Global Market Comments
May 13, 2022
Fiat Lux
Featured Trade:
(JULY 22 ZERMATT, SWITZERLAND STRATEGY SEMINAR)
(HOW TO GET A FREE TESLA), (TSLA),
(TESTIMONIAL)
I have assiduously instructed readers how to earn boatloads of money over the past 14 years.
Now I am going to teach you how to spend it wisely.
Tesla was once again at $680 a share at yesterday’s low and history has shown that it is time to pay attention.
How would you like to drive a vehicle whose technology is from ten years in the future, will be the envy of your neighbors, and leaves zero carbon footprint? It is also the fastest production car ever built. Sounds pretty good, doesn’t it?
I bet if I told you that the car was available for free, you’d be even more interested.
Here’s how it goes.
Buried in the tax bill signed into law in December 2017 is a provision for “bonus depreciation.” It allows companies the depreciation of the entire cost of a new car for business use over 5 years. All of this is tax deductible.
In addition, you get to deduct all of the annual interest on any loan taken out to purchase the vehicle. Also coming off the bottom line is any insurance and maintenance expenses which, in my experience, come to about $6,000 a year.
If you spend $125,000 for the new model, total deductions over a five-year period is about $155,000,
In five years, the car will have a residual value of $70,000, and the $85,000 in additional costs is covered by the tax breaks, taking the bottom-line after-tax cost of your new mid-life crisis to zero.
If all of this sounds impossible don’t worry. I’ve done it three times.
Now, here’s how to get a better deal.
Call Tesla and ask if they have any used 2022 showroom cars they want to get rid of before the new model year begins. In my case, I was able to find in Los Angeles a 2022 Model X P100 D SUV with just 800 miles on the odometer for a $25,000 discount to the $125,000 list price.
It was a total LA car, silver with black wheels and a black leather interior. They added on a $5,000 advanced navigation system and a $3,000 seven-seat configuration for free.
Tesla lists their used car inventory at https://www.tesla.com/inventory/used/ms. You may have to get a live Tesla salesman on the line to find the 2022 showroom cars.
For those of you who own your own companies or work through single-member LLCs, this is a no-brainer. If you work for a big company, it may be tougher to pull off. Talk to your accountant before you do anything.
This is exactly what I did which led me to pick up a brand-new Tesla during a torrential rainstorm. It was then that I truly learned what Elon Musk has recently referred to as “Logistics Hell.”
For a start, my car was supposed to be delivered to me at my lakefront estate in Incline Village, Nevada. But Tesla could only get it from Los Angeles to as far as the Fremont factory before the logistics system completely broke down. I agreed to pick it up at Fremont to cut a week off the delivery time and before the heavy snow hit.
When I arrived at the showroom, it was completely empty so I had to wait an hour. Out front were 100 parking spaces filled mostly with Tesla 3’s, and animated technicians showing new owners how to operate them. I was told that the parking lot is completely filled and then emptied out three times a day. (TSLA) is now producing 1,000 Tesla 3’s a day now.
When I finally got my turn, I discovered to my horror that the car was registered in the wrong name. When the Nevada Department of Motor Vehicles was told that the new registered owner was “Mad Hedge Fund Trader,” they were somewhat taken aback.
The tow hitch I ordered was missing so the tech pulled one from a back room. The same happened with the second set of keys which are very expensive. I had to Google the tire specs which required me to crawl under the car and get soaked to make sure they were all season because no one there knew.
In the end, I was sent off with my $125,000 car, a box of parts, and a vague promise that a mechanic would visit me someday and put it all together.
This was not the experience I had when I picked up my Tesla in 2010 and 2016 when I was treated like visiting royalty. But I love the car anyway.
Then it really got interesting!
What is the first thing a new Tesla owner wants to try out? The monstrous zero to 60 mph acceleration in 2.9 seconds. And they do this the second they drive out of the parking lot. So, I was treated to dozens of aspiring Indy 500 drivers with giant smiles on their faces zipping around on rain-slick roads. I felt like I was in a shooting gallery.
Thank goodness I brought an extra supply of airline airsick bags!
My 400 Bagger
Thank you for the analysis of Nvidia (NVDA). I wouldn't have looked at them without your analysis.
I got in NVDA at $69 Nov 2 after it dipped 3-5% from the recent top, it exploded up on the 11th Nov, +29% to $88, and eventually made it to $290!
More trade alerts to the people :)
Best Regards
Per
The Netherlands
Geneva, Switzerland 1968
Global Market Comments
May 12, 2022
Fiat Lux
Featured Trade:
(FRIDAY, JUNE 20 SAN FRANCISCO STRATEGY LUNCHEON)
(IS USA, INC. A SHORT?)
“I don’t know what’s going to happen next quarter and I don’t care,” said Jamie Diamond, CEO of JP Morgan Chase Bank.
