Can't read the article (I don't have a bloomberg subscription). I can't agree w/ the take that the real estate market will keep rolling. It may keep on for the near future, but once these stimulus protections end people will be evicted who are behind on rent and many home owners will be behind on mortgage payments. Even when the economy reopens (mostly in blue states) many people are going to be too afraid to travel, go to the movies, attend a sporting event/concert/festival, etc. I think there will be a bump in the economy from those who have been holed-up in blue states who are dying to get out and spend money - but that will come to and end after a few months. Housing will probably have a little bump because many people have been holding off on selling due to the virus - but, this will increase the inventory, which could stabilize prices. I think we see a "correction"....not a collapse, per se. I think it would have already happened if not for covid.
Global Market Comments
March 17, 2021
Fiat LuxFeatured Trade:(THE MAD HEDGE TRADERS & INVESTORS
SUMMIT VIDEOS ARE UP)
(THE MAD HEDGE DICTIONARY OF TRADING SLANG)
March 17, 2021
Fiat LuxFeatured Trade:(THE MAD HEDGE TRADERS & INVESTORS
SUMMIT VIDEOS ARE UP)
(THE MAD HEDGE DICTIONARY OF TRADING SLANG)
The Mad Hedge Summit Videos are UpThe Mad Hedge Summit videos are up from the March 9,10, and 11 confab. Listen to 27 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here, select CURRENT SUMMIT REPLAYS in the upper right-hand corner, and then choose the speaker of your choice.
The Mad Hedge Dictionary of Trading SlangThe Diary of a Mad Hedge Fund Trader is read in 140 counties. About a quarter of our readers run the letter through a Google Translator before reading.
That has created a problem.
Stock trading is probably the most slang and acronym-ridden profession on the planet, second only to the United States Marine Corps. (Semper Fi).
And guess what? The Google Translator has never worked on the floor of a major stock exchange.
That means its translations often come out as gobbledygook or complete nonsense. So, the customers email me asking what the heck I am talking about in my daily newsletters, eating up a portion of my day.
I am therefore enclosing “The Mad Hedge Fund Trader’s Dictionary of Traders’ Slang” below.
To keep this a PG-rated publication, I have left some terms undefined, but you can make a good guess as to their true meaning. It turns out that most traders never got to finishing school, and many are not even gentlemen.
If any of you out there have additional terms you would like to add, please email them to me at support@madhedgefundtrader.com and put “DICTIONARY” in the subject line. I’ll use them in a future update. No doubt there are hundreds, if not thousands more.
Read, enjoy, and laugh.
Accelerated Time Decay – The increasing decline of the value of a stock option as it approaches its expiration date
Black Swan – A term made popular by Nassim Taleb that refers to a sudden, unexpected, low-probability event that has a disproportionately high impact on your portfolio.
Boredom Trading – reaching for marginally profitable trades during quiet markets because there is nothing else to do. Usually a bad idea.
Bottoming Process – When a market makes several failed attempts to make new lows, creating a medium term bottom
Blow off Top – The top of a price spike upward usually associated with a volume spike as well
Bubble – Any assets class rising in price far above and beyond any rational valuation measures
Buy the Dip – BTD/BTFD/BTMFD - Buy the recent decline in prices.
Don’t Catch a Falling Knife – don’t try and buy a stock in free fall
Don’t be a Hero – keep positions small during volatile markets
“Be greedy when others are fearful, and fearful when others are greedy” is a classic Benjamin Graham quote which means “buy bottoms and sell top.”
Pigs Get Slaughtered – Buy a position that is too big for you and it will turn around and bite you
Bull Trap – a strong market move up that sucks in buyers and then dies as soon as the last one is in
Bear Trap – A strong market move down that sucks in lots of short sellers and turns around as soon and the last one sells
Buy When There is Blood in the Streets – Buy stocks at market bottoms
Capitulation Bottom – The last bull throws in the towel, gives up, and dumps all his stock, making the final bottom of a major move
Capitulation Top – The last bear throws in the towel, gives up, and jumps into the market late, making the final top of a major move
Choppy – sudden and erratic price moves within a narrow range
Contrarian – one who trades against the general market consensus
Dead Cat Bounce – A brief rally in s stock that has just seen a sharp drop
Dialing for Dollars – Calling brokerage house customers to sell stocks for commissions
Don’t Fight the Fed – Don’t expect markets to fall when interest rates are falling
Don’t Fight the Tape – Don’t trade against the market trend. Comes for the paper ticker tapes that once transmitted stock prices by telegraph
Dry Powder – Keeping cash in reserve for better trading opportunities
Dumb Money – what inexperienced retail investors are doing. Thanks to the internet, they’re not as dumb as they used to be
Get Filled – Your order is executed
Growing Hair on It – Keeping a position for too long
The Greeks – Greek alphabet letters that refer to option valuation components, such as delta, theta, gamma, and vega
High-Frequency Traders (HFT) – Firms using sophisticated computer programs to take positions for infinitesimally short periods of time taking microscopic profits in enormous volumes. They account for roughly 70% of daily trading volume
Holding the Bag – you are left holding stock in a falling market or short in a rising one
Honor Your Stops - don’t make excuses for ignoring stop losses. This is where the really big hits come from
Killing It – Making a series of successful trades
Locked Market – When the bid and offer are identical
Market Makers – firms that provide market liquidity with two-sided bids and offers, now largely replaced by computers
Melt Up – A straight line move upward in shares with no pullbacks whatsoever, usually triggered by a news or earnings release
Momo – Momentum-based trading, buying rising markets and selling falling ones
Never Short a Dull Market – Quiet markets can often rally sharply because the selling is done
Noise – Random media reporting that has no true impact on the direction of stock prices
Pain Trade – the market is moving against the positions of the trading community
Permabear – A persona who is always bearish, usually driven by some bizarre Armageddon-type ideology, or suffering from paranoia
Permabull – a person who is always bullish, despite deteriorating fundamental conditions
Picking Up Pennies in Front of a Steamroller – Sell short naked put options
Pump and Dump – Unethical brokers run of the prices of small illiquid stocks and then sell them to clients at market tops. The shares usually collapse afterwards. See the movie Wolf of Wall Street
Resistance Level – A price on a stock chart offering technical resistance to further price appreciation
Sell in May and Go Away – The preference for selling shares ahead of a period of seasonal weakness
Sell the Rip – STR/STFR/ STMFR
Short Squeeze – A sharp run-up in share prices that forces short sellers to buy to avoid accelerating losses.
