140 calls against them for $4.45 and potentially take in $4.45 for each 100 Apple shares you own. Then you make a decent profit if Apple remains unchanged or goes up less than $4.45.
That amounts to a $3.18% return in 34 trading days and annualizes out at 26%. In bull markets, hedge funds execute these all day long, but they have the infrastructure to manage the position. It’s better than a poke in the eye with a sharp stick.
There are other ways to set up buy writes.
Instead of buying stock, you can establish your long position with another call option. These are called “vertical bull call debit spreads” and are a regular feature of the Mad Hedge Trade Alert Service. “The ‘vertical’ refers to strike prices lined up above each other. The ‘debit’ means you have to pay cash for the position instead of getting paid for it.
How about if you are a cheapskate and want to get into a position for free? Buy one call option and sell short two call options against it for no cost. The downside is that you go naked short if the strike rises above the short strike price, again triggering a margin call.
Here is my favorite, which I regularly execute in my own personal trading account. Buy long-term LEAPS (Long Term Equity Anticipation Securities) spreads like I recommended with the (AAPL) January 21 $120-$130 vertical bull call spread for $5.20.
It closed at $7.21, up 38.65%.
This was a bet that one of the world’s fastest-growing companies would see its share unchanged or higher in seven months. In Q1, Apple’s earnings grew at an astonishing 35% to $23.6 billion. Sounds like a total no-brainer, right?
If I run this position all the way to expiration, and I probably will, the total return will be ($10.00 – $5.20 = $4.80), or ($4.80/$5.20 = 92.31%) by the January 21, 2022, option expiration. This particular expiration benefits from the year-end window dressing surge and the New Year asset allocation into equities.
Whenever we have a big up month in the market, I sell short front-month options against it. In this case, that is the August 20 $150 calls. This takes advantage of the accelerated time decay you get in the final month of the life of an option, while the time decay on your long-dated long position is minimal.
Keep in mind that the deltas on LEAPS are very low, usually around 10% because they are so long dated. That means your front-month short should only be 10% of the number of shares owned through your LEAPS in order to set delta neutral. Otherwise, you might get hit with a margin call you can’t meet.
After doing this for 53 years, it is my experience that this is the best risk/reward options positions available in the market.
To make more than 92.31% in seven months, you have to take insane amounts of risk, or engage in another profession, like becoming a rock star, drug dealer, or Bitcoin miner.
I’m sure you’d rather stick to options trading, so good luck with LEAPS.
“It is fine to have the longest view in the room, as long as the thing at the end of the vista is a gigantic hill of money,” said John Lanchester of The New Yorker magazine.
Global Market Comments
June 26, 2025
Fiat Lux
Featured Trade:
(THE NINE WORST TRADES IN HISTORY),
(TESTIMONIAL)
As you are all well aware, I have long been a history buff. I am particularly fond of studying the history of my own avocation, trading, in the hope that the past errors of others will provide insights into the future.
History doesn’t repeat itself, but it certainly rhymes.
So, after decades of research on the topic, I thought I would provide you with a list of the eight worst trades in history. Some of these are subjective, some are judgment calls, but all are educational. And I do personally know many of the individuals involved.
Here they are for your edification, in no particular order. You will notice a constantly recurring theme of hubris.
1) Ron Wayne’s sales of 10% of Apple (AAPL) for $800 in 1976
Say you owned 10% of Apple (AAPL) and you sold it for $800 in 1976. What would that stake be worth today? Try $120 billion. That is the harsh reality that Ron Wayne, 89, faces every morning when he wakes up, one of the three original founders of the consumer electronics giant.
Ron first met Steve Jobs when he was a spritely 21-year-old marketing guy at Atari, the inventor of the hugely successful “Pong” video arcade game.
Ron dumped his shares when he became convinced that Steve Jobs’ reckless spending was going to drive the nascent startup into the ground, and he wanted to protect his own assets in a future bankruptcy.
Today, Apple is worth $3.07 trillion. Co-founders Jobs and Steve Wozniak each kept their original 45% ownership. Today Jobs’ widow, Laurene Powell Jobs, has a 0.5% ownership in Apple worth $153 billion, while the value of Woz’s share remains undisclosed but is a lot.
