Global Market Comments
October 10, 2022
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or EATING YOUR SEED CORN),
(SPY), (TLT), (PANW), BRKB), (JPM), (MS), (V),
(USO), (MU), (RIVN), (TWTR), (TSLA)
Tag Archive for: (JPM)
You know that 10% downside risk I talked about? In other words, you may have to eat a handful of your seed corn.
We may have to eat into some of that 10% this week. With the September Consumer Price Index out on Thursday, and the big bank earnings are out Friday, there is more than a little concern about the coming trading week.
That’s why all my remaining positions are structured to handle a 10% correction or more and still expire at their maximum profit point in nine trading days.
Even in the worst-case Armageddon scenario, which we are unlikely to get, the S&P 500 is likely to fall below 3,000, or 627.90 points or 17.25% from here.
That’s what you pay me for and that’s what you are getting.
I shot out of the gate with an impressive +3.25% gain so far in October. My 2022 year-to-date performance ballooned to +72.93%, a new high. The Dow Average is down -19.3% so far in 2022 or a gob-smacking -7,000 points. It is the greatest outperformance on an index since Mad Hedge Fund Trader started 14 years ago. My trailing one-year return maintains a sky-high +81.35%.
That brings my 14-year total return to +585.49%, some 3.03 times the S&P 500 (SPX) over the same period and a new all-time high. My average annualized return has ratcheted up to +45.62%, easily the highest in the industry.
It is the greatest outperformance on an index since Mad Hedge Fund Trader started 14 years ago.
I used last week’s extreme volatility to rearrange positions, adding longs in Morgan Stanley (MS), JP Morgan (JPM), and Visa (V). That takes me to 80% long, 20% short, and 0% cash. I wisely rolled down the strikes on my Tesla position from $230-$240 to $200-$210. I covered one short in the S&P 500 (SPY). All of my options positions expire in only nine trading days.
I know that you’re probably getting boatloads of advice the sell all your stocks now, sell your house, and head for those generous 5% short term interest rates, and 8% in junk. Even I went 100% cash….in December last year. The problem is that these other gurus are giving you advice that is only a year late with perfect 20/20 hindsight.
To bail now, you risk giving up on the 100% gains in years to come. If I’m wrong, you lose 10%, if I’m right, you get a double or more. Sounds like a pretty good bet to me.
People always want to know how I pick market bottoms, something I have been doing since the Dow Average was at a miniscule $753.
The lower the market is, the less aggressive the Fed is going to be
Every single input into the Consumer Price Index is now turning down sharply, especially rents and housing costs, meaning we can expect a blockbuster decline when the next report comes out on October 13
We now have two outsiders doing the Fed’s job for it, the British economy, which is clearly collapsing, and a strong US dollar that is rapidly shrinking the foreign revenues of our multinationals, like big tech.
Capitulation indicators, occasionally spotted here and there, are now coming in volleys, the Volatility Index at $35, the (VIX) curve inversion, the RSI below 30, the ten-year US Treasury yield hit 4.0% and then instantly backed off, the British pound plunged to $1.03, and we saw absolutely massive retail selling in September.
The froth is now out of all tech stocks.
All of this brings forward the last Fed hike in interest rates and the next bull market in stocks. If the last Fed rate hike is two months away on December 14, then the reasons to sell stocks are disappearing like the last sands in an hourglass.
In my mere half century in the market, every time the CPI starts to fall, stock market “V” bottoms and begins classic “rip your face off’ rallies as the shorts panic to cover. It happened in 1970, 1974, 1980, 1990, and 2009. It will happen again in 2022. The market will smell that inflation is done, the Fed is done, and volatility becomes a distant memory.
And I hate to be so obvious, but if you sell in May, what do you do in October? You buy with both hands. Just do it on the right day. That could get you a 10% to 20% move by yearend. The S&P 500 earnings multiple has collapsed by eight points in nine months and that is too far, too fast.
How do midterm years perform? October is the best month of the year followed by November. Of the entire 16-month presidential election cycle, the coming first quarter of 2023 is the best of the entire lot.
Nonfarm Payroll Falls Short at 263.000 in September. The headline unemployment rate matched a 2022 low at 3.5%. The long-term unemployment rate, the U-6 also matched this year’s low at 6.7%. The report keeps the Fed on its current interest raising schedule. Stocks, bonds, and gold sold off 500-points.
JOLTS Drops Sharply, from an expected 11.0 million to only 10.05 million. This is the job openings report from the Department of Labor. It’s one of the sharpest declines in history. The jobs market is finally starting to deteriorate, which is just what the Fed wanted. Factory Orders for August were unchanged.
OPEC+ Cuts Quotas by 2 million, and production by 1 million, in one of the largest reductions in history. It’s an effort to maintain oil prices at current prices in the face of falling demand from a global recession. The Arabs are not your friends. It’s also a slap in the face of the anti-oil posture, pro-climate posture of the Biden administration, which responded with a further release of 10 million barrels from the Strategic Petroleum Reserve. Energy stocks soar across the board. Don’t get caught standing when the music stops playing. Avoid (USO).
Why Did Russia Blow Up Their Own Pipeline? International analysts are puzzled by Putin’s latest hostile move. Is this a prelude to limited nuclear war in Ukraine? My view is that Putin expects to be deposed soon and wants to make it difficult for the next government to resume relations with Europe. Others argue that the true motivation is to enable Nordstream to file a $10 billion insurance claim. Good luck collecting on that one.
Advanced Micro Devices Bombs on weak PC sales and supply chain problems, taking the stock down 5% aftermarket. Profit margins were cut. The news could take the stock down to new lows, which didn’t really participate in this week’s monster rally. The rest of the tech sector sold off in sympathy.
Tesla Breaks Production Records in Q3, manufacturing 365,000 EVs and delivering 365,000, a record high. Sales prices have risen three times this year, while commodity costs have fallen dramatically, widening profit margins. This is the most volatile stock in the market, with one 52% correction so far this year, and another 23% correction in recent weeks. It’s the reason we just saw a “buy the rumor, sell the news” type correction that took us to the bottom of a three-month range.
Another factor is that now that big tech is rallying again, people are rotating out of Tesla, which held up well in Q3. Below here, long term Tesla bulls like my friend Ron Baron, Cathie Wood, and I start adding to big positions. With OPEC+ threatening a million barrel a day production cut, taking crude up 6%, oil alternative Tesla should be rising.
