?The Solar Road Revisited?. Somehow this modernized version of Bob Dylan?s epic folk album doesn?t quite ring true when couched in terms of our hyper accelerating 21st century technology. Perhaps a Millennial bard will improve on this in the future on iTunes, Pandora, and Beats, of course?
Yet, such a futuristic invention has already been created, is raising money through crowdfunding, and even landed a small Federal Highway Administration grant.
We live in an age of exploding technologies. So, when I find some that are especially interesting, offer a potential long term impact on the global economy, or present immediate investment opportunities, I am going to update you in this newsletter.
One common complaint I hear during my road shows is that we are moving into the future so fast, that it is getting increasingly hard to keep up. That is, unless you live within sight of Apple (AAPL), Google (GOOG), Twitter (TWTR), and Facebook (FB) headquarters, which I do. These companies all have venture capital arms, which fund many of these things.
Sandpoint, Idaho based engineers Julie and Scott Brusaw are the founders of Solar Roadways, a tiny engineering company that seeks to convert the American highway system from old fashioned asphalt and concrete to tempered glass and LED?s.
They have raised $2 million through the crowdsourcing website Indiegogo, which saw its amazing videos on the project go viral and attract 15 million views (https://www.indiegogo.com/projects/solar-roadways ).
Caution: conservatives may want to avert their eyes during all of the global warming, anti gasoline, and tree hugging references. But this stuff raises big bucks in California.
What can solar roads do? Obviously, the green hexagonal panels they are made of convert sunlight into electricity, heating roads so they can remain free of ice and snow all year. I could really use that up at Lake Tahoe.
Surplus power can be sold to local utilities to pay for it. Electric cars, like my Tesla Model S-1 (TSLA), can recharge their batteries just by parking on it, as my toothbrush already does in my bathroom.
You can program the LED?s to embed changeable road signs, borders, parking lots, and crosswalks. They can highlight crossing animals (200 deaths a year now in the US), or impending road obstructions.
They can even display layouts for every kind of sport (basketball, tennis, etc). The glass can be cast to give it a better grip than contemporary roads. Highway deaths would plunge, as would insurance costs.
Driving trucks on glass? The material is so strong that it can support the heaviest, or some 62 tons. My question, can handle steel caterpillar tractor treads used in road repair equipment?
Of course, it always comes down to cost with these new technologies, many of which remain pie in the sky forever. Estimates are that these roads cost 50%-300% more than existing ones. Large-scale construction would bring that down through economies of scale via mass production. The design is really quite simple.
The vision is big. It would probably cost over $1 trillion just to pave over the existing 48,000 miles of the interstate highway system. Tens of thousands of blue-collar jobs would be created. It all sounds like a massive public works project would be required, of Rooseveltian, CCC magnitude.
This just gives you a flavor of the incredibly interesting things going on here in the San Francisco Bay area, which I learn about on a daily basis. Check out the site, if only to see the future of start up funding.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/06/Moose.jpg240440Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2015-07-06 01:03:322015-07-06 01:03:32The Solar Road Revisited
Well, so much for the 200 day moving average! It?s like that girlfriend who has been ferociously loyal for the last year, and suddenly she is busy every weekend and never returns phone calls.
Not that this ever happens to me. Ahem.
I knew there would be trouble when the perma bulls on TV told me the market would bounce hard off this inviolable line in the sand, with the (SPX) at 1,905. I cut my bullish equity positions by two thirds on the first market rally and never looked back.
For proof that you still make beginner mistakes after 45 years in the business, take a look at how I handled my Tesla (TSLA) position last week. Elon Musk teased us all with his ?D? tweet two weeks ago, and the stock levitated magically while all other momentum stocks were being mercilessly thrown overboard.
?Women and traders? first comes to mind.
Did I sell into the rumor and capture the 80 basis point profit I had in hand? Nope. I held on until yesterday morning and bailed after a $40 plunge in the stock, taking a 1.62% hit.
This happened while the rest of Texas was coming down with Ebola Virus. I fall victim to the bout of over confidence whenever my Trade Alert success rate exceeds 90%, as it recently has done. I start to believe my own research, always a fatal flaw.
Fortunately, I?m still running double shorts in the S&P 500 (SPY) and the Russell 2000 (IWM) to hedge these losses. The ?Hedge? in ?Mad Hedge Fund Trader? is a well-earned one, I assure you.
You would think I would get hate mail for making such a stupid mistake. Au contraire! Readers thanked me for pulling the plug so quickly and with all humility. It appears that when most other newsletters put out a bad call they develop a sudden case of amnesia, leaving their customers to thrash about in bloody, shark-invested waters on their own.
Not here!
So, should we be burning up the Internet trunk lines with frenzied clicks to unload our long-term stock portfolios?
