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Mad Hedge Fund Trader

A Special Note on Exercised January Options

Diary, Newsletter

There are only 5 trading days left until the equity option expiration on January 17. My short dated January expiration play turned out to be wildly successful, with all of these positions quickly turning profitable. During the two-week December holidays when markets fell asleep, time decay assured that we made money almost every day, and closed us on the year at an all time high.

As a result, the Mad Hedge Fund Trader?s model trade portfolio has a ton of remaining positions that are deep in-the-money that expire that day. So, it is important that we tread carefully to get the full benefit.

I am cautious about automatically rolling positions into February and March, as I have done for the last several months, because markets are all vastly over expended. This is my way of cutting back risk at interim market tops.

I received a few emails from readers whose option holdings have already been exercised against them, and have asked me for advice on how best to proceed. So, here we go.

The options traded on US exchanges and referred to in my Trade Alerts are American style, meaning that they can be exercised at any time by the owner. This is in contrast to European style options, which can only be exercised on the expiration day.

The call option spreads that I have been recommending for the past year are composed of a deep out-of-the-money long strike price plus a short portion at a near money strike price.

When stocks have high dividends, there is a chance that the near money option you are short gets exercised against you by the owner. This requires you to deliver the stock equivalent of the option you are short, plus any quarterly dividends that are due. Don?t worry, because your long position perfectly hedges you against this possibility.

You usually get notice of this assignment in an email after the close. You then need to email or call your broker back immediately informing him that you want to exercise your remaining long option position to meet your assigned short position.

This is a gift, as it means that you can realize the entire maximum theoretical profit of the position without having to take the risk of running it all the way into expiration. You can either keep the cash, or pile on another sort dated option spread position and make even more money.

This should completely close out your position and leave you with a nice profit. This is not an automatic process and requires action on your part!

Assignments are made on a random basis by an exchange computer, and can happen any day. Exercise means the owner of the option that you are short completely loses all of the premium on his call.

Dividends have to be pretty high to make such a move economic, usually at least over 3% on an annual rate. But these days, markets are so efficient that traders, or their machines, will exercise options for a single penny profit.

Surprise assignments create a risk for option spread owners in a couple of ways. If you don?t check your email every day after the close, you might not be aware that you have been assigned. Alternatively, such emails sometimes get lost, or hung up in local servers or spam filters, which occasionally happens to readers of my own letter.

Then, you are left with the long side deep out-of-the-money call alone, which will have a substantially higher margin requirement. This is equivalent to going outright long the stock in large size.

This is a totally unhedged position now, and suddenly, you are playing a totally different game. If the stock then rises, you could be in for a windfall profit. But if it falls, you could take a big hit. Better to completely avoid this situation at all cost and not take the chance. You are probably not set up to do this type of trading.

If you don?t have the cash in your account to cover this, you could get a margin call. If you ignore this call as well, your broker will close out your position at market without your permission.

It could produce some disconcerting communications from your broker. They generally hate issuing margin calls, and could well close your account if it is too small to bother with, as they create regulatory issues.

In order to get belt and braces coverage on this issue, it is best to call your broker and find out exactly what are their assignment policies and procedures. Believe it or not, some are still in the Stone Age, and have yet to automate the assignment process or give notice by email. An ounce of prevention could be worth a pound of cure here. You can?t believe how irresponsible some of these people can be.

Consider all this a cost of doing business, or a frictional execution cost. In-the-money options are still a great strategy. But you should be aware of all the ins and outs to get the most benefit.
Good Luck and Good Trading
John Thomas

BusinessJohnThomasProfileMap2-2

0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-10 01:03:082014-01-10 01:03:08A Special Note on Exercised January Options
Mad Hedge Fund Trader

January 9, 2014

Diary, Newsletter, Summary

Global Market Comments
January 9, 2014
Fiat Lux

Featured Trade:
(FEBRUARY 12 AUCKLAND NEW ZEALND STRATEGY LUNCH),
(MAD HEDGE FUND TRADER CLOSES 2013 WITH 67.45% PROFIT),
(AAPL), (XLE), (XLF), (FXY), (TLT), (SFTBY), (GILD)
(TESTIMONIAL)