Elon Musk Pays Full Price for Twitter at $54.20 a share, completely caving on pending litigation. Wall Street consensus is that the company is worth $15 a share. It may be years before we learn what’s really going on here, leaving many scratching their heads, including me. Tesla (TSLA) plunged $15 on the news, killing off a nascent rally. The distraction of management time will be huge. Avoid (TWTR).
Rivian Raises 2025 Production Goal, from 20,000 to 25,000, after a better-than-expected 7,363 third quarter. Mass production is reaching the sweet spot for the next Tesla. The company is planning a $5 billion investment in non-union Georgia. Buy (RIVN) on dips, sell short puts and buy LEAPS.
Micron Technology to Invest $100 Billion in New York Plant. It’s all part of a retreat from China and paring war risk in Taiwan. Massive government subsidies from the Chips Act helped. Biden also expanded restrictions on the export of key semiconductor manufacturing equipment, America’s crown jewels. It means more expensive buy safer supplied chips for US industry. Buy (MU) on dips.
Hurricane Ian to Cost Insurers $63 Billion, and deaths, and the federal government may be on the hook for more. The storm double-dipped, cutting a wide swath across Florida and the Carolinas. Some 95% of the costs are carried by foreign insurers through the reinsurance market. There are too many billionaire mansions on the beach which are fully insured. This paves the way for major rate increases by insurance companies, which is why Warren Buffet loves the insurance business. Many thanks to the many foreign Mad Hedge subscribers who expressed sympathy over the storm losses.
My Ten-Year View
When we come out the other side of pandemic and the recession, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With oil in a sharp downtrend and technology hyper-accelerating, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The America coming out the other side will be far more efficient and profitable than the old. Dow 240,000 here we come!
On Monday, October 10, no data of note is released.
On Tuesday, October 11 at 7:00 AM, the 6:00 AM, the NFIB Business Optimism Index for September is released.
On Wednesday, October 12 at 8:30 AM, Producer Price Index for September is published. At 11:00 AM, the FOMC minutes from the last Fed meeting is released.
On Thursday, October 13 at 8:30 AM, Weekly Jobless Claims are announced. We also get the blockbuster Consumer Price Index.
On Friday, October 14 at 8.30 AM, US Retail Sales for September is disclosed. At 2:00 the Baker Hughes Oil Rig Count is out.
As for me, with the 35th anniversary of the October 19, 1987 crash coming up, when shares dove 22.6% in one day, I thought I’d part with a few memories.
I was in Paris visiting Morgan Stanley’s top banking clients, who then were making a major splash in Japanese equity warrants, my particular area of expertise.
When we walked into our last appointment, I casually asked how the market was doing (Paris is six hours ahead of New York). We were told the Dow Average was down a record 300 points.
Stunned, I immediately asked for a private conference room so I could call the equity trading desk in New York to buy some stock.
A woman answered the phone, and when I said I wanted to buy, she burst into tears and threw the handset down on the floor. Redialing found all Transatlantic lines jammed.
I never bought my stock, nor found out who picked up the phone. I grabbed a taxi to Charles de Gaulle airport and flew my twin Cessna as fast as the turbocharged engines could take me back to London, breaking every known air traffic control rule.
By the time I got back, the Dow had closed down a staggering 512 points, taking the Dow average down to $1,738.74. Then I learned that George Soros asked us to bid on a $250 million blind portfolio of US stocks after the close. He said he had also solicited bids from Goldman Sachs, Merrill Lynch, JP Morgan, and Solomon Brothers, and would call us back if we won.
We bid 10% below the final closing prices for the lot. Ten minutes later he called us back and told us we won the auction. How much did the others bid? He told us that we were the only ones who bid at all!
Then you heard that great sucking sound. Oops!
What has never been disclosed to the public is that after the close, Morgan Stanley received a margin call from the exchange for $100 million, as volatility had gone through the roof, as did every firm on Wall Street.
We ordered JP Morgan to send the money from our account immediately. Then they lost it! After some harsh words at the top, it was found. That’s when I discovered the wonderful world of Fed wire numbers.
The next morning, the Dow continued its plunge, but after an hour managed a U-turn, and launched on a monster rally that lasted for the rest of the year. We made $75 million on that one trade from Soros.
It was the worst investment decision I have seen in the markets in 53 years, executed by its most brilliant player. Go figure. Maybe it was George’s risk control discipline kicking in?
At the end of the month, we then took a $75 million hit on our share of the British Petroleum privatization, because Prime Minister Margaret Thatcher refused to postpone the issue, believing that the banks had already made too much money.
That gave Morgan Stanley’s equity division a break-even P&L for the month of October 1987, the worst in market history. Even now, I refuse to gas up at a BP station on the very rare occasions I am driving an internal combustion engine.
Good Luck and Good Trading,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
September 23, 2022
Fiat Lux
Featured Trade:
(SEPTEMBER 21 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (INTC), (NVDA), (AMD), (MU) (TBT), (TLT), (AMGN),
(VIX), (CHPT), (TSLA), (GS), (BAC), (MS), (JPM), (USO), (TLT)
Below please find subscribers’ Q&A for the September 21 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley in California.
Q: What would cause you to look for a lower bottom than $330 on the (SPY)?
A: Nuclear war with Russia would certainly do the trick—they’re now threatening to use tactical nuclear weapons in Ukraine—and higher-than-expected interest rates. If we get another 75 basis points after this one today, then I think you’re looking at new lows, but we won’t find that out until November 2. So, the market may just bounce along the bottom here for a while until it sees what the Fed is going to do, not on this rate hike but the next one after that. Other than that, a few dramatically worse earnings from corporations would also allow us to test a lower low.
Q: Is it time to nibble on Nvidia Corporation (NVDA)?
A: Nvidia is one of the most volatile stocks in the market. You don’t want to go into it until you’re absolutely sure the bottom is in. If that means you miss the first 10% of the following move up, that’s fine because when this thing moves, you get a double or triple out of it. I would wait for the indecision in the market to resolve itself before you get too aggressive on the most volatile stocks in the market. The same is true for the rest of the semiconductor sector.
Q: What does a final capitulation look like?