I think not. Here are ten reasons why I believe the bull market in shares is still alive and well:
1) Stocks are selling at only 14 X 2015 earnings, in the middle of the historic range.
2) The $23 plunge in oil prices we have enjoyed over the last five months amounts to a gigantic tax cut for the world economy, and could add a full 1% to US GDP growth, which has essentially come out of nowhere. Saudi Arabia told us today that this could go on for another year. Remember, it is our oil that is crushing prices.
3) The Christmas selling seasons is setting up to be a strong one, thanks to a friendly calendar and renewed consumer confidence. This is why retailers and credit card companies like American Express (AXP) have been reviving.
4) The November 4 midterm elections are still a big unknown for the market to discount. The next day could signal the beginning of the yearend bull market.
5) I think we are seeing the final blow off top in the bond market. A reversal would be very stock friendly, especially for financials (BAC).
6) Mergers and acquisitions are continuing at a torrid pace. This is happening because companies see each other as cheap, not expensive, and usually happens at market bottoms.
7) Those who aren?t merging are buying their own stock back with both hands, like Apple, at a staggering $400 billion annualized rate.
8) Volatility spikes (VIX) also signal market bottoms (see chart below). We are nearing another top with the closely followed indicator closing at $24.64 today, a high for the past two years.
9) Capital spending is accelerating, not only in technology, but across most other industries as well. This is why the IMF boosted its growth forecast for America next year to 3.8%, and that is probably a low number.
10) Ever heard of ?Sell in May and Go Away?? Well, ?Buy in November and stay put? is also true. That is only weeks away. October is usually the worst month of the year to sell and is not the path to untold riches.
The big question now is how much additional pain we have to suffer before the promised turnaround occurs.
My colleague, Mad Day Trader Jim Parker, went over his screens with a fine tooth comb and came up with $1,846 and $1,810 for the (SPX). Similarly, NASDAQ could trade down to the $3,700-$3,800 range.
My personal favorite is on the calendar, the Midterm elections on November 4. Whatever the outcome, we could see an upside explosion that lasts for six months, once thus unknown disappears. Not only could this make your year in 2014, but 2015 as well.
And I already know who is going to win! It is gridlock, whether the Democrats control one House of congress, or none!
https://www.madhedgefundtrader.com/wp-content/uploads/2014/03/John-Thoms-Black-Swans-e1413901799656.jpg337400Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-10-14 09:48:062014-10-14 09:48:0610 Reasons Why the Bull Market is Still Alive
That?s all we managed to clock in the latest correction in the greatest bull market of all time.
It?s not the 6% hickey we had to endure in February, nor as modest as the 4% setback in August. Call it a middling type correction, a kind of correction light. The buyers do still have itchy trigger fingers.
All it took to bring it to an end was a September nonfarm payroll that blew the socks off the forecasts of most analysts, coming in at a positively steroidal 248,000. It?s like they?re finally hiring again.
That is, unless you just graduated from college with a degree in English, Sociology, or Political Science, and are lugging $100,000 in student loans. Coders everywhere are writing their own tickets.
The headline unemployment rate plunged from 6.1% to 5.9%, an eight year low, and the broader U-6 figure is closing in on 10%.
Even more impressive were the back month upward revisions, which were enormous. July was boosted from 212,000 to 243,000, and August was goosed from 142,000 to 180,000.
The hiring was across the board, with professional & business services, retail, health services, and even construction leading the way.
What all of this means is that the freshly updated 4.4% Q2 GDP growth rate isn?t some cockamamie government concoction, but is, in fact real.
More amazing is that we are seeing these blistering numbers against a background of non-existent inflation, even deflation, if the August -0.1% Consumer Price Index is to be believed.
That gives my friend, Federal Reserve governor Janet Yellen, a blank check to keep interest rates lower for longer than anyone believes possible.
Without the inflation bogeyman, you might as well keep rates at zero forever. Personally, I am in the 2016 camp before we start to see interest rate rises.
All this means it is back to the races for the stock market, with an (SPX) bull?s-eye of 2050-2100 now in the cards. However, we?re not going there in a straight line.
I expect more of a sideways wedge formation developing first over the coming month where we see successive higher lows and lower highs. When we reach the apex of the triangle it will be bingo!, and a blast off to new all time highs.
Of course, you can?t go to the races without a program. So make your choices carefully, as the kind of corrections of the type we have just seen often herald sudden sector rotations.
I think financials are the place to be, especially if my prediction that interest rates are bottoming proves correct. That?s why I knocked out a Trade Alert to buy Bank of America (BAC) last week (click here for the editor?s cut). Conveniently, it jumped 5% the next day. I have a pleasant habit of doing that with (BAC).
I am not dishing out a positive view on risk assets because I live in LaLa Land (I only grew up there), am a perma bull, or like drowning myself in the punch bowel (at least not since college). For me, it?s all about the numbers.