Apple Inc. (AAPL)
Energy Select Sector SPDR (XLE)
Financial Select Sector SPDR (XLF)
CurrencyShares Japanese Yen Trust (FXY)
iShares 20+ Year Treasury Bond (TLT)
SoftBank Corp. (SFTBY)
Gilead Sciences Inc. (GILD)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-09 09:07:252014-01-09 09:07:25January 9, 2014
Mad Hedge Fund Trader

Mad Hedge Fund Trader Closes 2013 With 67.45% Profit

Diary, Newsletter

The performance of the Mad Hedge Fund Trader?s Trade Alert Service finished 2013 with a total return for followers of 67.45%.

Including both open and closed trades, 75 out of the 90 Trade Alerts were profitable, a success rate of 83%. The final month of December alone came in at an eye popping 11.45%.

The three-year return is an eye popping 122.5%, compared to a far more modest increase for the Dow Average during the same period of only 35%.
That brings my averaged annualized return up to 39.7%.

This has been the best profit since my groundbreaking trade mentoring service was launched three years ago. It all is a matter of the harder I work, the luckier I get.

The hot streak continues. So far in January, we are up a further 3.58% in a down market. It seems like I can do no wrong, but am avoiding walking under ladders, breaking mirrors, and trading on Friday the 13th.

I held on to every risk on position during the two-week December correction, fully expecting the pause to become the springboard for a new run to all time highs by year-end. That is exactly what happened in the wake of the Federal Reserve?s decision to taper its quantitative easing program by only $10 billion a month, mere sofa change given the size of our bond market.

That sent off to the races my long positions in the Financials Select Sector SPDR (XLF), and the S&P 500 (SPY). I also piled into new longs in Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK). To spice things up, I also bought some Gilead Sciences (GILD), seeking to cash in on the windfall profits generated by Obamacare.

Only the Internet giant Softbank (SFTBY) has been boring, persistently hanging around my costs price. I cashed in two of my three short positions in the Japanese yen (FXY), which broke to new multiyear lows. I took profits on my shorts in the Treasury bond market (TLT), which crashed, then quickly jumped back in on the short side on the next rally.
This is how the pros do it, and you can too, if you wish.

Carving out the 2013 trades alone, 77 out of 92 have made money, a success rate of 83%. It is a track record that most big hedge funds would kill for.

My esteemed colleague, Mad Day Trader Jim Parker, has also been coining it. Since April, his own performance numbers have just come back from the auditors, revealing that he is up a staggering 300%.

The coming winter promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014. The Trade Alerts should be coming hot and heavy. Please join me on the gravy train. You will never get a better chance than this to make money for your personal account.

Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars.? Upgrade to Mad Hedge Fund Trader PRO and you will also receive Jim Parker?s Mad Day Trader service.

To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.

TA Performance

John Thomas-1974-Age 22Burma 1974
Taking on All Comers

https://www.madhedgefundtrader.com/wp-content/uploads/2013/12/TA-Performance.jpg 667 492 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-09 09:05:132014-01-09 09:05:13Mad Hedge Fund Trader Closes 2013 With 67.45% Profit
Mad Hedge Fund Trader

January 8, 2014

Diary, Newsletter, Summary

Global Market Comments
January 8, 2014
Fiat Lux

Featured Trade:
(TEN TIPS FOR SURVIVING A DAY OFF WITH ME),
(TESTIMONIAL),
(US HEADED TOWARDS ENERGY INDEPENDENCE),
(USO), (UNG), (KOL), (XOM), (OXY)

United States Oil (USO)
United States Natural Gas (UNG)
Market Vectors Coal ETF (KOL)
Exxon Mobil Corporation (XOM)
Occidental Petroleum Corporation (OXY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-08 01:06:592014-01-08 01:06:59January 8, 2014
Mad Hedge Fund Trader

US Headed Towards Energy Independence

Diary, Newsletter

My inbox was clogged with responses to my ?Golden Age? for the 2020?s piece, particularly my forecast that the US was moving towards complete energy independence. This will be the most important change to the global economy for the next 20 years. So I shall go into more depth.

