“I have not failed, I have just found 10,000 ways that do not work,” said the inventor, Thomas Edison.
Global Market Comments
June 13, 2022
Fiat Lux
Featured Trade:
(JUNE 15 BIWEEKLY WEBINAR IS POSTPONED)
(MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON FOR JUNE 14-16)
The biweekly strategy webinar scheduled for June 15 has been postponed until 12:00 PM EST on June 22. I will have my hands full hosting the Mad Hedge Traders & Investors Summit this week, which I hope you all attend.
I look forward to hearing from you again next week.
John Thomas
CEO & Publisher
Diary of a Mad Hedge Fund Trader
Global Market Comments
June 10, 2022
Fiat Lux
Featured Trade:
(WEDNESDAY JUNE 29 2022 LONDON STRATEGY LUNCHEON)
(MY “TOP GUN: MAVERICK” REVIEW)
Come join me for lunch for the Mad Hedge Fund Trader’s Global Strategy Update, which I will be conducting in London on Monday, June 29, 2022. A three-course lunch is included. This will be my first London Luncheon in six years.
I’ll be giving you my up-to-date view on stocks, bonds, currencies commodities, precious metals, energy, Bitcoin, and real estate.
And to keep you in suspense, I’ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $329.
The lunch will be held at a private club on St. James Street, the details of which will be emailed to you with your purchase confirmation. I just checked with the club and as of today, masks are not required.
I look forward to meeting you, and thank you for supporting my research.
To purchase tickets for this luncheon, please click here.
Due to overwhelming demand from readers, I am going to review the new Tom Cruise movie, Top Gun: Maverick.
I’m probably the only guy you will ever run into who has flown Mach 2.5 at 90,000 feet, and with 50 years of experience as a combat pilot, it’s safe to say I know my way around a cockpit, all of them.
For a start, they put Top Gun in the wrong state. The Naval Fighter Weapons School moved from North Island, San Diego to far cheaper Fallon Nevada in 1996, where I got my first Covid-19 shot.
But North Island definitely makes a much more scenic backdrop for a romantic backstory, the part where I fell asleep. I know it well and have given many speeches to graduating Top Gun and Naval Seal classes there over the years. You can’t beat those white sand beaches.
Let’s start with the stuff that doesn’t exist. The scramjet that Maverick takes to Mach 10.4 at the beginning of the movie probably won’t fly for another 20 years, it ever. In 2004, an unmanned test of the NASA X-43 scramjet did fly for ten seconds over the Pacific at Mach 10 and then crashed into the ocean.
There is work underway at the Lockheed Skunk Works at Edwards Air Force Base in California (you can see a skunk on the tail of Tom Cruise’s plane), but it’s so secret even I don’t know about it. My friend there, Kelly Johnson, passed away 32 years ago so no more inside tips. When this thing does fly, it will get you from New York to Tokyo in two hours.
The US does have a fifth-generation stealth fighter, the Lockheed Martin F-35 Lightning II that can go up against the Chinese Chengdu J-20 and the Russian Sukhoi-57 and beat them hands down. The F-35 can fly Mach 1.6. The movie implies only the enemy has these advanced planes, forcing our heroes to fly the ever-reliable, but constantly ungraded 44-year-old McDonnel Douglas F/A 18.
It is true that the military will pull old pilots out of retirement for special missions. I am a perfect example. When a pilot joins the military it’s for life and the only way to retire is to die in a crash. Maverick is retrieved from working on a WWII P51 Mustang, which I also fly.
This is because the military never throws anything out and will keep flying planes as long as they can find pilots. Our oldest flying B-52 Stratofortress is 70 years old, is slated to fly for 100 years in total, and was originally designed by Nazi Germany.
I thought the movie did a very accurate representation of high G-forces, which absolutely beat the crap out of you and are fatal above a reading of 10 where your internal organs explode. I have flown G-forces up to 10, and at that pressure, I weighed 2,000 pounds and my arms were so heavy I couldn’t reach the controls. I thought my Russian co-pilot was trying to kill me.
The same is true of the extreme aerobatics in the film, which are exhausting. Sometimes pilots have to be lifted out of their seats after such maneuvers.
Despite these factual transgressions, I enjoyed the movie, even though I spent half the movie saying to myself, “No way.” You can see they had massive support from the Navy and even had Blue Angle pilots flying the aerobatic and combat scenes (Tom Cruise was cut and pasted into the cockpit.) Sure, it was a stretch for them to steal a 52-year-old F-14 swing wing Tomcat and land it on a carrier. This is fiction after all. But it is all about us oldies.
That’s because many of the current Navy leadership were inspired to join by the first Top Gun movie in 1986 in which a much younger Tom Cruise also starred. It became the greatest Navy recruiting device of all time. It’s no surprise the Navy was all over this one like a wet blanket, lending them a squadron on F/A 18’s with real Top Gun pilots. How much did that cost?