Here?s a list of figures to show, not that shares are cheap or how expensive shares are, but how moderately priced they are:
1) With a price earnings multiple of 17X, we are smack in the middle of a 10-25X historic range.
2) The dividend yield for stocks is at 1.9%, compared to only 1.1% at the 2007 top.
3) Cash reserves per S&P 500 share are a rich $443, compared to only $353 seven years ago.
4) Corporate debt to assets is a mere 23% versus 32% 2007.
I could go on and on, but you see my point. This bull market has years to go before it even flirts with becoming truly expensive, unless you own Tesla (TSLA), according to Mr. Elon Musk.
I think the way to trade this market is to reserve the daily newspapers only for lining the bottom of a birdcage, and to hit the mute button on your TV.
That way you won?t hear about the Ebola Virus, ISIL, the Midterm Elections, the war in the Ukraine, and all the other bogus reasons to sell stocks we are bombarded with daily.
Did I mention that the $20 per barrel plunge in the price of oil we have just seen amounts to one of the largest tax cuts in history for the economy?
See, I always write more interesting economic pieces while watching Men in Black. I think the 6,800-foot altitude here at Lake Tahoe helps too.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/10/Men-in-Black-Jones-Smith.jpg252439Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-10-06 09:34:082014-10-06 09:34:08The Correction is Over
It looks we are going to have to start watching the appalling Zombie shows on TV and in the movies. That is so we can gain tips on how to survive the coming Apocalypse that will unfold when the Ebola virus escapes Texas and spreads nationally.
I?m not worried. I?m actually pretty good with a bow and arrow.
Thank you United Airlines!
I happy to report that the total return for my followers so far in 2014 has topped 35%, compared to a pitiful 1% gain for the Dow Average during the same period.
In September, my paid Trade Alert followers have posted a blockbuster 5.01% in gains. This is on the heels of a red-hot August, when readers took in a blistering 5.86% profit.
The nearly four year return is now at an amazing 157.8%, compared to a far more modest increase for the Dow Average during the same period of only 37%.
That brings my averaged annualized return up to 39.7%. Not bad in this zero interest rate world. It appears better to reach for capital gains than the paltry yields out there.
This has been the profit since my groundbreaking trade mentoring service was first launched in 2010. Thousands of followers now earn a full time living solely from my Trade Alerts, a development of which I am immensely proud.
It has been pedal to the metal on the short side for me since the Alibaba IPO debuted on September 19. I have seen this time and again over four decades of trading.
Wall Street gets so greedy, and takes out so much money for itself, there is nothing left for the rest of us poor traders and investors. They literally kill the goose that lays the golden egg. Share prices have nowhere left to go but downward.
Add to that Apple?s iPhone 6 launch on September 8 and the market had nothing left to look for. The end result has been the worst trading conditions in two years. However, my double short positions in the S&P 500 (SPY) and the Russell 2000 (IWM) provided the lifeboat I needed.
The one long stock position I did have, in Tesla (TSLA), is profitable, thanks to a constant drip, drip of leaks about the imminent release of the Model X SUV. The Internet is also burgeoning with rumors concerning details about the $40,000 next generation Tesla 3, which will enable the company to take over the world, at least the automotive part.
Finally, after spending two months touring dreary economic prospects on the Continent, I doubled up my short positions in the Euro (FXE), (EUO).
Those positions came home big time when the European Central Bank adopted my view and implanted an aggressive program of quantitative easing and interest rate cuts. Hint: we are now only one week into five more years of Euro QE!
The only position I have currently bedeviling me is a premature short in the Treasury bond market in the form of the ProShares Ultra Short 20+ Treasury ETF (TBT). Still, I only have a 40 basis point hickey there.
Against seven remaining profitable positions, I?ll take that all day long. And I plan to double up on the (TBT) when the timing is ripe.
Quite a few followers were able to move fast enough to cash in on the move. To read the plaudits yourself, please go to my testimonials page by clicking here. They are all real, and new ones come in almost every day.
Watch this space, because the crack team at Mad Hedge Fund Trader has more new products and services cooking in the oven. You?ll hear about them as soon as they are out of beta testing.
The coming year 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 by the end of 2014.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011, 14.87% in 2012, and 67.45% in 2013.
Our flagship product,?Mad Hedge Fund Trader PRO, costs $4,500 a year. ?It includes?Global Trading Dispatch?(my trade alert service and daily newsletter). You get a real-time trading portfolio, an enormous research database, and live biweekly strategy webinars. You also get Jim Parker?s?Mad Day Trader?service and?The Opening Bell with Jim Parker.
To subscribe, please go to my website at?www.madhedgefundtrader.com, click on ?Memberships? located on the second tier of tabs.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/08/John-Thomas4.jpg325331Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-10-03 01:05:282014-10-03 01:05:28Mad Hedge Fund Trader Tops 30% Gain in 2014
During last month?s Concourse d? Elegance vintage car show at Pebble Beach, California, I managed to catch up with Tesla?s senior management. All lights were flashing green, and it was full speed ahead.