With covid cases down 98% in two months and headed much lower, it is time for me to re-introduce the Mad Hedge Seminar at Sea. I firmly believe that the pandemic will be over by the summer, and what better way to celebrate than with an elegant Norwegian fiord cruise.
Come join me on Cunard Line’s luxurious Queen Victoria on a seven-day Norwegian Fiord Cruise.
For the first time in ten years, I am hosting a Seminar at Sea. I had planned to do this earlier but ran head-on into the pandemic. On the last Seminar at Sea, I and a group of subscribers crossed the Atlantic Ocean on the Queen Mary 2, passing over the Titanic wreck and tooting the ship’s horn.
The Queen Victoria departs Southampton, England at 12:00 noon on July 3, 2022, and returns to Southampton on July 10. There I will be conducting the Mad Hedge Fund Trader’s Strategy Update, a three-hour discussion on the global financial markets. You will have to get to Southampton under your own steam, which is about an hour south of Victoria Station by train.
I’ll be giving you my up-to-date view on stocks, bonds, currencies, commodities, precious metals, Bitcoin, and real estate. I’ll highlight the best long and short opportunities. And to keep you in suspense, I’ll be tossing 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 $499 for the seminar only.
Attendees will be responsible for booking their own cabins through Cunard., which is offering staterooms for this cruise for as little as $959 a person. To book your cruise please click here at https://www.cunard.com/en-us . The cruise you need to book is no. V216. The Queen Victoria has not sailed for two years and this will be one of the first post-pandemic voyages.
To get the details of the cruise please click here at https://www.cunard.com/en-us/find-a-cruise/V216/V216. The July 9 seminar will be held in the ship's owner’s suite while we are crossing the North Sea in of the most elegant accommodations afloat on the seven seas. For a video of the owner’s suite please click here at https://www.youtube.com/watch?v=vJhgleugNho
Just visit Cunard’s website at http://www.cunard.com/, or call them directly at 800-528-6273 to make your own arrangements.
The weather this time of year can range from balmy to tempestuous, depending on our luck. A brisk walk three times around the boat deck adds up to a mile. Full Internet access will be available for a price to follow the markets. Every dinner during the voyage will be black tie, so you might want to stop at Saks Fifth Avenue in Manhattan to get fitted for a second tux. I have arranged a few dinners with the captain for myself and will pass on any nuggets I gain in a future letter.
Don’t forget to bring your Dramamine and sea legs, although the 90,049 tonnes, 964.5-foot long billion-dollar ship is so big, I doubt you’ll need them. Her facilities include seven restaurants, thirteen bars, three swimming pools, a ballroom, and a theatre. I spend most of my time on these cruises writing deep research pieces, although I might take a few fencing classes.
Cunard is requiring covid vaccination cards of all passengers, and so am I. They may also require a negative covid test within three days of departure, as are most cruise lines these days. We’ll be sailing all the way up to 61 degrees, 81 minutes north latitude, about the same latitude as Anchorage, Alaska.
I look forward to meeting you and thank you for supporting my research. To purchase tickets for the seminar alone, please go to my online store at https://www.madhedgefundtrader.com/luncheons/.
Join Me for Lunch?
Global Market Comments
May 11, 2022
Fiat Lux
Featured Trade:
(JOIN ME ON CUNARD’S MS QUEEN VICTORIA
FOR MY JULY 9, 2022 SEMINAR AT SEA)
Global Market Comments
May 10, 2022
Fiat Lux
Featured Trade:
(MAY 4 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (ROM), (ARKK), (LMT), (RTN), (USO), (AAPL), (BRKB), (TLT), (TBT), (HYG), (AMZN)
Below please find subscribers’ Q&A for the May 4 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley.
Q: How confident are you to jump into stocks right now?
A: Not confident at all. If you look at all of my positions, they’re very deep in the money and fully hedged—I have longs offsetting my shorts—and everything I own expires in 12 days. So, I’m expecting a little rally still here—maybe 1,000 points after the Fed announcement, and then we could go back to new lows.
Q: Would you scale into ProShares Ultra Technology ETF (ROM) if you’ve been holding it for several years?
A: I would—in the $40s, the (ROM) is very tempting. On like a 5-year view, you could probably go from the $40s to $150 or $200. But don’t expect to sleep very much at night if you take this position, because this is volatile as all get out. It's not exactly clear whether we have bottomed out in tech or not, especially small tech, which the (ROM) owns a lot of.
Q: Is it time to buy the Ark Innovation ETF (ARKK) with the 5-year view?
A: Yes. I mentioned the math on that a couple of days ago in my hot tips. Out of 10 positions, you only need one to go up ten times to make the whole thing worth it, and you can write off everything else. Again, we’re looking at venture capital type math on these leverage tech plays, and that makes them very attractive; however I’m always trying to get the best possible price, so I haven’t done it yet.
Q: We’ve been hit hard with the tech trade alerts since March. Any thoughts?