A: The Volatility Index (VIX) ever $40. We’ve had a high of VIX at $37 so far this year. If really get over $40, that would be a new high for the year. That would signal people that are throwing in the towel, giving up the market, selling everything—of course that is always the best time to buy.
Q: How do we get LEAPS guidance?
A: We send our LEAPS recommendations first to our concierge members—we only have a small number of those—and then after that, they go out to all subscribers to the Mad Hedge Global Trading Dispatch. Everyone gets exposure to the LEAPS. By the way, with LEAPS, you can take up to a month to execute a position. What I do is literally buy 1 contract a day, so I get a nice average over the period of a month when the market is most likely bottoming.
Q: Do you see Intel Corporation (INTC) as a good candidate for a Taiwan invasion hedge?
A: Well, first of all, China’s not going to invade Taiwan. I’ve been waiting for this for 70 years and it’s not going to happen. Also, Intel’s new management has yet to prove itself. You have a salesman running the company; I never like companies run by a salesman. I’d prefer to have an engineer run an engineering company. The court is still out on Intel and whether they can turn that company around or not; so, I would much rather buy the market leaders, Nvidia (NVDA), Advanced Micro Devices (AMD), and Micron Technology (MU) in the semiconductor space.
Q: You talked dollar/cost averaging before. Should we pause on averaging in?
A: No, that's why I say buy one contract a day and put it in order to buy at the bid side of the market. That way, any sudden swoosh down in the market and you’ll get filled. The spreads on these LEAPS are quite wide, so you want to try to buy as close to the middle or bottom end of the spread, and putting in single contract orders over a month, of course, will do that to you.
Q: Does that mean it’s time to sell the ProShares UltraShort 20+ year Treasury Yield (TBT)?
A: I would say yes; (TBT) hit $30.30 yesterday, which is a new multi-year high. I would be taking profits on that because on the next turnaround in bonds, you could get a very rapid move in (TBT) from $30 back down to $20. I’d rather have you keep that profit than try to squeeze the last dollar out of it. Remember, the (TBT) has a negative cost of carry now of 8% a year and that is a big nut to cover.
Q; Market outlook for mid-2023?
A: We could hit my $4,800 target by mid-2023; that is up 28% from here.
Q: Can we buy LEAPS on Amgen (AMGN)?
A: Absolutely yes, you can. Go for the highest listed strike prices on the call side with the longest possible maturity. I would do the January 17, 2025 $350-$360 vertical bull call spread which you can buy now for $1.00. That gives two years and four months to get a tenfold return. That’s enough time for a full-bore recession to happen and then a recovery where markets take off like a rocket. The call spread you bought for $1.00 becomes worth $10.00.
Q: Is there a long position on the beneficiary of government plans to build EV charging stations?
A: There is, but I'm not recommending EV charging stations because it’s a low value-added business. You buy electric power from the local utility, add 10 cents and resell it. The margins are small, the competition is heating up. There are much smarter ways to play EVs than the charging station. ChargePoint (CHPT) is certainly one of them, but it’s not a great investment idea. Look at how ChargePoint (CHPT) has performed over the last six months compared to Tesla (TSLA) and you see what I mean.
Q: Given the very poor investor sentiment, why don’t we get a testing of the lows and result in a (VIX) pop?
A: Absolutely yes—that is what everybody in the market is waiting for. And it could happen as soon as this afternoon. If it doesn’t happen this afternoon, allow for a little rally and then a meltdown on the next piece of bad news.
Q: I’m not able to get an email response from customer support.
A: Try emailing filomena@madhedgefundtrader.com. If that doesn’t work, you can try calling at (347) 480-1034. Filomena will always be happy to take care of you.
Q: What maturity of US Treasury securities would you buy now?
A: I would buy the 30-year. You’re getting close to a 4% yield on that—that is starting to look attractive to people who don’t want to work for a living picking stocks on a daily basis. We are about to see the rebirth of bond investing.
Q: What about banks?
A: Banks will be a screaming buy and a three-year double once recession fears end, which could be in a couple of months. We now have sharply rising interest rates, which banks love, but the bear market in stocks has killed off the IPO business, credit risk is rising, and of course, the Bitcoin business has gone to zero also. So, I would wait for fears of credit quality to end, and then you’ll get a double in the banks very quickly, and notice how they’re all flatlining at a bottom, they’re not actually going down anymore.
Q: Which banks are good choices?
A: Goldman Sachs (GS) and Bank of America (BAC) are two great ones, along with Morgan Stanley (MS) and JP Morgan (JPM).
Q: Do you think the market will bottom by the midterms?
A: I do, I think we will bottom a few weeks before the midterms, or the day after. Sometimes that’s the way it goes, and then it will be off like a rocket for the rest of the year. If we can do this from a much lower level in the SPYs, so much the better. Remember, the next Fed meeting is six days before the election. Yikes!
Q: If OPEC cuts production (USO), won’t the supply/demand cause oil prices to start rising again, increasing inflation and people’s prices at the pump?
A: Yes, but OPEC needs the money. Not necessarily Saudi Arabia, but all the other members of OPEC are starved for cash, and that is always how these shortages end. The smaller members cheat on quotas and bust the price. That's clearly what’s driven us down $50 since the February high, small member cheating. And that will continue. It is a cartel with some serious internal conflicts that will never resolve.
Q: Does it cost $17,000 to mine a Bitcoin?
A: It did four months ago. My guess is it’s more expensive now because of the higher cost of electricity around the world. We may even be up to $20,000 cost, which is why it tends to hang around the $20,000 level on the low side. Below that, miners lose money and the supply dries up, just like you see in the gold market.
Q: Do you have an opinion on Real Estate Investment Trusts (REIT)?
A: Yes; credit risk is rising, as are the yields. In a real estate recession, you start to get more defaults on REITS, but the yields on them are very high; so if you are going to play, buy a basket to spread your risk.
Q: Would you buy ProShares UltraShort 20+ year Treasury Yield (TLT) calls spreads now?
A: Yes, but I would go farther in the money, like the mid $90s, because I don’t think we’ll get that low in this cycle. I would also go out another month; instead of a one-month call spread in the mid $90s, I would do a two-month maturity. You could probably take in about $2,000 on a $10,000 position in the mid $90s.