The new Gigafactory being built outside Reno, Nevada will pave the way for the firm?s entry into the mass market. The big issue in selecting a site was not cost or subsidies, but the permitting process. In Nevada, where almost everything is legal, you can get a building permit in 30 days, compared to months elsewhere and years in California.
Expect to see the Model Tesla 3 out in three years, which will cost $40,000 and get a 300-mile range. Ranges on Lithium Ion battery driven vehicles are doubling every four years. Buying a car at that price, with no maintenance and free fuel for life, is the same as paying $20,000 for a gasoline driven car.
That?s when Tesla ramps up production from this year?s 40,000 units to 500,000, turning the ?Big Three? auto makers into the ?Big Four.? This is why the big institutional investors are going gaga over the stock.
All that has been missing this year has been a decent entry point to buy the stock. It now appears we have one, the stock giving up 17% from its August $295 high.
All of which brings me to Tesla?s share price, which has just taken a swan dive from $265 to $184 as hot money fled the big momentum names. Let me tell you that the revolutionary vehicle is still wildly misunderstood, and the company has done a lousy job making its case. I guess you can afford that luxury when consumers line up for a year to buy your product.
The electric power source is, in fact, the least important aspect of the Tesla cars. Here are 15 reasons that are more important:
1) The vehicle has 75% fewer parts than any other, massively reducing production costs. The drive train has 11 parts, compared to over 1,500 for conventional gasoline powered transportation. Tour the factory and it is eerily silent. There are almost no people, just a handful who service the German robots that put these things together.
2) No maintenance is required, as any engineer will tell you about electric motors. You just rotate the tires every 6,000 miles.
3) This means that no dealer network is required. There is nothing to fix.
4) If you do need to repair something, usually it can be done over the phone. Rebooting the computer addresses most issues. If not, they will send a van to do a repair at your house for free.
5) The car runs at room temperature, not the 500 degrees in standard internal combustion cars. This means that the parts last forever.
6) The car is connected to the Internet 24/7. Once a month it upgrades its own software when you are sleeping. You jump in the car the next morning and a message appears on your screen saying, ?We just upgraded the following 20 Apps.? This is the first car I ever owned that improved itself with age, as I do myself.
7) This is how most of the recalls have been done as well, over the Internet while you are sleeping.
8) If you need to recharge at a public station, it is free. Tesla has its own national network of superchargers that will top you up in 45 minutes, and allow you to drive across the country (see map below). But hotels and businesses have figured out that electric car drivers are the kind of big spending customers they want to attract. So public stations have been multiplying like rabbits. When I first started driving my Nissan Leaf in 2010 there were only 25 charging stations in the Bay Area. There are now over 1,000. They even have them at Costco.
9) No engine means a lot more space for other things, like storage. You get two trunks in the Model-S, a generous one behind, and a ?frunk? in front.
10) Drive an electric car in California, and you are treated like visiting royalty. You can drive in the HOV commuter lanes as a single driver. This won?t last forever, but it?s a nice perk now.
11) There is a large and growing market for all American made products. Tesla has a far higher percentage of US parts (100%) than any of the big three.
12) Since almost every part is made on site at the Fremont factory, supply line disruptions are eliminated. Most American cars are over dependent on Asian supply lines for parts and frequently fall victim to disruptions, like floods and tidal waves.
13) There are almost no controls, providing for more cost savings. Except for the drive train, windows, and turn signals, all vehicle controls are on the touch screen, like a giant iPhone 6 plus.
14) A number of readers have argued that the Tesla really runs on coal, as this is still the source of 36% of the US power supply. However, if you program the car between midnight and 7:00 AM (one of my ideas that Tesla adopted in a recent upgrade), you are using electricity generated by the utilities to maintain grid integrity at night that otherwise goes unused and wasted. How much power is wasted like this in the US every night? Enough to recharge 150 million cars per night!
15) Oh yes, the car is good for the environment, a big political issue for at least half the country.
No machine made by humans is perfect. So in the interest of full disclosure, here are a few things Tesla did not tell you before you bought the car.
1) There is no spare tire or jack, just an instant repair kit in a can.
2) The car weighs a staggering 3 tons, so conventional jacks don?t work. Lithium is heavy stuff, and the electric rotors and stators on the wheels that generate power weigh 250 pounds each. This means you only get 12,000 miles per set of tires.
3) The car is only 8 inches off the ground, so only a scissor jack works.
4) The 21-inch tires on the high performance model are a special order. Get a blowout in the middle of nowhere and you could get stranded for days. So if you plan to drive to remote places, like Lake Tahoe, as I do, better carry a 19-inch spare in the ?frunk? to get you back home.
