Global Market Comments
December 22, 2020
Fiat Lux
Featured Trade:
(A CHRISTMAS STORY),
(MY FAVORITE SECRET ECONOMIC INDICATOR)
Global Market Comments
December 21, 2020
Fiat Lux
SPECIAL END OF YEAR ISSUE
Featured Trade:
(THANK YOU FROM THE MAD HEDGE FUND TRADER),
(MY LAST RESEARCH PIECE OF THE YEAR)
You are in safe hands now, with your trading portfolios up nearly 65% on the year, if you had followed every one of my Trade Alerts to the letter.
I know a lot of you made more, a lot more.
I will be making a beeline for my beachfront estate at Incline Village, Nevada on the pristine shores of Lake Tahoe and work from there for the next two weeks. That is if I can battle my way through the nightmarish Sacramento holiday traffic.
My Tesla Model X packed to the gills with Christmas presents, ski equipment, snowshoes, board games (yes, “Qi” is a word in Scrabble), and my expedition backpack. No extra food this year because the pandemic has barred all guests. Thank you Elon Musk and your P100D!
For proof that after working 12 hours a day, six hours a week, to make you wealthier and wiser, please read my last research piece of the year below, written tongue in cheek with a certain Hollywood film classic in mind.
And what a year it has been. Pandemics, wildfires, economic collapse, lockdowns, recoveries, and a presidential election still being fought out in the courts. It all seems like some cheap Hollywood thriller!
The research I gathered was enough for me to publish 760 letters totaling one million words, including Global Trading Dispatch, the Mad Hedge Technology Letter, the Mad Hedge Biotech & Health Care Letter, and Mad Hedge Hot Tips.
That is about almost double the length of Tolstoy’s War and Peace, but then Tolstoy in his time had to write with a quill and ink, not Word for Windows. I am a writing machine. I haven’t received a single complaint this year that I was not sending out enough content.
I also managed to pump out over 300 trade alerts with a success ratio of 92%. That’s an average of more than one each trading day.
According to the email traffic, many of you did extremely well. If you are into triple digits, please send me an email. I would love to get a testimonial from you. I know that many of you have run out and purchased the new Tesla Model X gullwing P100D with the “ludicrous mode” on my recommendation.
You know that when they are advertising power tools and Pelotons on CNBC, it is time to get out of Dodge. I’ll take the hint.
At Tahoe, I will consume a suitcase full of research and, after much cogitation and contemplation, write my 2021 Annual Asset Review, which I will publish on Wednesday, January 6.
I will also be rethinking my business model, so if any of you have suggestions on how I can improve this service, send me an email at madhedgefundtrader@yahoo.com.
Just put “suggestions” in the subject line. My intention is to never stop improving the product, to always under-promise and over-deliver.
It’s a nostrum of Silicon Valley that whenever you think you're finished, you’re finished.
Please forgive me in advance if I take a few hours catching some “big air” off of Squaw Valley’s treacherous double X black runs.
If you have any trading questions, please seek me out on the northern section of Tahoe Rim Trail around 11,000 feet, where I will be snowshoeing my way around the lake in subzero temperatures.
I will probably be the only guy up there, so you can just follow the first set of tracks you find. That is if hungry mountain lions don’t get you first.
I’ll have my Bowie knife and an industrial-sized can of bear spray, so I’ll be fine. As for you, I’m not so sure. This is what I do during my winter leisure time.
During my absence, I will be posting some of my favorite pieces from the last year which give insights on how markets will play out over the coming decades, and a lot of basic educational pieces.
I have thousands of new subscribers who will be reading these for the first time, and many legacy readers may have missed them the first time around or forgotten the data because they are older than me.
I hope you find them as another useful step towards your education on the global financial markets. Charts and data have been updated to make them relevant.
Finally, I want to thank you all for my incredible life. Thanks to you I have crossed the Atlantic in luxury in the owner’s suite of Cunard’s Queen Mary 2 (My uncle took the Queen Mary 1 in 1943 in somewhat more cramped conditions).
I rode the Orient Express from London to Venice. I lived in the lap of luxury at the Hotel Cipriani in Venice and at the Raffles in Singapore.
And I managed to haggle the merchants in Tangier’s historic bazaar down in the price of the most elegant hand-made carpets.