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
Back at Lake Tahoe
Global Market Comments
June 14, 2022
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON FOR JUNE 14-16)
(MARKET OUTLOOK FOR THE WEEK AHEAD,
or WHAT HAPPENS WHEN YOUR BEST FRIEND BECOMES YOUR WORST ENEMY?)
(SPY), (TLT), (TSLA), (CCJ), (TGT), NVDA), (JPM), (BAC), (C)
Of course, I am talking about the Federal Reserve.
The Fed was the best friend of share owners, pressing interest rates lower from March 2009. That remained the case for 12 years until November 2021 when its notorious pivot took place, flipping overnight from an easing to a tightening posture.
It's actually worst than that. In fact, our nation’s central bank morphed overnight from the easiest monetary policy in history to the most aggressive tightening.
Stock markets have noticed, the Dow average giving up 20% in six months, and the final lows are probably not in yet.
I would bet money that you are expecting the worst-case scenario to happen. After all, the last serious selloff in 2008-2009 took the index down a heart-palpitating 52%.
What’s more, every oil shock of the last 50 years was followed by a recession, and we are clearly in one now. So, you are right to fear for your net worth and retirement security.
However, my work suggests that the best-case scenario will happen. Who is right, you or me?
You already know the answer.
Let me tell you what is already priced in the stock market: a Russian invasion of Ukraine, inflation at a 40-year high and climbing, a doubling of mortgage interest rates in a half year, peaking of the housing bubble, popping of technology and Bitcoin bubbles, and 200 basis points of Fed interest rate hikes.
With all this negativity already in the market, I would say that it is impossible for stocks NOT to go up. All that is left is to suck in one last round of non-believers on the short side before the indexes start a move to new all-time highs. That could take months at the most.
The only question now is whether a further 5% decline to an S&P 500 of 3,600, or a final puke out low of 3,500, down 7.5%. That means you should start scaling into your favorite longs now, the Cadillacs at Volkswagen prices.
So, let’s do some thinking outside the box here.
Tech stocks are cheaper now than after the low point of the Great 2000 Dotcom Bust. But they are still expensive compared to the main market. The S&P without technology stocks is now valued at earnings multiple of 13X versus 17x main market.
That is well into decade-low territory. That’s why I have included financials like (JPM), (BAC), and (C) in my list of “must own sectors'.
It's clear that inflation will bedevil the market for months to come given the dramatic acceleration we saw in May, from 0.3% to 1%. Let me tell you that there are only two ways to end inflation, and they could be done overnight.
*End all US support for Ukraine and throw in with Vladimir Putin. That would shave $50 off the price of oil immediately and get gas prices below $3.00 a gallon. You might have a hard time selling this to the thousands of Americans going over to Ukraine to volunteer.
*Cause a sharp recession immediately. The Fed is already well on their way to doing this with three guaranteed 50 basis point rate hikes by September. The first thing to collapse in a recession is oil demand. In the last recession, it went to negative $37 in the futures market (I got stopped out at -$5). This is why the oil industry isn’t interested in investing a dime at these oil prices. They are responsible to their shareholders, not Biden’s reelection prospects.
If there is a recession, it’s an invisible one. It’s a recession where you can’t hire anyone, can’t buy anything, subcontractors give you a six-month timeline with a straight face, and it takes a year to get delivery of a damn sofa. This recession miserably fails my “look out the window test.”
But at my advanced age, I don’t get surprised anymore.
Boba tea anyone? Who knew?
Consumer Price Index slaughters stocks, taking the Dow Average down 1,600 points, or 5% in two days, the worst move in two years. It’s typical bear market action. May inflation hit 8.6%, a new 40-year high. But you have to more than double to hit the old 1980s peak. New stock lows are in easy reach.
Lumber crashes, down 50% from the highs in months, with the near-complete cessation of new orders from builders. They see a recession just around the corner with higher interest rates and no new home buyers. It’s proof that the current inflation is spiking and setting up for a big fall.
Luxury Home Sales are plunging in New York, in numbers, but not in prices. Anyone who needed debt to trade up is out of the picture.
US drop Covid Testing Requirement for international travelers. Too many Americans trying to get home were getting stranded overseas for weeks because they failed a Covid test. Wheww!! That was a close call!
Americans will spend an extra $730 Billion on energy this year. That’s a heck of a lot to take out of consumer spending. So far, there has been no decline in demand. Much of this money ended up in Russian coffers.
Amazon (AMZN) splits 20:1, triggering an avalanche of new retail buyers. The company is also at the low end of its valuation range anger a gut-punching 41% decline in the share price this year. It may be early, but (AMZN) is definitely a BUY.
Target (TGT) warns of more margin squeeze, with too much inventory and flagging demand. (TGT) has become a bellwether for all of retail, which points to inflation, labor, and supply chain problems.
Uranium Stocks soar on Biden’s plan to buy $4.3 billion worth of enriched uranium, or yellow cake. The move is aimed to replace Russian imports where Russia is one of the world’s largest suppliers. It is the most unexploited form of non-carbon energy out there. Mad Hedge recommended Cameco (CCJ), the world’s second-largest supplier, a month ago. It was up 15% yesterday at the high.
New Home Mortgages hit a 22-year low. With 30-year fixed-rate loans soaring from 2.8% to 5.58% in six months, how can they not? Refis have crashed 75% YOY. Now that the Fed has quit buying, investors won’t touch mortgage-backed securities with a ten-foot pole.
Weekly Jobless Claims pop 29,000 to a five-month high in another hint toward a recession. Continuing Claims are at 1.306 million. The preemptive layoffs by ultra-cautious companies have begun, especially in technology.
Tesla (TSLA) gets an upgrade by UBS, which sees 51% of upside from here to $1,200. Total sales should top 1.4 million vehicles in 2022, up 40% YOY, and that includes lost production of 60,000 in Shanghai. A new Gigafactory in Indonesia is planned with a locked-up supply of Nickel, where the world’s largest supply of the metal resides. Cheap labor helps a lot where 5,000 need to be hired. The company will need six gigafactories to reach 20 million annual production.
My Ten-Year View
When we come out the other side of pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still historically cheap, oil peaking out soon, and technology hyper-accelerating, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The America coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 240,000 here we come!