5) If you let some dummy out in the boonies jack the car up the wrong way, he might puncture the battery and set it on fire. It will be a decade before many mechanics learn how to work with this advanced technology. The solution here is to put a hockey puck between the car and the jack. And good luck explaining what this is to a Californian.
6) With my Leaf, I always carried a 100-foot extension cord in the trunk. If power got low, I just stopped for lunch at the nearest sushi shop and plugged in for a charge. Not so with Tesla. You are limited to using their 20-foot charging cable, or it won?t work. I haven?t found anyone from the company who can tell me why this is the case.
The investment play here is not with the current Model S1, which is really just a test bed for the company to learn how to execute real mass production. This is why the current price/earnings multiple is meaningless. Battery technologies are advancing so fast now, that range/weights are doubling every four years.
And guess what? Detroit is so far behind developing this technology that they will never catch up. My guess is that they eventually buy batteries and drive trains from Tesla on a licensed basis, as Toyota (for the RAV4) and Daimler Benz (for the A Class) already are. Detroit?s entire existing hybrid technologies are older versions similarly purchased from the Japanese (bet you didn?t know that).
That leaves the global car market to Tesla for the taking. Sales in China are taking place at a price 50% higher than here in the US, and the early indications are that they will be an absolute blowout. Government support there is no surprise, given that the air pollution in Beijing is so thick you can cut it with a knife.
All of this will boost the shares from the present $250 to over $500. I would say $1,000 a share, but I don?t want to give it the Apple (AAPL) curse. So if you can use the current weakness to buy it under $250, you will be well rewarded.
You might also go out and buy a Model S1 for yourself as well. It?s like driving a street legal Formula 1 racecar and is a total blast. Just watch out for soccer moms driving Silverado?s speaking on cell phones.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/02/Tesla-Plant.jpg315416Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-25 01:03:082014-09-25 01:03:08Plunging Back into Tesla
It now appears that the ?Alibaba? correction (BABA) is at hand.
I warned you, pleaded with you, and begged you about this yesterday, and on May 8 (click here for ?Will Alibaba Blow Up the Market?).
The longer the company postponed the mother of all IPO?s, the higher the prices flew, until we finally got a print at the absolute apex of the market. Now, it?s time to pay the piper.
The development is part of a broader move out of riskier, higher beta stocks into safe, large caps that has been underway for several weeks now. Those traders who are ahead want to protect their years. Those who aren?t are screwed anyway, so don?t bother returning their phone calls.
Look no further than my favorite, Tesla (TSLA), which topped out on September 3, along with the rest of the MoMo high technology, biotechnology and Internet names.
Still love the cars, though.
The (IWM) has really been sucking hind teat all year, falling by 3% year to date compared to an 8% gain in the S&P 500.
Yesterday, the sushi really hit the fan when the 50-day moving average pierced the 200-day moving average for the first time since August, 2011. Known as a much dreaded ?death cross,? this is the technical equivalent of slitting both wrists and thrashing about in shark-invested waters, heralding more declines to come.
Let me list the reasons why this is the sector traders love to hate when markets move from ?RISK ON? to ?RISK OFF?:
*Since small companies borrow more than large companies, they are far more sensitive to rising interest rates. Guess what? Rates have been rocketing this month.
*Since small companies are more leveraged (indebted) than big ones, they are more sensitive to a slowing economy.
*Small companies don?t have the international diversification of their bigger brethren, and therefore have less of a financial cushion to fall back on.
*The (IWM) has roughly 1.5 times the volatility of the S&P 500, making a short position here fantastic downside protection for a broader based portfolio of stocks. So you get a lot of selling here, as managers try to lock in performance for fiscal years that start ending as early as October 31.
*Did I mention that the stock market is at one of its most overbought levels in history, the worst since 1928? Bearish sentiment is at only 13%, the lowest since 1987. These are more reason to sell, as if you needed any.
My readers have made tons of money over the years playing the (IWM) on the short side. It?s time for another visit to the trough. I?m not finishing my year early.
Not yet, anyway.
If you can?t trade options, then buy the Short Russell 2000 Fund ETF (RWM) as a 1X play, or the Direxion Daily Small Cap Bear 3X ETF (TZA) for a 3X trade. However, 3X ETF?s of any kind are for intra day traders only.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/04/Burning-Building-e1430840521423.jpg308400Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-24 01:05:532014-09-24 01:05:53Time to Bail on the Small Caps
In recent weeks, I couldn?t help but notice the green and white vans of Solar City (SCTY) visiting my neighbors. My trader?s radar went up, so I thought there might be an opportunity here.
With my second Tesla (TSLA) about to be delivered, the Model X SUV, it was time for me to review my electricity bill.