I had the opportunity to meet heads of state, CEOs, top money managers, our nation’s military leaders, and even a Maori chieftain.
I had the pleasure of flying the length of the Grand Canyon at low altitude as a pilot, weaving my way along the Colorado River. And, oh yes, I made it to the top of the Matterhorn one more time.
I really did get to rub shoulders with the high and mighty who run the world and harvest their pearls of wisdom, which I passed on to you.
I logged 200 hours as a pilot flying to such diverse locations as the Great Barrier Reef in Australia and Honda’s loading docks in San Francisco.
I never minded the horrendous jet lag, the well-deserved hangovers, or the traffic jams in China. Your subscriptions to my services, your support of my research, and your endless compliments made it all worth it.
I always tell people that I am not in this for the money, and it’s true.
Not a day goes by when I don’t receive an email from a grateful reader who claims that I have paid off their mortgage, a kid’s college education, a parent’s uninsured operation, or a child’s chemotherapy.
They tell me that I am teaching them to fish; thus, sparing them from the frozen tasteless kind they sell at Safeway, which they must wait in line to pay inflated prices. You can’t buy that kind of appreciation, not with all the money in the world.
It certainly beats the hell out of spending my retirement scoring a 98 on the local golf course. And I’ll never beat Tiger Woods, no matter how many blonds I date.
To leave you all in the Christmas spirit, I have posted a video and pictures of the Polar Express in Portland, Oregon.
Taking my family for a ride has become an annual event, and it is a thrill for my younger kids as well. To watch a short video of one of the largest steam engines in the world, please click here.
Merry Christmas and Happy New Year to All!
Good Trading in 2021!
John Thomas
The Mad Hedge Fund Trader
You Have to Know the Right People to Call This Market
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
All work and no play makes Jack a dull boy.
With Apologies to "The Shining" (1980)
“If the Fed brings a lump of coal in 2020, then they better bring some candy canes for the kids as well,” said Bill Gross, former CEO of bond giant PIMCO.
Global Market Comments
December 18, 2020
Fiat Lux
FEATURED TRADE:
(HOW “HIGH” CAN MARIJUANA STOCKS GO?)
(TLRY), (CGC), (TOKE)
(TESTIMONIAL)
Global Market Comments
December 17, 2020
Fiat Lux
FEATURED TRADE:
(PLEASE SIGN UP NOW FOR MY FREE TEXT ALERT SERVICE NOW),
(BIDDING MORE FOR THE STARS)
The stock market has turned into the real estate market, where everyone is afraid to sell for fear of being unable to find a replacement. Will it next turn into the Bitcoin market, which has gone ballistic?
Risk assets everywhere are now facing a good news glut.
My 2020 market top target of 30,000 for the Dow Average has come and gone.
This year’s price action really gives you the feeling of an approaching short term blow off-market top. If Covid-19 crashed the market, will the vaccine kill the recovery?
A few years ago, I went to a charity fundraiser at San Francisco’s priciest jewelry store, Shreve & Co., where the well-heeled men bid for dates with the local high society beauties, dripping in diamonds and Channel No. 5.
Amply fueled with Dom Perignon champagne, I jumped into a spirited bidding war over one of the Bay Area’s premier hotties, who shall remain nameless. Suffice to say, she is now married to a well-known tech titan and has a local sports stadium named after her.
Obviously, I didn’t work hard enough.
The bids soared to $27,000, $28,000, $29,000.
After all, it was for a good cause. But when it hit $30,000, I suddenly developed a severe case of lockjaw. Later, the sheepish winner with a rampant case of buyer’s remorse came to me and offered his date back to me for $24,000. I said, “no thanks.” $23,000, $22,000, $21,000?
I passed.
The altitude of the stock market right now reminds me of that evening.
If you rode the S&P 500 (SPX) from 700 to 3,700 and the Dow Average (INDU) from 7,000 to 30,000, why sweat trying to eke out a few more basis points, especially when the risk/reward ratio sucks so badly, as it does now?
And if there was ever an excuse to take a break, it is my blistering 2020 12,000-point rally off the March bottom.
I realize that many of you are not hedge fund managers and that running a prop desk, mutual fund, 401k, pension fund, or day trading account has its own demands.
But let me quote what my favorite Chinese general, Deng Xiaoping, once told me in person: “There is a time to fish, and a time to hang your nets out to dry. You don’t have to chase every trade.