With some of the greatest market volatility seen since 1987, my June month-to-date performance recovered to +2.57%.
My 2022 year-to-date performance ratcheted up to 44.44%, a new all-time high. The Dow Average is down -13.52% so far in 2022. It is the greatest outperformance on an index since Mad Hedge Fund Trader started 14 years ago. My trailing one-year return maintains a sky-high 66.63%.
That brings my 14-year total return to 557%, some 2.56 times the S&P 500 (SPX) over the same period and a new all-time high. My average annualized return has ratcheted up to 44.56%, easily the highest in the industry.
We need to keep an eye on the number of US Coronavirus cases at 85.6 million, up 200,000 in a week, and deaths topping 1,011,200 and have only increased by 2,000 in the past week. You can find the data here.
On Monday, June 13 at 8:00 AM EDT, US Consumer Inflation Expectations are out.
On Tuesday, June 14 at 8:30 AM, the Producer Price Index for May is published.
On Wednesday, June 15 at 10:30 AM, Retails Sales for May are announced. The Fed interest rates decision is out at 11:00 AM. The press conference follows at 11:30.
On Thursday, June 16 at 8:30 AM, Weekly Jobless Claims are out. We also get Housing Starts and Building Permits for May.
On Friday, June 10 at 8:15 AM, Industrial Production for May is published. At 2:00, the Baker Hughes Oil Rig Count is out.
As for me, I have benefited from many mentors and role models over the years, but Al Pinder, last of the New York-based Shipping and Trade News, is one of my favorites. Short with blown hair, glasses, and an always impish smile, he was a regular at lunch where we always played an old dice game called “ballout.”
I sat next to Al for ten years at the Foreign Correspondents Club of Japan high up in Tokyo’s Yukakucho Denki Building, we were pounding away on our antiquated Royal typewriters. At the end of the day, our necks would be stiff as boards. Al’s idea of work was to type for five minutes, then tell me stories for ten.
Saying that Al lived a colorful life would be the understatement of the century.
Al covered the Japanese invasion of China during the 1930s, interviewing several key generals like Hideki Tojo and Masaharu Homma, later executed for war crimes. He told me of child laborers in Shanghai silk processors who picked cocoons out of boiling water with their bare hands.
Al could see war with Japan on the horizon, so he took an extended tour of every west-facing beach in Japan during the summer of 1941, taking thousands of black and white pictures. The trick was how to get them out of the country without being arrested as a spy.
So he bought an immense steamer trunk and visited a sex shop in Tokyo’s red-light district where he bought a life-sized, blow-up doll of a Japanese female. His immensely valuable photos were hidden below a false bottom in the trunk and the blow-up doll placed on top.
When he passed through Japanese customs on the ship home from Yokohama, the inspectors opened the trunk, had a good laugh, and then closed it. These photos later became the basis of Operation Coronet, the American invasion of Japan in 1945.
Al was working for the Honolulu Star Bulletin when the Japanese attacked Pearl Harbor on December 7, 1941. Many antiaircraft shells fired at the attacking zeros landed in Honolulu causing dozens of casualties. Al told me every woman on the island wanted to get laid that night because they feared getting raped by the Japanese Army the next day.
Since Al knew China well, he was parachuted into western Yunan province to act as a liaison with Mao Zedong, then fighting a guerrilla war against the Japanese with his Eighth Route Army. Capture by the Japanese then meant certain torture and certain death.
In 1944, Al received a coded message in Morse code to pick up an urgent communication from Washington. So, he hiked a day to the drop zone and when the Army Air Corps DC-3 approached, he lit three signal fires.
A package parachuted to the ground, which he grabbed and then he fled for the mountains. Dodging enemy patrols all the way, he returned to his hideout in a mountain cave and opened the package. It was a letter from the Internal Revenue Service asking why he had not filed a tax return in three years.
When the second atomic bomb fell on Nagasaki, the war ended on August 15. Since Al was the closest man on the spot, he flew to Korea where he accepted the Japanese surrender there.
Al was one of the first to move into the Press Club, which housed war correspondents in one of the only buildings still standing in a city that had been bombed flat.
Al never left Japan because, as with many other war correspondents who arrived with the US military, it was the best thing that ever happened to him. After some initial hesitation, they were treated like conquering heroes, it was incredibly cheap at 800 yen to the dollar, and the women were beautiful.
During the Japanese occupation when the people were starving, Al bought an acre of land in Tokyo’s burned-out prime Akasaka district for a ten-pound can of ham. He spent the rest of his life living off this investment, selling one piece at a time, until it eventually became worth $10 million.
Al went to work for the Shipping and Trade News, an obscure industry trade publication which no one had ever heard of. I sat next to him when he artfully lifted every story out of an ancient book, Ships of the World. But Al always had plenty of money to spend.
When Al passed away in the early 2000s, an official from the American embassy in Tokyo showed up at the Press Club asking if anyone knew all Pinder. We eventually traced a bank branch which held a safe deposit box in his name. In it was proof that the CIA had been bribing every Japanese prime minister of the 1950s. He kept the evidence as an insurance policy against the day when his lucrative deal with the Shipping and Trade News was ever put at risk.
I flew in for Al’s wake and his Japanese wife was there along with most of the foreign press. Everyone was crying until I told the IRS story, then they had a good laugh.
A few years ago, I was invited to give the graduation speech at Defense Language Institute in Monterey, California. The latest bunch of graduates, including my nephew, were freshly versed in Arabic and headed for the Middle East.
The school was founded in 1941 to train Americans in Japanese to gain an intelligence advantage in the Pacific war.
General 'Vinegar Joe' Stillwell said their contribution shortened the war by two years. General Douglas MacArthur believed that an army had never before gone to war with so much advance knowledge about its enemy.
To this day, the school's motto is 'Yankee Samurai'. There on the wall with the school’s first graduates was a very young Al Pinder, still with that impish grin.
Al lived a full life and I still miss him to this day. I hope I can do as well.
Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Al Pinder
Press Club 1976
Global Market Comments
June 3, 2022
Fiat Lux
Featured Trade:
(JUNE 1 BIWEEKLY STRATEGY WEBINAR Q&A),
(AAPL), (GOOGL), (MSFT), (JPM), (BAC), (C), (UUP), (FXA), (FXC), (EEM),
(VIX), (CRM), (AAPL), (TSLA), (COIN), (EDIT), (CRSP), (LMT), (RTX), (GD)
Below please find subscribers’ Q&A for the June 1 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley.