My first Tesla, an S-1, boosted my monthly power consumption from 600 kWh to 1,800 kWh per month, about what a small industrial facility might use. Yet, my bill from PG&E increased from only $350 to $450 a month. This is because they effectively give away power for free from 12:00 AM to 7:00 AM to qualified EV users, charging me only 4.7 cents per kWh.
On my suggestion, Tesla then upgraded their software so vehicles could be programmed to recharge only at these hours. That means it is costing me $4.00 for a full 80 kWh charge that can take me 255 miles, or 1.6 cents a mile. That doesn?t include the enormous savings on maintenance (there is none).
Well then! The IRS currently allows a mileage deduction of 56 cents per mile for business purposes, so that?s an opportunity to exploit right there.
Given that the average US car now gets 25 miles per gallon of gasoline (and that is being generous), that means my equivalent cost for running my S-1 works out to paying a scant 40 cents a gallon.
This compares to the $3.60 at the local service station ($3.45 at Costco), which is at a one year low, or a savings of 89%. That is a little more than I paid for gas when I first started driving a beat up VW Bug at the Santa Anita Race Track parking lot back in 1967.
That sounds like a deal to me.
However, the second Tesla is likely to boost my monthly power consumption from 1,800 kWh to 3,000. When PG&E sees bills that big, they assume someone is operating an illegal marijuana grow house and send the DEA to kick your door down at 5:00 AM on a Monday morning.
So I was on the phone to Solar City the next morning. What I heard was nothing less than amazing.
For a start, they called up a Google Earth mapping program that focused on a picture of my roof from a low earth orbit satellite (Google has invested $280 million in Solar City). Then a second program autofit their existing solar panels to my roof and spit out a mass of numbers.
This complete stranger told me things about my roof that I never knew, like it was 4,000 square feet of flat concrete tiles on 14 planes. Welcome to the 21st century.
I nervously looked down and made sure my fly was fully zipped up.
He went on to tell me that he could fit a 15 kW DC system on my roof that would generate 106% of my power needs, generating 19,365 kWh a year. That would make me completely self sufficient in electricity, even though I will be charging two hulking Tesla 1,000 pound lithium ion batteries every day.
They will install a ?net? two-way electric meter on my house. When the sun shines, it will run backwards as I can sell power to PG&E (PCG) at high prices.
At night, when I recharge my cars, I would then buy cheap power from Solar City. No storage devices are required. The PG&E grid is effectively the storage system. That would turn me into a day trader of electricity, selling high by day and buying low by night. I love it!
How did their satellite know I was a hedge fund trader? What else does it know?
Now comes the best part. The cost of the installation and panels was $66,000. Solar City would do it for free. Yes, free, as in gratis, with no money down. They would lease me the panels for 20 years, with an annual price increase of 6.2%. That would cut my monthly electricity bill from $450 to $200. It does this by eliminating the tier 3, 4 and 5 prices I am currently paying PG&E.
If I sell my house, I can either buy out my contract at the discounted, fully depreciated value, or pass it on to the new owners. It is well known that solar panels significantly increase the value of existing homes.
Installation can be done in a day. But it can only take place on unbreakable concrete tile roofs. Those made of clay tiles, metal, tar and gravel, wood shakes, or slate don?t work for various reasons. You need a FICO score of 680 or better to qualify. There is a 60-day waiting list to get this done.
It didn?t take me long to figure out the game here. By purchasing the panels and leasing them to me, they keep the 30% government subsidy for capital investments in alternative energy, which works out to $19,890 for my house alone. Solar city also gets to depreciate these panels on an accelerated schedule, mostly in the first five years.
This explains why Solar City has grown larger than the next 15 competitors combined. Solar City?s largest customer is the US Army, which has already installed panels on 1 million structures.
There is one cautionary note to add here. The government subsidies that help float the company expire in 2018, making the entire proposition financially less attractive. That is, unless they get renewed. Think President Hillary.
The only things that would save them are dramatically higher conventional energy costs. However, right now energy costs are heading the opposite direction, thanks to fracking.
As with everything else Elon Musk touches, an investment in Solar City has been wildly successful. Since the company went public at the end of 2012, the shares have risen by an awesome 670%. Needless to say, with no earnings, and no dividend, the $6.5 billion market cap company may appear hopelessly expensive.
Like with Elon?s other company, Tesla, your aren?t betting on the value of the business today, but where it will be in five years, when it has a far larger share of the market.
Given Musk?s track record so far, that is a bet that I am willing to take.
My Home from Outer Space
It?s Been a Long and Winding Road Driving from This?
https://www.madhedgefundtrader.com/wp-content/uploads/2014/08/John-Thomas-Tesla.jpg330317Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-08-28 09:35:342014-08-28 09:35:34Taking a Look at Solar City
Once again, Tesla (TSLA) visionary, Elon Musk, surprised to the upside with his latest reports on earnings and production for his revolutionary vehicle.