The energy research house, Raymond James, put out an estimate this morning that domestic American oil production (USO) would rise from 5.6 million barrels a day to 9.1 million by 2015. That means its share of total consumption will leap from 28% to 46% of our total 20 million barrels a day habit. These are game changing numbers.

Names like the Eagle Ford, Haynesville, and the Bakken Shale, once obscure references on geological maps, are now a major force in the country?s energy picture. Ten years ago North Dakota was suffering from depopulation. Now, itinerate oil workers must brave -40 degree winter temperatures in their recreational vehicles pursuing their $150,000 a year jobs.

The value of this extra 3.5 million barrels/day works out to $121 billion a year at current prices (3.5 million X 365 X $95). That will drop America?s trade deficit by nearly 25% over the next three years, and almost wipe out our current account deficit. Needless to say, this is a hugely dollar positive development.

This 3.5 million barrels will also offset much of the growth in China?s oil demand for the next three years. Fewer oil exports to the US also vastly expand the standby production capacity of Saudi Arabia.

If you want proof of the impact this will have on the economy, look no further that the coal (KOL), which has been falling in a rising market. Power plant conversion from coal to natural gas (UNG) is accelerating at a dramatic pace. That leaves China as the remaining buyer, and their economy is slowing.

It all makes the current price of oil at $95 look a little rich. As with the last oil spike three years ago, this one is occurring in the face of a supply glut. Cushing, Oklahoma is awash in Texas tea, and the Strategic Petroleum Reserve stashed away in salt domes in Texas and Louisiana is at its maximum capacity of 727 barrels. It is concerns about war with Syria and Iran, fanned by elections in both countries that took prices to $112 in the fall.

My oil industry friends tell me this fear premium has added $30-$40 to the price of crude. This is why I have been advising readers to sell short oil price spikes to $110. The current run up isn?t going to take us to the $150 high that we saw in the last cycle. It is also why I am keeping oil companies with major onshore domestic assets, like Exxon Mobile (XOM) and Occidental Petroleum (OXY), in my long term model portfolio.

WTIC 1-6-14

US Intl Trade in Goods & Services

Current-Acct Balance & its Components

KOL 1-7-14

US-Canada Border Map

https://www.madhedgefundtrader.com/wp-content/uploads/2014/01/US-Canada-Border-Map.jpg 371 492 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-08 01:03:502014-01-08 01:03:50US Headed Towards Energy Independence
Mad Hedge Fund Trader

January 7, 2014

Diary, Newsletter, Summary

Global Market Comments
January 7, 2014
Fiat Lux

2014 Annual Asset Class Review

FOR PAID SUBSCRIBERS ONLY

Featured Trades:
(SPX), (QQQ), (XLF), (XLE), (XLI), (XLY), (EEM),
(TLT), (TBT), (JNK), (PHB), (HYG), (PCY), (MUB), (HCP)
(FXE), (EUO), (FXC), (FXA), (YCS), (FXY), (CYB)
(FCX), (VALE), (MOO), (DBA), (MOS), (MON), (AGU), (POT),
(PHO), (FIW), (CORN), (WEAT), (SOYB), (JJG)
(DIG), (RIG), (USO), (DUG), (UNG), (OXY), (X)
(GLD), (DGP), (SLV), (PPTL), (PALL)
(XHB)