Q: What are the 3 best stocks to own for the end of the year?
A: Apple (AAPL), Alphabet Inc. (GOOGL), and Microsoft (MSFT). Those you want to buy on meltdown days, kind of like today. Make sure you scale into these—so maybe buy 20% on every down-500-point Dow day. Eventually, you’ll end up with a pretty decent position at a market low in a stock that will double in 3-5 years.
Q: Why these three stocks?
A: Lots of reasons: They’re huge, they’re safe, two out of three pay dividends, Alphabet is about to split, and they have huge moats so nobody can get into their sectors. They have near monopolies in what they do, and they have immense cash on the balance sheet. These are the kind of stocks that portfolio managers dream about. And watch what rallied the hardest in the last dead cat bounce we had—it was these three names. That tells you that they will lead any long-term bull market in the future. These are the stocks that people want to own.
Q: What will bring your predicted second half-bull market in the stock market?
A: Inflation drops from 8% to 4%. That will happen for a couple of reasons. The year-on-year comparisons become highly favorable starting from next month when inflation started to take off a year ago. Inflation numbers are going to be climbing the wall of worry from here on out. That could get us down to 4% by the end of the year. The second reason is the Ukraine War either ends or becomes a stalemate and is no longer a factor in the global markets, and we’ve had time to replace all the Russian oil and Ukrainian wheat.
Q: Are banks positioned to benefit from the coming rally?
A: Absolutely. I think big tech and banks will be the top-performing stock sectors for the next five years because inflation will go away, recession fears will go expire, and credit quality will improve, but interest rates will remain 300 basis points higher than they were during the pandemic. Buy (JPM), (BAC), and (C) on dips.
Q: What will be the worst performing sector?
A: Energy—anything energy-related will get absolutely slaughtered, which is why I don't want to touch it with a ten-foot pole right now. That includes oil companies, exploration companies, E&P companies, and master limited partnerships, as well as coal and other natural gas stocks. So, if you’re long these names don’t forget to sit down when the music stops playing. You could get your head handed to you at the end.
Q: Can we make lower lows?
A: Yes, that’s entirely possible. Market moves are basically random when you get down to these levels— down more than 20%. And on all future downturns, I would be spending your cash going back into the market expecting a second half rally.
Q: What about green energy?
A: Unfortunately, green energy is very tied to old energy because $120 oil makes green companies much more competitive from a cost point of view. So, I’m not going to go piling into green companies right here, especially if I think oil is topping out in the near future. Buying green energy companies here is the same as buying oil at $120 a barrel.
Q: What is the best way to play the declining US dollar?
A: Buy the iShares MSCI Emerging Markets ETF (EEM). Also, the Aussie dollar (FXA) and the Canadian Dollar (FXC), which benefit tremendously from commodity prices, which will rise for another decade in a global economic recovery.
Q: Why will energy be the worst sector?
A: If you end the war in the Ukraine or you replace Russian oil, either by finding new sources of oil, getting other producers to increase production which they can do (including the US), or by accelerating the move to alternatives, then you move oil back to pre-invasion prices which were about $70 a barrel or $50 lower than they are here.
Q: Best way to hedge a falling market?
A: Do what I'm doing: keep a balanced portfolio of longs and shorts, that way you always have something that’s going up. And if you do it through the options, you have time decay working for you on both sides of the equation. If you want to go outright, buy outright puts on individual stocks because they had double the moves of the indexes. And go to my short selling school which you can find by going to my website at https://www.madhedgefundtrader.com. There’s actually 12 different ways to benefit from falling markets.
Q: How deep in the money can we go on our call spreads?
A: Wait for the Volatility Index (VIX) to go over $30, and then go 15-20% in the money. And yes, you only make 10, 15, or 20% on those positions in a month but then you put together ten of them and that adds up to quite a lot of money. You want to find the position that has the greatest probability of happening—i.e. something that’s 20% in the money. Do that when the market has just dropped 20%, which it already has, and then you have a position that has a minuscule chance of losing money.
Q: How much longer do you see this current bear market bounce lasting?
A: Until yesterday.
Q: What's your favorite commodity ETF?
A: My favorite commodity stock is Freeport McMoRan (FCX), the world’s largest copper producer. Rather than pay the extra management fees for an ETF, I prefer just to go straight to the source and buy (FCX).
Q: When do you think the Fed will pivot to dovish or neutral?
A: This summer. It’s just a question of whether it’s the July or the September meeting.
Q: When you say “buy on dips”, what does that mean? 1%, 3%, 5%?
A: Well in this market, a dip would be a retest of the previous lows which is going to be down 10% or 15% on the major positions in your portfolio. If you’re day trading, a dip is only 1%, so it really depends on your timeframe and your risk tolerance. That’s why I always tell people to scale by doing everything in incremental pieces—20%, 25%, and so on. You never know what the market’s actually going to do on a short-term basis. Randomness can’t be predicted.
Q: If you plan to enter a LEAPS on Apple, what strikes would you do?
A: Well, first of all, I want to see if Apple drops all the way to $125, which is a lot of people’s downside target. If it did, then I would do the $125/$135 call spread two years out, and that will probably double. And if it starts a long term up trend, then I’ll keep rolling up the strike prices. If, say, Apple goes to $125, you put your LEAPS on. If the stock rises to 150, then take profits on the $125/$135 and roll into the $150/$160. That’s how you can get like 1,000% returns like we got on Tesla (TESLA) a few years ago. You just keep rolling up your strike prices on every weak day and maintain your leverage.
Q: When do we bet the farms on Editas Medicine Inc. (EDIT) and Crispr (CRSP) Therapeutics?
A: Never. These are small, highly speculative companies which will make money someday, but if the someday is in five years and you’re betting the farm with a LEAPS, you lose the farm. It's going to take a long time for these smaller biotech stocks to come back. If you want to play biotech, go with the big ones like Amgen. It takes a long time to convert cutting-edge technology into profits. The big companies already have a stable of reliable money-making drugs on hand.
Q: Salesforce Inc. (CRM) is up big on earnings—what should I do with the stock?
