Gosh darn it, you nailed it again!
Trump stopped firing Powell. Banks are on fire. Netflix hit a new high.
Score John Thomas 100, everyone else zero.
Well done, John AND let's keep it going.
You're the Savant of the time at the moment.
Talk to you soon, bye.
Bill
Florida
What if you want to be a little more aggressive with your investment strategy, say twice as aggressive? What if markets don’t deliver any year-on-year change from here?
Then you need a little more pizzazz in your portfolio, and some extra leverage to earn your crust of bread and secure your retirement.
It turns out that I have just the solution for you. This would be my “Passive/Aggressive Portfolio”.
I call it passive in that you just purchase these positions and leave them alone, and do not trade them. I call it aggressive as it involves a basket of 2x leveraged ETFs issued by ProShares, based in Bethesda, MD (click here for their link).
The volatility of this portfolio will be higher. But the returns will be double what you would get with an index fund, and possibly much more. It is a “Do not open until 2035” kind of investment strategy.
Here is the makeup of the portfolio:
(ROM) –- ProShares Ultra Technology Fund - The three largest single stock holdings are Apple (AAPL), Microsoft (MSFT), and Facebook (FB). It is up 13.7% so far this year. For more details on the fund, please click here.
(UYG) – ProShares Ultra Financials Fund - The three largest single stock holdings are Wells Fargo (WFC), Berkshire Hathaway (BRK.B), and JP Morgan Chase (JPM). It is up 6.2% so far this year. For more details on the fund, please click here.
(UCC) – ProShares Ultra Consumer Services Fund - The three largest single stock holdings are Amazon (AMZN), (Walt Disney), (DIS), and Home Depot (HD). It is up 18.3% so far this year. For more details on the fund, please click here.
(DIG) -- ProShares Ultra Oil & Gas Fund - The three largest single stock holdings are ExxonMobile (XOM), Chevron (CVX), and Schlumberger (SLB). It is DOWN 38.2% so far this year. For more details on the fund, please click here.
(BIB) – ProShares Ultra NASDAQ Biotechnology Fund – The three largest single stock holdings are Amgen (AMGN), Regeneron (REGN), and Gilead Sciences (GILD). It is up 15% so far this year, but at one point (before the “Sell in May and Go away” I widely advertised) it was up a positively stratospheric 64%. For more details on the fund, please click here.
You can play around with the sector mix at your own discretion. Just focus on the fastest-growing sectors of the US economy, which the Mad Hedge Fund Trader does on a daily basis.
It is tempting to add more leveraged ETFs for sectors like gold (UGL) to act as an additional hedge.
There is also the 2X short Treasury bond fund (TBT), which I have been trading in and out of for years, a bet that long-term bonds will go down, and interest rates rise.
There are a couple of provisos to mention here.
This is absolutely NOT a portfolio you want to own going into a recession. So, you will need to exercise some kind of market timing, however occasional.
The good news is that I make more money in bear markets than I do in bull markets because the volatility is so high. However, to benefit from this skill set, you have to keep reading the Diary of a Mad Hedge Fund Trader.
There is also a problem with leveraged ETFs in that management and other fees can be high, dealing spreads wide, and tracking errors can be huge.
This is why I am limiting the portfolio to 2X ETFs and avoiding their much more costly and inefficient 3X cousins, which are really only good for intraday trading. The 3X ETFs are really just a broker enrichment vehicle.
There are also going to be certain days when you might want to just go out and watch a long movie, like Gone with the Wind, with an all-ETF portfolio, rather than monitor their performance, no matter how temporary it may be.
A good example was the May 6, 2010, flash crash, when the complete absence of liquidity drove all of these funds to huge discounts to their asset values.
Check out the long-term charts, and you can see the damage that was wrought by high-frequency traders on that cataclysmic day, down -53% in the case of the (ROM). Notice that all of these discounts disappeared within hours. It was really just a function of the pricing mechanism being broken.
I have found the portfolio above quite useful when close friends and family members ask me for stock tips for their retirement funds.
It was perfect for my daughter, who won’t be tapping her teacher’s pension accounts for another 30 years, when I will be long gone. She mentions her blockbuster returns every time I see her, and she has only been in them for 10 years.
Imagine what technology, financial services, consumer discretionaries, biotechnology, and oil and gas will be worth then? It boggles the mind. My guess is up 100-fold from today’s levels.
You won’t want to put all of your money into a single portfolio like this. But it might be worth carving out 10% of your capital and just leaving it there.