Today, Ron is living off a meager monthly Social Security check in remote Pahrump, Nevada, about as far out in the middle of nowhere as you can get, where he can occasionally be seen playing the penny slots.
2) AOL’s 2001 Takeover of Time Warner
Seeking to gain dominance in the brave new online world, Gerald Levin pushed old-line cable TV and magazine conglomerate Time Warner to pay $164 billion to buy upstart America Online in 2001. AOL CEO Steve Case became chairman of the new entity. Blinded by greed, Levin was lured by the prospect of 130 million big-spending new customers.
It was not to be.
The wheels fell off almost immediately. The promised synergies never materialized. The Dotcom Crash vaporized AOL’s business the second the ink was dry. Then came a big recession and the Second Gulf War. By 2002, the value of the firm’s shares had cratered from $226 billion to $20 billion.
The shareholders got wiped out, including “Mouth of the South” Ted Turner. That year, the firm announced a $99 billion loss as the goodwill from the merger was written off, the largest such loss in corporate history. Time Warner finally spun off AOL in 2009, ending the agony.
Steve Case walked away with billions and is now an active venture capitalist. Gerald Levin left a pauper and is occasionally seen as a forlorn guest on talk shows. The deal is widely perceived to be the worst corporate merger in history.
Buy High, Sell Low?
3) Bank of America’s Purchase of Countrywide Savings in 2008
Bank of America’s CEO, Ken Lewis, thought he was getting the deal of the century, picking up aggressive subprime lender Countrywide Savings for a bargain $4.1 billion, a “rare opportunity.”
As a result, Countrywide CEO Angelo Mozilla pocketed several hundred million dollars. Then the financial system collapsed, and suddenly we learned about liar loans, zero money down, and robo-signing of loan documents.
Bank of America’s shares plunged by 95%, wiping out $500 billion in market capitalization. The deal saddled (BAC) with liability for Countrywide’s many sins, ultimately paying out $40 billion in endless fines and settlements to aggrieved regulators and shareholders.
Ken Lewis was quickly put out to pasture, cashing in on an $83 million golden parachute, and is now working on his golf swing. Mozilo had to pay a number of out-of-court settlements, but was able to retain a substantial fortune, and is still walking around free.
The nicely tanned Mozilo is also working on his golf swing.
4) The 1973 Sale of All Star Wars Licensing and Merchandising Rights by 20th Century Fox for Free
In 1973, my former neighbor, George Lucas, approached 20th Century Fox Studios with the idea for the blockbuster film, Star Wars. It was going to be his next film after American Graffiti, which had been a big hit earlier that year.
While Lucas was set for a large raise for his directing services – from $150,000 for American Graffiti to potentially $500,000 for Star Wars – he had a different twist ending in mind. Instead of asking for the full $500,000 directing fee, he offered a discount: $350,000 off in return for the unlimited rights to merchandising and any sequels.
Fox executives agreed, figuring that the rights were worthless and fearing that the timing might not be right for a science fiction film.
In hindsight, their decision seems ridiculously short-sighted.
Since 1977, the Star Wars franchise has generated about $27 billion in revenue, leaving George Lucas with a net worth of over $3 billion by 2012. In 2012, Disney paid Lucas an additional $4 billion to buy the rights to the franchise
The initial budget for Star Wars was a pittance at $8 million, a big sum for an unproven film. So, saving $150,000 on production costs was no small matter, and Fox thought it was hedging its bets.
George once told me that he had a problem with depressed actors on the set while filming. Harrison Ford and Carrie Fisher thought the plot was stupid and the costumes silly.
Today, it is George Lucas who is laughing all the way to the bank.
$150,000 for What?
5) Lehman Brothers’ Entry Into the Bond Derivatives Market in the 2000s
I hated the 2000s because it was clear that men with lesser intelligence were using other people’s money to hyperleverage their own personal net worth. The money wasn’t the point. The quantities of cash involved were so humongous that they could never be spent. It was all about winning points in a game with the CEOs of the other big Wall Street institutions.