A: Buy the dips. It’s still way, way below its all-time highs, so use the weekdays to accumulate Salesforce for the long term. It’s one of the best cloud plays out there.
Q: What do you think about NVIDIA Corporation (NVDA)?
A: I absolutely love it. It rallied 20% off the bottom. Use any other additional weak days like today to increase your position. This stock someday is worth $1,000, up from today’s $195.
Q: Do you like SPACS?
A: No, I hate them and think they’re a rip-off. And a lot of them have become totally illiquid and untradable, so you have no choice but for them to shut down and return their money if they have any left. I’ve hated SPACS from day one and people are now getting their comeuppance on these.
Q: What do you think about the weakness in Coinbase Global Inc. (COIN) down here?
A: It’s just going down with all the other high-risk, speculative, meme stock type plays, which include all of the crypto plays like Bitcoin. I would avoid all of those. You want to buy quality at the discount now, and you want to buy the Cadillacs at Volkswagen prices and leave the speculative plays for the next generation, Gen Z, who are already highly interested in stocks.
Q: What is your favorite non-US country to invest in?
A: Australia, because you get a double play there on the currency, which should go up 30% from here, and they will benefit from a global commodity boom which continues for another ten years. They pretty much sell a lot of the major commodities like iron ore, wheat, sheep, and so on. It’s also a really nice country to visit. The only negative with Australia are the sharks.
Q: Biotech takeover targets?
A: Well (EDIT) and (CRSP) would be two of them. Things in the sector are so cheap that they are all potential takeover targets. M&A (Mergers and Acquisitions) will be a major play in the biotech sector for the foreseeable future.
Q: Should we sell short the defense industry here?
A: No, even if the war ends tomorrow, you might get some profit-taking, but the fact is that long term military spending is increasing permanently. The peace dividend now has to be paid back, and that is great for all the defense companies, so I would not be shorting them. If anything, I’d be buying on dips. Buy Lockheed Martin (LMT), Raytheon (RTX), who make the Javelin antitank missile for which there is now a two-year order backlog. You can also throw in General Dynamics (GD) for good measure which builds nuclear submarines and the Stryker armored vehicle.
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
Keep Those Defense Plays
Global Market Comments
May 23, 2022
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or ALL QUIET ON THE WESTERN FRONT)
(SPY), (TLT), (TBT), (GOOGL), (AAPL), (MSFT), (BRKB), (NVDA), (JPM), (BAC), (WFC), ($BTCUSD)
When I first joined Morgan Stanley in 1983, a number of my clients were old enough to have experienced the 1929 stock market crash and the Great Depression that followed.
One was Sir John Templeton, who confided in me over lunch at his antebellum-style mansion at Lyford Cay in the Bahamas, that his long career started with a lot of excitement, and then became incredibly boring for a decade.
It looks like we entered the incredibly boring phase on January 4, when the stock market began its current downtrend. Last week brought the longest weekly losing streak since 1923, some eight weeks so far.
The market is actually down a lot more than it looks, meaning that we are a lot closer to the bottom than you think. Some 87% of the S&P 500 is down more than 10% and 61% is down 20%. The damage is far worse with the NASDAQ, with some 93% of shares down 10%, and a gut-punching 73% down 20% or more.
While tech has already gone down a lot, some 32% so far this year, it is still trading at an 18% premium to the main market. Remember, in this business, timing is everything. If you invested in tech at the Dotcom peak in 1999, it took you 14 years to break even. Latecomers in this cycle could suffer a similar duration of pain and suffering.
And while these are the kind of moves that usually precede a recession, there is still an overwhelming amount of data that says it won’t happen. We here at Mad Hedge Fund Trader analyze, dissect, and examine data all day long.
I will once again repeat what my UCLA math professor told me a half-century ago. “Statistics are like a bikini bathing suit; what they reveal is fascinating, but what they conceal is essential.”
For a start, 3.6% unemployment rates are not what recessions are made of. Double-digit ones are. The next jobless rate print in June is likely to be down, not up. The country in fact is suffering its worst worker shortage in 80 years. There are currently 6 million more jobs than workers. And wages are rising, putting more money in the pockets of consumers.
Last month, airline ticket prices rose by 25%. Good luck trying to get a plane anywhere as all are full. Last winter, I bought a first-class round-trip ticket from San Francisco to London for $6,000. Today, the same ticket is $10,000. During recessions, planes fly empty, routes get cancelled, and staff laid off. Airlines also go bust and are not subject to the takeover wars we are seeing now.
Recessions also bring dramatic credit crises. Rising default rates force banks to retreat from lending, FICO scores tank, and debt markets dry up. It’s all quiet on the western front now, with all fixed income and liquidity indicators are solidly in the green. And while interest rates are higher, they are nowhere near the peaks seen during past recessions.
All this may explain that after the horrific market moves we have already seen but we may be only 4% from the final bottom in this bear move to an S&P 500 at $3,600, or 7% from an (SPX) of $3,500. That means it is time to start scaling into long-term positions now in the best quality names.
That’s why I have been aggressively piling on call spreads in technology that are 10%-20% in the money with only 19 days to expiration, making money hand over fist.
An interesting headline caught my attention last week. The Russians were stealing farm equipment from Ukraine on an epic scale. When they couldn’t steal it, such as when the electronics were disabled, they were destroying it.
That means the Russians didn’t invade Ukraine to get more beachfront territory on the Black Sea, although that is definitely a plus. They want to destroy a competitor’s agricultural production in order to raise the value of their own output.
Yes, this is the beginning of the Resource Wars that could continue for the rest of this century. Resource producers like the US, Russia, Canada, Australia, and Ukraine will be the big winners. Resource consumers like China, India, and the Middle East will be the big losers.
JP Morgan cuts US GDP Forecasts, with the second half marked down from 3% to 2.4% and 2023 from 2.1% to 1.5%. This means no recession, which requires two back-to-back negative quarters.
China’s Industrial Production collapses by 2.9%, and Retail Sales fell by a shocking 11.1%. The Shanghai shutdown is to blame. It means longer supply chain disruptions for longer and another drag on our own economy. If Tesla has a bad quarter, it will be because of a shortage of vehicles in China. So, will the end of Covid in China bring the bull market back in the US?