S&P 500 Index (SPX)
PowerShares QQQ (QQQ)
Financial Select Sector SPDR (XLF)
Energy Select Sector SPDR (XLE)
Industrial Select Sector SPDR (XLI)
Consumer Discret Select Sector SPDR (XLY)
iShares MSCI Emerging Markets (EEM)
iShares 20+ Year Treasury Bond (TLT)
ProShares UltraShort 20+ Year Treasury (TBT)
SPDR Barclays High Yield Bond (JNK)
PowerShares Fundamental High Yld Corp Bd (PHB)
iShares iBoxx $ High Yield Corporate Bd (HYG)
PowerShares Emerging Mkts Sovereign Debt (PCY)
iShares National AMT-Free Muni Bond (MUB)
HCP, Inc. (HCP)
CurrencyShares Euro Trust (FXE)
ProShares UltraShort Euro (EUO)
CurrencyShares Canadian Dollar Trust (FXC)
CurrencyShares Australian Dollar Trust (FXA)
ProShares UltraShort Yen (YCS)
CurrencyShares Japanese Yen Trust (FXY)
WisdomTree Chinese Yuan (CYB)
Freeport-McMoRan Copper & Gold Inc. (FCX)
Vale S.A. (VALE)
Market Vectors Agribusiness ETF (MOO)
PowerShares DB Agriculture (DBA)
The Mosaic Company (MOS)
Monsanto Company (MON)
Agrium Inc. (AGU)
Potash Corp. of Saskatchewan, Inc. (POT)
PowerShares Water Resources (PHO)
First Trust ISE Water Idx (FIW)
Teucrium Corn (CORN)
Teucrium Wheat (WEAT)
Teucrium Soybean (SOYB)
iPath DJ-UBS Grains TR Sub-Idx ETN (JJG)
ProShares Ultra Oil & Gas (DIG)
Transocean Ltd. (RIG)
United States Oil (USO)
ProShares UltraShort Oil & Gas (DUG)
United States Natural Gas (UNG)
Occidental Petroleum Corporation (OXY)
United States Steel Corp. (X)
SPDR Gold Shares (GLD)
PowerShares DB Gold Double Long ETN (DGP)
iShares Silver Trust (SLV)
Premium Energy Corp. (PPTL)
ETFS Physical Palladium Shares (PALL)
SPDR S&P Homebuilders ETF (XHB)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-07 01:03:092014-01-07 01:03:09January 7, 2014
Mad Hedge Fund Trader

January 6, 2014

Diary, Newsletter, Summary

Global Market Comments
January 6, 2014
Fiat Lux

Featured Trades:
MY 20 RULES FOR TRADING

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-06 01:04:212014-01-06 01:04:21January 6, 2014
Mad Hedge Fund Trader

My 20 Rules for Trading

Diary, Newsletter

Nothing like starting the New Year with going back to basics and reviewing the rules that worked so well for us in 2013. Call this the refresher course for Trading 101.

I usually try to catch three or four trend changes a year, which might generate 50-100 trades, and often come in frenzied bursts.

Since I am one of the greatest tightwads that every walked the planet, I only like to buy positions when we are at the height of despair and despondency, and traders are raining off the Golden Gate Bridge. Similarly, I only like to sell when the markets are tripping on steroids and ecstasy, and are convinced that they can live forever.

 

 

Some 99% of the time, the markets are in the middle, and there is nothing to do but deep research, looking for the next trade. That is the purpose of this letter. Over the four decades that I have been trading, I have learned a number of tried and true rules which have saved my bacon countless times. I will share them with you.

1) Don?t over trade. This is the number one reason why individual investors lose money. Look at your trades of the past year and apply the 90/10 rule. Dump the least profitable 90% and watch your performance skyrocket. Then aim for that 10%. Over trading is a great early retirement plan for your broker, not you.

2) Always use stops. Risk control is the measure of the good hedge fund trader. If you lose all your capital on the lemons, you can?t play when the great trades set up. Consider cash as having an option value.

3) Don?t forget to sell. Date, don?t marry you positions. Remember, hogs get fed and pigs get slaughtered. My late mentor, Barton Biggs, told me to always leave the last 10% of a move for the next guy.