CEO Richard Fuld could have come out of central casting as a stereotypical bad guy. He even once offered me a job, which I wisely turned down. Fuld took his firm’s leverage ratio up to 100 times in an extended reach for obscene profits. This meant that a 1% drop in the underlying securities would entirely wipe out its capital.
That’s exactly what happened, and 10,000 employees lost their jobs, sent packing with their cardboard boxes with no notice. It was a classic case of a company piling on more risk to compensate for the lack of experience and intelligence. This only ends one way.
Morgan Stanley (MS) and Goldman Sachs (GS) drew the line at 40 times leverage and are still around today, but just by the skin of their teeth, thanks to the TARP.
Fuld has spent much of the last five years ducking in and out of depositions in protracted litigation. Lehman issued public bonds only months before the final debacle, and how he has stayed out of jail has amazed me. Today, he works as an independent consultant. On what, I have no idea.
Out of Central Casting
6) The Manhasset Indians’ Sale of Manhattan to the Dutch in 1626
Only a single original period document mentions anything about the purchase of Manhattan. This letter states that the island was bought from the Indians for 60 Dutch guilders worth of trade goods, which would consist of axes, iron kettles, beads, and wool clothing.
No record exists of exactly what the mix was. Indians were notoriously shrewd traders and would not have been fooled by worthless trinkets.
The original letter outlining the deal is today kept at a museum in the Netherlands. It was written by a merchant, Pieter Schagen, to the directors of the West India Company (owners of New Netherlands) and is dated 5 November 1626.
He mentions that the settlers “have bought the island of Manhattan from the savages for a value of 60 guilders.” That’s it. It doesn’t say who purchased the island or from whom they purchased it, although it was probably the local Lenape tribe.
Historians often point out that North American Indians had a concept of land ownership different from that of the Europeans. The Indians regarded land, like air and water, as something you could use but not own or sell. It has been suggested that the Indians may have thought they were sharing, not selling.
It is anyone’s guess what Manhattan is worth today. Just my old two-bedroom 34th-floor apartment at 400 East 56th Street is now worth $2 million. Better think in the trillions.
7) Napoleon’s 1803 Sale of the Louisiana Purchase to the United States
Invading Europe is not cheap, as Napoleon found out, and he needed some quick cash to continue his conquests. What could be more convenient than unloading France’s American colonies to the newly founded United States for a tidy $7 million? A British naval blockade had made them all but inaccessible anyway.
What is amazing is that President Thomas Jefferson agreed to the deal without the authority to do so, lacking permission from Congress, and with no money. What lies beyond the Mississippi River, then, was unknown.
Many Americans hoped for a waterway across the continent, while others thought dinosaurs might still roam there. Jefferson just took a flyer on it. It was up to the intrepid explorers, Lewis and Clark, to find out what we bought.
Sound familiar? Without his bold action, the middle 15 states of the country would still be speaking French, smoking Gitanes, and getting paid in Euros.
After Waterloo in 1815, the British tried to reverse the deal and claim the American Midwest for themselves. It took Andrew Jackson’s (see the $20 bill) surprise win at the Battle of New Orleans to solidify the US claim.
The value of the Louisiana Purchase today is incalculable. But half of a country that creates $17 trillion in GDP per year and is still growing would be worth quite a lot.
Great General, Lousy Trader
8) The John Thomas Family Sale of Nantucket Island in 1740
Yes, my own ancestors are to be included among the worst traders in history. My great X 12 grandfather, a pioneering venture capitalist investor of the day from England, managed to buy the island of Nantucket off the coast of Massachusetts from the Indians for three ax heads and a sheep in the mid-1600s. Barren, windswept, and distant, it was considered worthless.
Two generations later, my great X 10 grandfather decided to cut his risk and sell the land to local residents just ahead of the Revolutionary War. Some 17 of my ancestors fought in that war, including the original John Thomas, who served on George Washington’s staff at the harsh winter encampment at Valley Forge during 1777-78. Maybe that’s why I have an obsession about not wasting food?
By the early 19th century, a major whaling industry developed on Nantucket, fueling the lamps of the world with smoke-free fuel. By then, our family name was “Coffin,” which is still abundantly found on the headstones of the island’s cemeteries.