The US Budget Deficit is in free fall, putting our hefty bond shorts at risk. While Trump was president the national debt exploded by $4 trillion, a dream come true for bond shorts. Since Biden became president, the annual budget deficit has plunged from $3.1 trillion to $360 billion for the first seven months of fiscal 2022, and we could approach zero by yearend. An exploding economy has sent tax revenues soaring, and taxpayers still have to pay a gigantic bill for last year’s monster capital gains in the stock market. Biden has also been unable to get many spending bills through the Senate, where he lacks a clear majority.
India Bans Food Exports. Climate change is destroying its output with heat waves, while the Ukraine War has eliminated 13% of the world’s calories. This is a problem when you have 1.2 billion to feed. Expect food inflation to worsen.
Consumer Sentiment hits an 11-year low according to the University of Michigan, dipping from 64 to 59.1. Record gas prices and soaring inflation are the reasons, but spending remains strong off the super strong jobs market.
Homebuilder Sentiment hits a two-year low, down from 77 to 69 in May, according to the National Association of Homebuilders. Recession fears and soaring interest rates are the big reasons.
Building Permits dive in April by 3.2%, and single family permits were down 4.6%. The onslaught of bad news for housing continues. Avoid.
Target implodes on terrible earnings, taking the stock down 25%, the worst in 40 years. They finally got the inventory they wanted. Too bad consumers are too poor to buy it with $6.00 a gallon.
Commodities send Battery Costs soaring by 22%. Who knew you were going long copper, lithium, and chromium when you bought your Tesla? It’s a good thing you did. Now you can give the middle finger salute when you drive past gas stations.
Average Household now spending $5,000 a year on gasoline, which is $5,000 they’re not spending on anything else. Just ask Target (TGT) and Walmart (WMT).
My Ten-Year View
When we come out the other side of pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still historically cheap, oil peaking out soon, and technology hyper-accelerating, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The America coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 240,000 here we come!
With some of the greatest market volatility seen since 1987, my May month-to-date performance recovered to +4.79%.
My 2022 year-to-date performance exploded to 34.97%, a new high. The Dow Average is down -16.4% so far in 2022. It is the greatest outperformance on an index since Mad Hedge Fund Trader started 14 years ago. My trailing one-year return maintains a sky-high 62.99%.
This week, I added new long positions in Visa (V) and Microsoft (MSFT) when the Volatility Index (VIX) was in the mid $30s. I also did a nice round trip on an Apple (AAPL) short which brought in $1,740. I also took profits on two longs in the (SPY) and two shorts in the (TLT). Overall, it was a great week!
That brings my 14-year total return to 547.53%, some 2.40 times the S&P 500 (SPX) over the same period and a new all-time high. My average annualized return has ratcheted up to 43.78%, easily the highest in the industry.
We need to keep an eye on the number of US Coronavirus cases at 82.5 million, up 300,000 in a week and deaths topping 1,000,000 and have only increased by 2,000 in the past week. You can find the data here.
On Monday, May 23 at 8:30 AM EST, the Chicago Fed National Activity Index for April is out.
On Tuesday, May 24 at 8:30 AM, New Home Sales for April are released.
On Wednesday, May 25 at 8:30 AM, Durable Goods for April are published.
On Thursday, May 26 at 8:30 AM, Weekly Jobless Claims are disclosed. The first look at Q2 GDP is printed.
On Friday, May 27 at 8:30 AM, Personal Income & Spending is out. At 2:00 the Baker Hughes Oil Rig Count is out.
As for me, one of my fondest memories takes me back to England in 1984 for the 40th anniversary of the D-Day invasion of France. On June 6, 160,000 Americans stormed Utah and Omaha beaches, paving the way for the end of WWII.
My own Uncle Al was a participant and used to thrill me with his hair-raising D-Day experiences. When he passed away, I inherited the P-38 Walther he captured from a German officer that day.
The British government wanted to go all out to make this celebration a big one as this was expected to be the last when most veterans, now in their late fifties and sixties, were in reasonable health. President Ronald Reagan and prime minister Margaret Thatcher were to be the keynote speakers.
The Royal Air Force was planning a fly past of their entire fleet that started over Buckingham Palace, went on the to the debarkation ports at Southampton and Portsmouth, and then over the invasion beaches. It was to be led by a WWII Lancaster bomber, two Supermarine Spitfire, and two Hawker Hurricane fighters.
The only thing missing was American aircraft. The Naval and Military Club in London, where I am still a member, wondered if I would be willing to participate with my own US-registered twin-engine plane?
“Hell yes,” was my response.
Of course, the big concern was the weather, as it was in 1944. Our prayers were answered with a crystal clear day and a gentle westerly wind. The entire RAF was in the air, and I found myself the tail end Charlie following 175 planes. I was joined by my uncle, Medal of Honor winner Colonel Mitchell Paige.
We flew 500 feet right over the Palace. I could clearly see the Queen, a WWII veteran herself, Prince Philip, Lady Diana, and her family waving from the front balcony. Massive shoulder-to-shoulder crowds packed St. James Park in front.
As I passed over the coast, much of the Royal Navy were out letting their horns go full blast. Then it was southeast to the beaches. I flew over Pont du Hoc, which after 40 years still looked like a green moonscape, after a very heavy bombardment.
In one of the most courageous acts in American history, a company of Army Rangers battled their way up 100-foot sheer cliffs. After losing a third of their men, they discovered that the heavy guns they were supposed to disable turned out to be telephone poles. The real guns had been moved inland 400 yards.
We peeled off from the air armada and landed at Caen Aerodrome. Taxiing to my parking space, I drove over the rails for a German V2 launching pad. I took a car to the Normandy American Cemetery at Colleville-sur-Mer where Reagan and Thatcher were making their speeches in front of 9,400 neatly manicured graves.
There were thousands of veterans present from all the participating countries, some wearing period uniforms, most wearing ribbons. At one point, men from the 101st Airborne Division parachuted overhead from vintage DC-3’s and landed near the cemetery.
Even though some men were in their sixties and seventies, they still made successful jumps, landing with big grins on their faces. The task was made far easier without the 100 pounds of gear they carried in 1944.
The 78th anniversary of the D-Day invasion is coming up shortly. I won’t be attending this time but will remember my own fine day there so many years ago.
Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Pont du Hoc