Musk, who also founded groundbreaking Space X and Solar City (SCTY), expanded on his plans to manufacture in China and expand sales in Europe, where 220 volts is already standard.
The first ever left hand drive Model S-1 was just delivered in London to E.L. James, author of Fifty Shades of Grey, a fictional tome that is racy in its own right (worst book I ever read).
You can? keep a good stock down, which is now spitting distance from an all time high. That was the obvious message on Tesla (TLSA) shares in the wake of last year?s fire that consumed one of its $80,000 Model S-1?s on a Washington state road after it ran over the rear bumper of the truck it was following.
The video was quickly plastered all over YouTube (click here to view). Tesla quickly delivered a new car to the grateful owner within a week.
This was the first S-1 to catch fire since the production run started two years ago. There have been two others since. Compare that to the roughly 400 gasoline powered vehicles that catch fire on US roads nearly every day.
If you really want to see how volatile gasoline is, try lighting a campfire with it some day. Even tossing in matches in from a great distance, as I once did, you?ll be lucky to have your eyebrows left. I didn?t.
To make amends, Tesla is installing titanium armor plating on the bottom of every S-1 for free. They did mine this week, and gave me new a new Tesla as a loaner!
Tesla followed up quickly with an analysis and a letter with a complete explanation sent to all other S-1 drivers signed by none other than CEO Elon Musk. I have included the entire text below in italics. He doesn?t leave much to the imagination.
If only all car manufacturers behaved like this! ?Earlier this week, a Model?S traveling at highway speed struck a large metal object, causing significant damage to the vehicle. A curved section that fell off a semi-trailer was recovered from the roadway near where the accident occurred and, according to the road crew that was on the scene, appears to be the culprit. The geometry of the object caused a powerful lever action as it went under the car, punching upward and impaling the Model?S with a peak force on the order of 25 tons. Only a force of this magnitude would be strong enough to punch a 3 inch diameter hole through the quarter inch armor plate protecting the base of the vehicle.
The Model?S owner was nonetheless able to exit the highway as instructed by the onboard alert system, bring the car to a stop and depart the vehicle without injury. A fire caused by the impact began in the front battery module ? the battery pack has a total of 16 modules ? but was contained to the front section of the car by internal firewalls within the pack. Vents built into the battery pack directed the flames down towards the road and away from the vehicle.
When the fire department arrived, they observed standard procedure, which was to gain access to the source of the fire by puncturing holes in the top of the battery's protective metal plate and applying water. For the Model?S lithium-ion battery, it was correct to apply water (vs. dry chemical extinguisher), but not to puncture the metal firewall, as the newly created holes allowed the flames to then vent upwards into the front trunk section of the Model?S. Nonetheless, a combination of water followed by dry chemical extinguisher quickly brought the fire to an end.
It is important to note that the fire in the battery was contained to a small section near the front by the internal firewalls built into the pack structure. At no point did fire enter the passenger compartment.
Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse. A typical gasoline car only has a thin metal sheet protecting the underbody, leaving it vulnerable to destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and often burn the entire car to the ground. In contrast, the combustion energy of our battery pack is only about 10% of the energy contained in a gasoline tank and is divided into 16 modules with firewalls in between. As a consequence, the effective combustion potential is only about 1% that of the fuel in a comparable gasoline sedan.
The nationwide driving statistics make this very clear: there are 150,000 car fires per year according to the National Fire Protection Association, and Americans drive about 3 trillion miles per year according to the Department of Transportation. That equates to 1 vehicle fire for every 20 million miles driven, compared to 1 fire in over 100 million miles for Tesla. This means you are 5 times more likely to experience a fire in a conventional gasoline car than a Tesla!
For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid.?
https://www.madhedgefundtrader.com/wp-content/uploads/2014/08/Tesla.jpg351473Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-08-08 01:03:292014-08-08 01:03:29An Update on the Tesla Fire
Will the person who bought Tesla shares (TSLA) on my recommendation last year at $30 please email me?
I have been traveling a lot recently and lost your email address. I would like to get a testimonial from you. The stock hit $250 earlier this year and is up 833% from your cost, making it one of the best performing shares in US over the last 18 months
With the money you?ve made you can probably buy several Teslas now. I recommend the high performance Model S-1 with the upgraded sound system and the 270-mile range. I have one, and they are to die for.
It?s a bargain at $110,000, considering there is no fuel or maintenance required for the life of the car (the power is almost free in California). And you can get $5,000 worth of state and federal tax refunds and credits for being so green, as well as a white sticker to drive in HOV lanes alone at rush hour. That, alone, will cut an hour off your commute each day
It's the only car I ever bought where the specifications keep improving every month with each automatic software update.
Only last night, the company adopted another one of my recommendations with it?s monthly software upgrade, to highlight public supercharging stations on the navigation system with a red flag, so I can conveniently stop off for a quick 45 minute top up.