One Coffin even saw his ship, the Essex, rammed by a whale and sunk in the Pacific in 1821. He was eaten by fellow crewmembers after spending 99 days adrift in an open lifeboat. Maybe that’s why I have an obsession with not wasting food?
In the 1840s, a young itinerant writer named Herman Melville visited Nantucket and heard the Essex story. He turned it into a massive novel about a mysterious rogue white whale, Moby Dick, which has been torturing English literature students ever since. Our family name, Coffin, is mentioned seven times in the book.
Nantucket is probably worth many tens of billions of dollars today as a playground for the rich and famous. Just a decent beachfront cottage there rents for $50,000 a week in the summer.
The 2015 Ron Howard film, The Heart of the Sea, is breathtaking. Just be happy you never worked on a 19th-century sailing ship.
Yes, it’s all true and documented.
Hi Grandpa!
9) The Sales of Babe Ruth’s Contract for $110,000 in 1919
Boston Red Sox owner Harry Frazee wasn’t really interested in baseball. His first love was producing shows on Broadway in New York. The club was having financial troubles, with WWI dropping game attendance at Fenway Field by 35%.
So when the New York Yankees offered to buy the contract for an up-and-coming player named Babe Ruth for $125,000, then playing in only his third year of professional baseball, he jumped at the chance. The Babe was tough to manage, a regular habitue of bars and whorehouses, frequently showing up to games drunk or with a severe hangover. But the slugger broke the home run record in the 1919 season at 29 and was fodder for the newspapers.
The sale proved to be the baseball deal of the century. Babe Ruth brought in tens of millions of dollars for the Yankees. A new stadium was built in 1923 for the staggering sum of $2.4 million ($2.3 billion in today’s money) to house the 75,000 fans who wanted to see the Babe play. It was referred to as “the House that Ruth Built.”
My grandparents attended games there from nearby Bronx during the legendary 1927 season, when the team was known as “Murderer’s Row.” I used to get free tickets from Morgan Stanley right behind home plate during the 1980s and took my kids.
The Babe hit a record 60 home runs during the 1927 season and a lifetime total of 714 home runs. The record stood for 47 years when it was broken by Hank Aaron. Babe Ruth died of throat cancer in 1948 at the age of 53, the obvious result of excessive cigar smoking.
What did Harry Frazee do with his $110,000? He financed the production of No No Nanette, one of Broadway’s great blockbuster musicals of the 1920s.
Promissory Note Paying for the Purchase of Babe Ruth’s Contract in 1919
Babe Ruth, or the “Bambino”
Global Market Comments
June 25, 2025
Fiat Lux
Featured Trade:
(MY FAVORITE SECRET ECONOMIC INDICATOR)
It is the end of the school year at the University of California, and as a single parent, the unenviable task of retrieving my daughters out of the dorms for the holidays fell to me.
When I arrived, I was stunned to find nothing less than a war zone. Both sides of every street were lined with mountains of trash, the unwanted flotsam and jetsam cast aside by departing students.
Computer desk, embarrassingly stained mattresses, broken lava lamps, and an assortment of heavily worn Ikea furniture were there for the taking. Newly arriving students were sifting through the piles looking for that reusable gem.
Diminutive Chinese teenagers were seen pushing massive suitcases on wheels down the sidewalk on their way back to Shanghai, Beijing, and Hong Kong. The university attempted to bring order to the chaos by strategically placing dumpsters on every block, but they were rapidly filled to overflowing.
It was all worth it because of the insight it gave me into one of my favorite, least-known leading economic indicators. When I picked up the truck at U-HAUL, the lot was absolutely packed with returned vehicles, and there were more parked on both sides of the streets.
The booking agent told me there is a massive influx of people moving into California from the Midwest and the Northwest, with the result that lots all over the San Francisco Bay Area are filled to capacity.
I love this company because, in addition to providing a great service, they get the first indication of any changes to the migratory habits of Americans. The last time I saw this happen was after the dotcom bust, when thousands of tech-savvy newly unemployed pulled up stakes in the foggy city and moved to Lake Tahoe to work in “the cloud.”
Bottom line: California is enjoying a resurgence of hiring and new economic growth, most likely driven by Artificial Intelligence. This is what the stock market is screaming at us right now.