A: Yes, we’re getting close to a bottom here. The short squeeze on the Chinese tech trade alerts that we had out was a one-day thing. However, when you get these ferocious short covering rallies at the bottom—we certainly got one on Monday in the S&P 500 (SPY) —it means we’re close to a bottom. So, we may go down maybe 4%-6% and test a couple more times and have 500- or 1000-point rallies right after that, which is a sign of a bottom. There’s a 50% chance the bottom was at $407 on Monday, and 50% chance we go down $27 more points to $380.
Q: Is the Roaring 20s hypothesis still on?
A: Yes absolutely; technology is still hyper-accelerating, and that is the driver of all of this. And while tech stocks may get cheap, the actual technology underlying the stocks is still increasing at an unbelievable rate. You just have to be here in Silicon Valley to see it happening.
Q: Do you like defense stocks?
A: Yes, because companies like Lockheed Martin (LMT) and Raytheon (RTN) operate on very long-term contracts that never go away—they basically have guaranteed income from the government—meeting the supply of F35 fighters for example, for 20 years. Certainly, the war in Ukraine has increased defense spending; not just the US but every country in the world that has a military. So all of a sudden, everybody is buying everything—especially the javelin missiles which are made in Florida, Georgia and Arizona. The Peace Dividend is over and all defense companies will benefit from that.
Q: Is Buffet wrong to go into energy right now? How will Berkshire Hathaway Inc. (BRK.B) perform if energy tanks?
A: Well first of all, energy is only a small part of his portfolio. Any losses in energy would be counterbalanced by big gains in his banking holdings, which are among his largest holdings, and in Apple (AAPL). Buffet does what I do, he cross-hedges positions and always has something that’s going up. I think Berkshire is still a buy. And he's not buying oil, per say; he is buying the energy producing companies which right now have record margins. Even if oil goes back down to $50 a barrel, these companies will still keep making money. However, he can wait 5 years for things to work for him and I can’t; I need them to work in 5 minutes.
Q: You must have suffered big oil (USO) losses in the past, right?
A: Actually I have not, but I have seen other people go bankrupt on faulty assumptions of what energy prices are going to do. In the 1990s Gulf War, someone made an enormous bet that oil would go up when the actual shooting started. But of course, it didn’t, it was a “buy the rumor, sell the news” situation. Energy prices collapsed and this hedge fund had a 100% loss in one day. That is what keeps me from going long energy at the top. And the other evidence that the energy companies themselves believe this is true is that they’re refusing to invest in their own businesses, they won’t expand capacity even though the government is begging them to do so.
Q: Why should we stay short the iShares 20 Plus Year Treasury Bond ETF (TLT) instead of selling out for a profit or holding on due to your statement that the TLT will go down to $105/$110?
A; If you have the December LEAPS, which most of you do, there’s still a 10% profit in that position running it seven more months. In this day and age, 7% is worth going for because there isn’t anything else to buy right now, except very aggressive, very short term, front month options, which I've been doing. So, the only reason to sell the TLT now and take a profit—even though it’s probably the biggest profit of your life—is that you found something better; and I doubt you're finding anything better to do right now than running your short Treasuries.
Q: Are you still short the TLT?
A: Yes, the front months, the Mays, expire in 8 days and I’m running them into expiration.
Q: What will Bitcoin do?
A: It will continue to bounce along a bottom, or maybe go lower as long as liquidity in the financial system is shrinking, which it is now at roughly a $90 billion/month rate. That’s not good for Bitcoin.
Q: Is now the time for Nvidia Corporation (NVDA)?
A: Yes, it’s definitely time to nibble here. It’s one of the best companies in the world that’s dropped more than 50%. I think we’d have a final bottom, and then we’re entering a new long term bull market where we’d go into 1-2 year LEAPS.
Q: What do you think of buying the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) junk bond fund here for 6% dividend?
A: If you’re happy with that, I would go for it. But I think junk is going to have a higher dividend yet still. This thing had a dividend in the teens during the financial crisis; I don’t think we’ll get to the teens this time because we don’t have a financial crisis, but 7% or 8% are definitely doable. And then you want to look at the 2x long junk bond special ETFs, because you’re going to get a 16% return on a very boring junk bond fund to own.
Q: What do you think about Amazon (AMZN) at this level?
A: I think it’s too early and it goes lower. Not a good stock to own during recession worries. At some point it’ll be a good buy, but not yet.
Q: Energy is the best sector this year—how long can it keep going?
A: Until we get a recession. By the way, if you want evidence that we’re not in a recession, look at $100/barrel oil. When you get real recessions, oil goes down to 420 or $30….or negative $37 as it did in 2020. There’s a lot of conflicting data out in the market these days and a lot of conflicting price reactions so you have to learn which ones to ignore.
Q: Should we stay short the (TLT)?
A: Yes, we should. I’m looking for a 3.50% yield this year that should take us down to $105.
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, 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
"20 years ago, I could read the Wall Street Journal every morning and feel that I knew enough to at least start my day. That is no longer true," said technology guru and venture capital investor, Roger McNamee.