At least then, I’ll have plenty of dry powder for when the window of opportunity reopens for business. So, while I’m mending my nets, I’ll be building new lists of trades for you to strap on when the sun, moon, and stars align once again.
What Am I Bid?
Global Market Comments
December 16, 2020
Fiat Lux
FEATURED TRADE:
(WHAT TO BUY AT MARKET TOPS?),
(CAT), ($COPPER), (FCX), (BHP), (RIO),
(EUROPEAN STYLE HOMELAND SECURITY),
(TESTIMONIAL)
I will start today’s letter by listing six more data points showing how overbought stocks have become.
1) While the number of outstanding shares in the US has remained unchanged since 2006, thanks to M&A, buybacks, bankruptcies, and privatizations, the average weighted share price has more than doubled from $50.15 to $137.00.
2) The Volatility Index (VIX) has just collapsed from a high of $41 in November to $20 today.
3) The Mad Hedge Market Timing Index has just soared from a record low of 2 eight months ago to 76 today, deep into “SELL” territory.
4) 2000 forward stock earnings growth has collapsed from 26% a year ago, to 0% in a few months.
5) Almost every investor now bullish once more, now that their stocks are going up.
6) The stock market has had its best month since 1987. Grizzled, long in the tooth readers can’t be more cautious right now.
This all leads to the urgent question of the day, WHICH stocks do you buy as we approach market tops? The answer is very simple. You buy cheap ones. And what are the cheapest stocks out there?
Commodity stocks.
My friend, Jim Umpleby, said that we are just entering a ten-year super cycle in commodities.
Jim should know. He is the CEO of Caterpillar (CAT), a company I have been following for 45 years. I even have one of their cool worn yellow baseball caps from years past.
Thanks to the 2017 tax bill, companies can now buy Caterpillar’s bulldozers, backhoes, and heavy trucks, and expense 100% of the investment in the first year. (Last year, I bought a new $162,500 Tesla Model X using the same break). That makes a purchase of (CAT)’s products one of the best tax breaks ever.
Needless to say, this has created a stampede to buy the companies heavy machinery because they fear this tax windfall will be reversed by the next administration. This is equipment with a 30-year life or longer.
Industrial commodities are in fact the perfect sector to buy right now. Take a look at the long-term chart for copper prices, which are a great bellwether for the entire industry. They are imminently poised to make a long-term upside breakout.
Copper last peaked at the beginning of 2011, when the Chinese infrastructure build-out suddenly outdrew to a juddering halt. Prices cratered from $4.60 a pound to a lowly $1.90. Mines were sold off, mothballed, or permanently closed at a record rate.
Copper prices fell so low that the US Mint finally started making a profit on pennies they struck.
Then a funny thing happened.
Copper bottomed, assisted by the global synchronized economic recovery I have been writing about for years. Then at the beginning of this year, investors smelled a recovery in a severely oversold, bargain basement, lagging sector. Copper prices jumped from $2.60 to $3.6, up 42% since June.
The share prices of copper and other major commodity producers went ballistic. Freeport McMoRan (FCX), the world’s largest copper producer, (whose management is a long-time reader of this letter) has just seen its stock jump six-fold from a near $4.00 a share to $24.00. If this sounds rich, recall that the peak during the last cycle was at $51.
Other big commodity producers did as well. Australia’s BHP Billiton (BHP) leaped 41% in a month!
You may think that it’s too late to get into the commodities space, but you’d be wrong. Having covered the sector for nearly a half-century there is one thing you learn quickly. While you can shut down a mine in weeks, it can take years to bring them back on line.
As for developing a new mine from scratch, that can take a decade by the time you get the design, permits, infrastructure, equipment, and labor in place.
My Australian readers tell me that (BHP) is flying young skilled workers from Brisbane an incredible 2,000 miles to work in Northwest mines in a six week on, six week off work schedule and paying them $200,000 a year to do it. And they’re making a profit doing this!
The bottom line here is that a short squeeze has developed for industrial commodities which will last for years.
Oh, and that global economic recovery? It is on vacation until the pandemic ends. That could happen in a few months, and no more than a year.
At least you have something to buy now besides more technology stocks. As much as we here at the Mad Hedge Fund Trader all love them for the long term, they are extremely overbought for the short term. Up 50% in a month? I’ll pass.