4) You don?t have to be a genius to play this game. If that was required, Wall Street would have run out of players a long time ago. If you employ risk control and stops, then you can be wrong 40% of the time, and still make a living. That?s little better than a coin toss. It you are wrong only 30% of the time, you can make millions. If you are wrong a scant 20% of the time, you are heading a trading desk at Goldman Sachs. If you are wrong a scant 10% of the time, you are running a $20 billion hedge fund that the public only hears about when you pay $100 million for a pickled shark at a modern art auction. If someone says they are never wrong, as is often claimed on the Internet, run a mile, because it is impossible. By the way, I was wrong 15% of the time in 2013. That?s what you?re paying for.

5) This is hard work. Trading attracts a lot of wide eyed, na?ve, but lazy people because it appears so easy from the outside. You buy a stock, watch it go up, and make money. How hard is that? The reality is that successful investing requires twice as much work as a normal job. The more research you put into a trade, the more comfortable you will become, and the more profitable it will be. That?s what this letter is for.

6) Don?t chase the market. If you do, it will turn back and bite you. Wait for it to come to you. If you miss the train, there will be another one along in minutes, hours, days, weeks, or months. Patience is a virtue.

7) When I put on a position, I calculate how much I am willing to lose to keep it. I then put a stop just below there. If I get triggered, I just walk away. Emotion never enters the equation. Only enter a trade when the risk/reward is in your favor. You can start at 3:1. That means only risk a dollar to potentially make three.

8) Don?t confuse a bull market with brilliance. I am not smart, just old as dirt.

9) Tape this quote from the great economist and early hedge fund trader of the 1930?s, John Maynard Keynes, to you computer monitor: "Markets can remain illogical longer than you can remain solvent." Hang around long enough, and you will see this proven time and again (ten year Treasuries at 1.38%?!).

10) Don?t believe the media. I know, I used to be one of them. Look for the hard data, the numbers, and you?ll see that often the talking heads, the paid industry apologists, and politicians don?t know what they are talking about (the Gulf oil spill will create a dead zone for decades?). Average out all the public commentary, and half are bullish and half bearish at any given time. The problem is that they never tell you which one is right (that is my job). When they all go one way, the markets usually go the opposite direction.

 

 

11) When you are running a long/short portfolio, 80% of your time is spent managing the shorts. If you don?t want to do the work, then cash beats a short any day of the week.

12) Sometimes the conventional wisdom is right.

13) Invest like a fundamentalist, execute like a technical analyst.

14) Use technical analysis only, and you will buy every rally, sell every dip, and end up broke. That said, learn what an ?outside reversal? is, and who the hell that Italian guy, Leonardo Fibonacci is.

15) The simpler a market approach, the better it works. Everyone talks about ?buy low and sell high?, but few actually do it. All black boxes eventually blow up, if they were ever there in the first place.

16) Markets are made up of people. Understand and anticipate how they think, and you will know what the markets are going to do.

17) Understand what information is in the market and what isn?t and you will make more money.

18) Do the hard trade, the one that everyone tells you that you are ?Mad? to do. If you add a position and then throw up on your shoes afterwards, then you know you?ve done the right thing. This is why people started calling me ?Mad? 40 years ago. (What! Obamacare is going to work?)

19) If you are trying to get out of a hole, the first thing to do is quit digging and throw away the shovel. Sell everything. A blank position sheet can be invigorating.

20) Making money in the market is an unnatural act, and fights against the tide of evolution. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue to do so. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training. I am in the latter group.

 

Great Hunter, Lousy Trader

https://www.madhedgefundtrader.com/wp-content/uploads/2013/12/Caveman.jpg 258 275 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2014-01-06 01:03:282014-01-06 01:03:28My 20 Rules for Trading
Mad Hedge Fund Trader

January 3, 2014

Diary, Newsletter, Summary

Global Market Comments
January 3, 2014
Fiat Lux

Featured Trade:
(REPORT FROM THE MATTERHORN SUMMIT)

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Mad Hedge Fund Trader

Report from the Matterhorn Summit

Diary, Newsletter

From where I stand, the rolling foothills of Northern Italy spread out below me to the south. On my left lie the distinctive peaks of the Dolomite Alps. On my right I can see the massive expanse of Mont Blanc, at 15,781 feet the highest mountain in Europe. I am standing at the summit of the Matterhorn. Knock another item off the bucket list.