That will certainly be a recommendation for financial advisors besieged with clients complaining about paying high fees.
Adding some spice and a little leverage to their portfolios might be just the ticket for them.
The Istanbul Spice Market
It’s Time to Spice Up Your Portfolio
"The question is not whether Tesla will sell 80,000 or 90,000 cars this year, but whether they will sell 14 million or 15 million in 15 years. I believe they can do it," said Ron Baron of long-term value player, Baron Capital.
Global Market Comments
April 23, 2025
Fiat Lux
Featured Trade:
(WHERE’S THIS MARKET BOTTOM?),
(SPX), (INDU), (TLT),
(THE ONE SAFE PLACE IN REAL ESTATE)
After Monday’s 1,200-point swoon, the S&P 500 (SPY) has fallen 20.88% from its February peak. And we may still have a “Sell in May” ahead of us.
This was one of the most overbought stock markets in my career. I have to think back to the March 2000 Dotcom Top and the Tokyo bubble in 1989 to recall similar levels of ebullience. It seems that everyone in the world is now dumping US bonds and dollars as well.
With a price/earnings multiple of 20, we are still near the top of a long-time historic range of 9-22. High US interest rates make that level appear even more expensive. The “Buy the Dip” crowd has become an extinct species.
So, how much lower do we have to go? I just completed a conference call with some major hedge fund traders, and thought I‘d throw out my numbers and the logic behind them. The following is an itinerary of what your summer trading might look like, expressed in (SPX) terms:
-20.88% - 4,850 – The April 9 low before a tweet triggered a monster 500-point rally. The market is begging for a retest of this level.
-29.52% - 4,320 is an earnings multiple of 18X times unchanged earnings for the (SPX) of $240 a share.
-37.35% - 3,840 is an earnings multiple of 16X times an unchanged earnings for the (SPX) of $240 a share.
-39.96% - 3,680 is an earnings multiple of 16X times a lower earnings for the (SPX) of $230 a share.
-42.57% - 3,520 is an earnings multiple of 13X times an unchanged earnings for the (SPX) of a recessionary $220 a share.
-45.18% - 3,360 is an earnings multiple of 16X times an unchanged earnings for the (SPX) of $210 a share, which assumes the trade war with China extends into 2026.
Big swings in the market also often start and finish around an options expiration, which takes place on the third Friday of each month.
To confuse you even further, contemplate the concept that I refer to as the “Lead Contract.” There is always a lead contract around, one on which all traders maintain a laser-like focus, which leads every other financial product out there. It says “Jump,” and we ask “How High?” It is also always changing.
Right now, the bond market futures are the lead contract. When bonds rise and interest rates fall, it is a positive for equities. When bonds fall and rates rise, the “Sell America” trade is back on, leading to the dumping of all US assets. If you want to get a preview of each day’s US trading, stay up the night before and watch the action in the US bond futures in Singapore, as I often do.
Looking for More Market Insights
I feel obliged to reveal one corner of this time of great turmoil that might actually make sense.
By 2050, the population of California will soar from 40 million to 50 million, and that of the US from 340 million to 400 million, according to data released by the US Census Bureau and the CIA Factbook (check out the population pyramid below).
That means enormous demand for the low end of the housing market–apartments in multi-family dwellings. They will be joined by generational demand for limited rental housing by 65 million Gen Xer’s and 85 million Millennials enduring a lower standard of living than their parents and grandparents.
These people aren’t going to be living in cardboard boxes under freeway overpasses. The trend towards apartments also fits neatly with the downsizing needs of 80 million retiring Baby Boomers. So you have three different generations converging on a single sector of the real estate market. Prices here will hold up, and may even rise.
Rents are now rising at more than 5% a year in some of the more popular markets, and vacancies are dropping like a stone. Good luck finding an apartment in Silicon Valley. Fannie and Freddie financing is still abundantly available.
Institutions combing the landscape for low volatility cash flows and limited risk are now accounting for up to 30% of the low-end market. In some markets, it is now cheaper to buy than to rent, a 50-year reversal, if you can get the credit.
More a Rectangle Than a Pyramid
“Real Estate is the new gold. It is the gold of 2025,” said Jeffrey Gundlach of Doubleline Capital
Global Market Comments
April 22, 2025
Fiat Lux
Featured Trade:
(THE GOVERNMENT’S WAR ON MONEY)
(TESTIMONIAL)
When I lived as a student in West Berlin during the 1960s, I had a nice little side business.