Top Gun: Maverick has been far and away the biggest box office blockbuster of 2022 and signaled the return of many moviegoers for the first time since the pandemic. Call it a coming-out party for all of us. A Top Gun Barbie Doll has even hit the stores.
Sure Tom Cruise is getting old (59), but who am I to complain?
A Soviet Mig-29
My Russian Copilot
“Altitude above you, runway behind you, and fuel in tanks on the ground are utterly useless,” said presidential candidate George McGovern, a WWII B-24 Liberator pilot.
Global Market Comments
June 9, 2022
Fiat Lux
Featured Trade:
(WHAT THE HECK IS ESG INVESTING?),
(TSLA), (FSLR), (TAN), (MO)
It’s truly astonishing how much money is pouring into ESG investing. Maybe it was another year of blistering heat worldwide that did it. It now accounts for one-third of all US equity investments.
In 2020, BlackRock, one of the largest fund managers in the country, made a major new commitment to ESG investment by rolling out several new ETFs. I thought I’d better take him seriously, as his firm is one of the largest money managers in the world with $10 trillion in assets.
So what the heck is ESG investing?
Environmental, Social, and Governance Investing (ESG) seeks to address climate change in any way shape or form possible. Its goal is to move the economy and capital away from carbon-based energy forms, like oil (USO), natural gas (UNG), and coal, to any kind of alternative.
I am always suspicious of investment themes are politically correct and ideologically directed, as they usually end in tears. I can’t tell you how many people I know who invested their life savings in solar companies to save the world, like Solyndra, Sungevity, American Solar Direct, and Suniva, only to get wiped out when they went under.
As laudable as the goals of these companies may have been, they were unable to deal with collapsing prices, Chinese dumping, and the harsh realities of doing business in a cutthroat competitive world.
As a venture capital friend of mine once told me, “Technology is a bakery business”. If you can’t sell your products immediately, you go broke. Technology always drops prices dramatically and if you can’t stay ahead of the curve you don’t stand a chance.
Still, what I believe is not important. The fastest-growing group of new investors in the market today are Millennials, and they happen to take ESG investing very seriously.
There does seem to be a method to BlackRock’s madness. Over the past year, ESG-influenced funds have grown from 1% to 3.6% of total investment. Other major fund families like Vanguard have already jumped on the bandwagon.
ESG can include a panoply of activities, including, recycling, climate change mitigation, carbon footprint reduction, water purification, green infrastructure, environmental benefits for employees, and greenhouse gas reduction. There are many more.
There is even an ESG rating system for funds and companies produced by firms like Refinitiv, which scores 7,000 companies around the world based on their environmental sensitivity. Companies like United Utilities Group PLC, the UK’s largest water company, get an A+, while China’s Guangdong Investment Ltd, which supplies water and energy to Hong Kong, gets a D-.
It goes without saying that companies from emerging nations tend to score very poorly. So do manufacturing companies relative to service ones, and energy companies versus non-energy ones.
The ESG concept began in 2005 when UN Secretary-General Kofi Annan wrote to 50 global CEOs urging them to take climate change seriously. A major report by Ivor Knoepfel followed a year later entitled “Who Cares Wins.”
The report made the case that embedding environmental, social and governance factors in capital markets makes good business sense and leads to more sustainable markets and better outcomes for societies. The snowball has been rolling ever since.
Themed investing is not new. “Sin” stocks have long been investment pariahs, including alcohol and tobacco companies. As a result, these companies trade at permanently low multiples. The newest investment ban is on firearms-related companies.
ESG investment received a major tailwind in 2021 when the price of oil took off like a rocket. When oil prices rise, it also makes all forms of alternative energy more competitive. But over production by US fracking companies will eventually cause supply gluts that will lead to chronically lower prices. The US happens to have a new 200-year supply of oil and gas, thanks to the fracking revolution.
Saudi Arabia floated their oil monopoly, Saudi ARAMCO, raising a record $26 billion. When Saudi Arabia wants to get out of the oil and gas business, so should you. It’s not because they can’t think of new ways to spend money that they’re unloading it.
That’s why I have been advising followers to avoid energy investments like the plague for the past decade. It’s just a matter of time before alternatives rule the world. Even the oil industry won’t expand production now because they don’t want to buy at the top only to see prices collapse, as they have done many times in the past.
Who is the greenest company in America? That would be electric car and autonomous driving firm Tesla (TSLA). Perhaps ESG investing helps explain why the shares have risen 400 times since I started buying.
What is the top-performing listed stock of the last 30 years? Tobacco company Altria Group (MO), the old Philip Morris.
It’s proof that investment shaming doesn’t always work.
“Sometimes, when you jump off a bridge, you have to grow your wings on the way down,” said author Danielle Steele.