I have been trying to climb this mountain for 45 years. During my early attempts I possessed the physical conditioning, but not the money to acquire the necessary equipment needed to get to the top. An ice axe, crampons, helmet, and ropes don?t come cheap to a 16 year old. In later years, vile weather frustrated my every attempt. Now the forecast was perfect, and the sun, the moon, and the stars aligned.

The Matterhorn has long been the premier climbing challenge on the continent. My doctor in Zermatt heads up many rescues and tells me that a dozen people a year die trying. The year 1999 was especially bad, claiming 39 lives. Still, if death isn?t on the table, it?s not worth doing.

I spent a restless night sleeping under a heavy wool blanket in a shared bunk with a dozen other climbers at the 10,695 foot Hornli Hut. Get a group of guys like this together, and there is always one who snores.

At 3:00 AM we bolted out of bed to eat a hardy breakfast of eggs, cold cuts, and lots of strong coffee before launching an assault on the mountain. We then quietly filled canteens and donned climbing harnesses and backpacks. The night sky was crystal clear, an ocean of stars shimmering upon us, with the occasional shooting star giving its blessing.

I had spent the past week acclimatizing myself to the high altitude, completing practice climbs to the top of increasingly difficult surrounding peaks. I was joined by my Swiss guide, Christian, of the Zermatt Alpine Center. In his mid forties, chocolate tanned, with thighs like tree stumps, he had already climbed the Matterhorn an impressive 77 times.

We took off at a rapid pace, passing most of the early starters. Zermatt guides are notorious for speed climbing, the theory being that the quicker they wore out their clients, the sooner they could go home. I realized there was something far more responsible going on. Christian had to gain the confidence that I had enough energy reserves left for the descent, when 90% of all fatalities occur. At 11,800 feet he said ?Good,? and we roped up.

It was about this time that I started to wonder if I should really be here. Most of the climbers we were passing were in their twenties and a few in their thirties, young enough to be my grandchildren. After all, I?m the silver haired gentleman people give their seat up to when riding the San Francisco BART. At 12,200 feet Christian ordered, ?Now we put on our crampons.?

From there on we silently pushed our way upward in the darkness, headlamps illuminating the way, methodically positioning our feet to make the leap to the next boulder above. The mountain has been climbed for 148 years, and many of the surfaces have been polished smooth by boots to the point of becoming dangerously slippery. Much of the slope is frustratingly unstable. Half the rocks you reach for are loose. Stones sent flying by climbers above are a major risk, which is why we wear helmets.

By 5:00 AM we were at 12,700 feet and the sun started to rise. I took out my camera to take a picture, but fumbling with my climbing gloves, I dropped it. It smashed into a dozen pieces and then skittered down into the great Matterhorn crevasse below.

I still had my iPhone 5s to take pictures. But its touch screen required me to take my glove off. With the temperature at 10 degrees below freezing, photos were not worth risking fingers to frostbite. So you?ll just have to read about it.

During the first half of the 19th century, the Matterhorn was the Holy Grail among climbers, and was considered impossible to conquer. Englishman, Edward Whymper, finally led a seven-man team to the top in 1865. He pioneered the same Hornli Ridge route that I was ascending today. But on the way down a rope broke and four perished. One body was never found. Today, you can see the rope in a Zermatt museum, a crude manila affair, along with the clothes from another dead climber found months later.

Some 5,000 now attempt the climb every year, and about 500 make it to the summit. Ulrich Inderbinen made the top over 370 times, and last climbed it when he was 90. I was able to shake his hand at a picture signing in Zermatt a couple of years before he died from old age at 103 (click here for his obituary).

At 13,000 feet we approached the Mosley Slab, so named for an American who fell to his death here in 1879. Beyond beckoned the Solvay Hut, a tiny, precariously sited refuge from weather that suddenly turns bad. Taking a break I found, amazingly, that I still had cell phone reception. Should I send out a Trade Alert from 13,133 feet?