Or you can wait until next year and by the four-wheel drive SUV Model X with the gull wing doors. I am on the waiting list for that one as well.
Don?t sell your stock either if you are a long-term player. My friend, CEO Elon Musk, is imminently going to announce the location of his new $5 billion ?gigafactory.? My bet is that California will be the winner of the location battle, as Texas and New Jersey have unwisely banned Tesla sales to protect the local dealer network and the firm is afraid that its workers will be arrested as illegal immigrants in ultra red state Arizona.
The project, one of the largest capital investments in US history, will, in one fell swoop, double global battery production.
That will lay the groundwork for the launch of its ?NextGen? vehicle in 2018. The $40,000, 300-mile range car will take Tesla to a global mass market of 500,000 units a year and more, compared to last year?s nascent, start up 20,000 in sales.
That should take the stock up to $500 in a few years and possibly even $1,000. This is why the investment giants like Fidelity are hanging in there with gigantic long positions.
The other major car companies are so far behind, they will never catch up with the technology. In fact, if you get another chance to buy the shares around $160, I would pick up more.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/JT-with-Tesla-e1427723768460.jpg227400Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-06-10 01:03:002014-06-10 01:03:00About That Tesla Recommendation
If there is one complaint about the Diary of aMad Hedge Fund Trader, it is that I am too short term in my orientation. My response is that this is the only way you can obtain a 138% trading return in 3 ? years. I can skim off the cream when others can?t.
There is a reason why we are the only investment newsletter that publishes our performance on a daily basis. Basically, all our competitors lose money for their readers. It?s a lot like those Japanese restaurants that display plastic models of their food in the front window.
Still, I like to throw readers ten baggers when I find them. Long-term followers get that warm and fuzzy feeling when I mention Baidu (BIDU) ($12 to $190), Cheniere Energy (LNG) ($5 to $68), Molycorp ($12 to $80), and Tesla (TSLA) ($16 to $260) for a good reason.
Well, I found another ten bagger, one you can just buy and forget about for the next three to five years. I discovered this jewel at the SALT conference in Las Vegas last month organized by my friend, Anthony Scaramucci (click here for ?The Report on the 6th Annual Skybridge Alternatives (SALT) Conference?).
At the keynote dinner, I randomly picked a table near the stage. One of the couples next to me wore a UCLA pin from where she graduated, prompting a discussion of the Golden age of Bruin basketball and the salad days of? legends John Wooden and Bill Walton (four perfect 30-0 seasons and an 88 game winning streak!).
I casually mentioned I was there as a cancer researcher and DNA scientist during the early 1970?s, and graduated in biochemistry. The ears perked up, and the dam broke.
The gentleman I was dining with turned out to be the CEO of CytRx Corp. (CYTR) a revolutionary innovator in the chemotherapy field. Through a top secret, patented chemical reaction, their chemists can add an acid sensitive linker molecule to pre existing generic chemotherapy drug.
That enables the drug to only kill the cancer cells and not the rest of you as well, eliminating side effects, and permitting a substantial ramping up of the dosage. I worked out the chemistry in my mind, and quickly figured out that it would work.
The net effect is to install a turbocharger on existing drugs, greatly enhancing their curative effects. Stage three trials will be completed by 2016, when the company expects full FDA approval. The company has $125 million in cash and no debt.
I lost a wife to cancer 12 years ago, and received a crash update on the state of the science then. I have been following it ever since, awaiting my turn. If CytRx is able to pass the FDA gauntlet, then they have found the Holy Grail. Best of all, the shares have just suffered a 67% pullback, thanks to the spring biotech meltdown.
To learn more about the company and obtain the details, please visit their website: ?http://www.cytrx.com .
Curing of cancer during the 2020?s is a major part of my Golden Age scenario for the coming decade (click here for ?Here Comes the Next Golden Age?).
The kicker here is that there is not just one, but hundreds of companies developing ground-breaking treatments that will come out in the years ahead, many of them just across the bridge from me. This should collapse the cost of health care for the government, and the rest of us as well.
I knew I would live forever!
Remember that buying the shares of a drug company before final approval is always a crapshoot. The last time I did this was with Genentech?s (DNA) Avastin, because I was dating the senior researcher there at the time (tall, long legs, brilliant).
The shares doubled the day they got the green light, and Bank of America flipped from a ?SELL? to a ?BUY? recommendation for the stock on top of a $30 move, tail between legs. That was good.
As we parted ways, the CEO even pushed over his desert, from which his doctor forbade him for health reasons. I gobbled that up as well.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/JT-with-Tesla-e1427723768460.jpg227400Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-06-05 01:04:442014-06-05 01:04:44Is CytRx Corp (CYTR) Another Ten Bagger?
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Somehow, It?s Just Not the Same