I organized weekend walking tours through the Berlin Wall at Checkpoint Charlie to visit East Berlin for American students too afraid to go alone.
To pay for it, I smuggled in my boots Ostmarks, the currency of East Germany, which I could buy at a 75% discount to the official price in West Berlin. I then covered lunch and all my other bills very cheaply, booking a nice profit on the day.
That would be much more difficult to pull off today, as governments around the world have launched a war on cash that will not end until its ultimate demise.
The truth is, governments hate cash.
This became clearly apparent when the government of India withdrew circulation of its two largest banknotes last year. Some 50% of Indian GDP is thought to take place in the underground economy, in cash only.
The move caused a financial panic as consumers sold gold (GLD) and other hard assets to meet bills because they were unable to settle accounts with the large denomination notes they had hoarded.
As we move towards an all-electronic economy, the few remaining purposes where cash is essential are largely illegal.
Waitresses, babysitters, and bookies don’t report income to the IRS. Nor do drug dealers.
This is a big deal because eight states legalized marijuana in the last election.
Since banks are still banned from handling pot proceeds, this booming business has to take place entirely in cash. Tales about dealers making their runs with gym bags full of $100 bills are rampant.
The IRS estimates that $460 billion in tax revenue is lost every year through unreported income, which is largely earned in cash.
Some half of the entire US paper money supply is held by foreigners, where it is used to evade taxes, bribe foreign officials, and finance terrorism.
The US government’s war on cash is not a new thing. In 1929, it cut the size of US banknotes by one-third to save money on the cost of high-grade paper.
In 1970, the US Treasury banned the circulation of the $10,000, $5,000, $1,000, and $500 bills to halt mafia money laundering. Since then, the IRS has been the biggest beneficiary of the move.
Large denominations of US bills are now solely the domain of collectors.
The US government would love to get out of the cash business entirely, as it is so expensive to run. It spends about $737.4 million a year just to print American $1, $2, $5, $10, $20, $50, and $100 notes.
Paper dollar bills, which are actually made of 75% cotton and 25% linen, are completely worn out and have to be returned in only 18 months.
Coins are even a bigger loser. It costs more than two cents to make a penny.
Since the advent of color printers, counterfeiting has exploded. North Korea runs almost its entire economy on fake $100 bills, which are said to be the best in the world. Only a handful of specialists at the US Treasury can identify them under a high-powered microscope.
Today, some 80% of the entire $1.34 trillion M1 notes and coins in circulation in America are in the form of $100 dollar bills. That works out to $4,200 per person. Where has all that money gone?
The US is now considering eliminating even this convenient denomination. While $1 million in $100s can fit into a tote bag, that quantity of $10 bills would weigh 220 pounds, a quantity much more difficult to sneak around.
An all-electronic economy would certainly pose some privacy problems, as it would leave a massive paper trail on everything you do.
When you get audited by the IRS, the first thing they do is obtain your past three years of bank and credit card records detailing your every transaction. If the inspection goes criminal, they go back six years.
State authorities will pursue phone records to establish your physical presence to verify residency. So, how long did you really spend in tax-free Florida last year?
It would also pare back illegal immigration, as this is another industry that runs entirely on cash. Once here, undocumented workers are often paid in cash in restaurants and on construction sites.
There is truly no place to hide.
Other countries are already well ahead in the war of cash. In Belgium, some 93% of all financial transactions take place electronically.
Sweden has also been pushing hard on this front, taking the M1 money supply there down by 27% over the past two years.
Many small businesses there now post signs saying they don’t accept cash. The goal is to move to an all-electronic economy.
The preferences of Millennials are also moving us towards a cashless economy.
Have you ever been in line at Starbucks and noticed that the kid in front of you just paid $5 for a cup of coffee with his credit card? Or maybe he swiped his Apple Pay account on his iPhone? The last time I handed them a ten-dollar bill, they said, “Oh, dinosaur money.”
Whatever that means, it is clear that hard cash is about to become extinct, just like the Brontosaurus and the Tyrannosaurus Rex.
The confidence you have given me to enter the USD:JPY spot positions have returned me in excess of $1,500,000 in the last few weeks.
I'll be in California next year.
Can't wait to catch up. Dinner is on me, both times!
I know you said you aren’t retiring until you’re well into your seventies. Why so soon?
You're welcome to use this as a testimonial.
Cheers
Peter,
Australia