That was where I encountered my first zombie, a climber who grievously underestimated the mountain and had used up every ounce of energy to get this far. His guide was coaxing, shouting, and cajoling him to climb down one rock at a time.

Looking at his dead eyes, you know it was going to be a tough and dangerous descent. I later heard that the poor fellow, Japanese, fell and broke his leg and had to be helicoptered off. There were many more zombies to come.

Above Solvay, we encountered the ?fixed ropes,? which are actually steel cables bolted to the face to help traverse the steepest and most dangerous passages. Lose your grip here, and its 3,000 feet straight down.

This is where we ran into the traffic jam, with simultaneous ascending and descending climbers competing for the same handholds. One dummy actually abseiled down on top of me, nearly knocking me off of my grip. Here, falling climbers are a major danger.

At 300 feet below the summit I passed Sophie?s Ridge, so named for a young Italian woman who was turned back in the 1880?s because high winds were blowing up her Victorian ankle length dress. Now, altitude sickness was taking its toll, with many puking climbers turning back, the disappointment showing on their faces. Luckily, I felt fine.

Not far from there was the location of the original 1865 accident. We approached the small bronze statue of Saint Bernard, the patron saint of mountain climbers. Bolted to the side of the peak, it was covered with ropes, as many teams tie on to it to rappel down.

Then we were on top. The weather was glorious. The summit was graced with a wrought iron cross that one finds atop many Alpine peaks. There was an impatient line of climbers waiting their turn to tag the summit, take some quick pictures, and then start their way down. The feeling of accomplishment was immense.

We carefully picked our way down, rappelling down the steepest faces. By now the sun was well up, the ice was melting, freeing up infinitely more loose rubble. One boulder the size of a small car crashed down 50 feet away, making a thunderous roar. ?Yikes,? I thought, ?we better get out of here.?

At 13,000 feet, we encountered a team with one climber absolutely paralyzed with fear and refusing to budge. After some discussion, I agreed to let her rope up with us and escort her down to the Hornli hut. The other guide was Christian?s friend, and that would enable him to continue upward with his other clients. Our expedition turned into a mountain rescue.

Once Christian tied her in I had second thoughts about being so charitable. If she fell, she could take me with here. Christian then convinced me he could hold both of us with a belay. We then encouraged her down the mountain one step at a time. I went through my entire repertoire of German jokes, which is rather short.

I learned that she sold toilets on behalf of a Swiss plumbing company for a living, and that until today, had never dome anything more serious than a day hike out of Lausanne. All of her equipment was brand new. Part of the problem was that she had failed to don her crampons, which we found in her backpack, untouched in its original packaging.

Back at the Hornli Hut I was dog tired. Our impromptu guest suddenly fell to the ground and burst into tears. She then bought us both a celebratory liter of beer. I was dying of thirst, as I had done the entire climb on just two quarts of water to save weight.

It had been the hardest day of my life, and after 15 minutes at the table I couldn?t move. The $1,200 investment in Christian had been well spent. He departed for Zermatt to pick up his next client. I elected to spend a second night at Hornli and complete the 3,000 foot hike down to Schwarzee the next day. From there I was taking the gondola down. Nothing left to prove here. The second time, I slept like a rock.

It is traditional for successful climbers to pick up a stone at the summit and deposit it on a giant cairn at the beginning of the trail at 7,000 feet. Some of these weigh over 50 pounds, a macho display of strength and endurance. When I made my contribution, a small pebble the size of a quarter, I made sure no one was looking.

I now have an empty place on my bucket list. What will replace it? I hear that Africa?s 19,341 foot Mount Kilamanjaro is pretty easy.

Life is good.

The MatterhornClimbing One Step at a Time

The Matterhorn 2Only 4,000 Feet to Go

John Thomas-MatterhornHalf Way, and All is Good

Climbers-MatterhornThe Traffic Jam

Matterhorn SummitThe Summit

Matterhorn-RescueA Mountain Rescue

John ThomasTake That Item off the Bucket List

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