Smart Money – what the best informed, most experienced investors are doing. Not as smart as they used to be.
Snakebit – A surprise news development that comes out of the blue and costs you money
Spoofing – entering orders without any intention of executing them and cancelling them before they can be executed. It is a common tactic of high-frequency traders
Spoos – S&P 500 futures contracts
Squak Box – A small loudspeaker on a desktop in a trading room constantly broadcasting news reports and large trades
Support Level – A price on a stock chart offering significant technical support
Stop Loss - a price at which, when reached, a liquidation of the position is automatically triggered
The Trend is Your Friend – Trade with the market direction, not against it
Theta Burn – Time decay on options
Ticker Tape – A white ¾ inch wide paper tape used to transmit stock prices by telegraph at the rate of 500 characters a minute that was used until the 1950s to transmit stock prices. See ticker tape parade and delayed tape.
Topping Process – occurs when a market makes several failed attempts to make a new high, creating a medium term top
Turnaround Tuesday – the tendency of markets to reverse direction after the markets digest weekend news on a Monday
Yellen Put – an assumption that the Fed will come to the rescue with a monetary easing on any substantial market selloff.
That has created a problem.
Stock trading is probably the most slang and acronym-ridden profession on the planet, second only to the United States Marine Corps. (Semper Fi).
And guess what? The Google Translator has never worked on the floor of a major stock exchange.
That means its translations often come out as gobbledygook or complete nonsense. So, the customers email me asking what the heck I am talking about in my daily newsletters, eating up a portion of my day.
I am therefore enclosing “The Mad Hedge Fund Trader’s Dictionary of Traders’ Slang” below.
To keep this a PG-rated publication, I have left some terms undefined, but you can make a good guess as to their true meaning. It turns out that most traders never got to finishing school, and many are not even gentlemen.
If any of you out there have additional terms you would like to add, please email them to me at support@madhedgefundtrader.com and put “DICTIONARY” in the subject line. I’ll use them in a future update. No doubt there are hundreds, if not thousands more.
Read, enjoy, and laugh.
Accelerated Time Decay – The increasing decline of the value of a stock option as it approaches its expiration date
Black Swan – A term made popular by Nassim Taleb that refers to a sudden, unexpected, low-probability event that has a disproportionately high impact on your portfolio.
Boredom Trading – reaching for marginally profitable trades during quiet markets because there is nothing else to do. Usually a bad idea.
Bottoming Process – When a market makes several failed attempts to make new lows, creating a medium term bottom
Blow off Top – The top of a price spike upward usually associated with a volume spike as well
Bubble – Any assets class rising in price far above and beyond any rational valuation measures
Buy the Dip – BTD/BTFD/BTMFD - Buy the recent decline in prices.
Don’t Catch a Falling Knife – don’t try and buy a stock in free fall
Don’t be a Hero – keep positions small during volatile markets
“Be greedy when others are fearful, and fearful when others are greedy” is a classic Benjamin Graham quote which means “buy bottoms and sell top.”
Pigs Get Slaughtered – Buy a position that is too big for you and it will turn around and bite you
Bull Trap – a strong market move up that sucks in buyers and then dies as soon as the last one is in
Bear Trap – A strong market move down that sucks in lots of short sellers and turns around as soon and the last one sells
Buy When There is Blood in the Streets – Buy stocks at market bottoms
Capitulation Bottom – The last bull throws in the towel, gives up, and dumps all his stock, making the final bottom of a major move
Capitulation Top – The last bear throws in the towel, gives up, and jumps into the market late, making the final top of a major move
Choppy – sudden and erratic price moves within a narrow range
Contrarian – one who trades against the general market consensus
Dead Cat Bounce – A brief rally in s stock that has just seen a sharp drop
Dialing for Dollars – Calling brokerage house customers to sell stocks for commissions
Don’t Fight the Fed – Don’t expect markets to fall when interest rates are falling
Don’t Fight the Tape – Don’t trade against the market trend. Comes for the paper ticker tapes that once transmitted stock prices by telegraph
Dry Powder – Keeping cash in reserve for better trading opportunities
Dumb Money – what inexperienced retail investors are doing. Thanks to the internet, they’re not as dumb as they used to be
Get Filled – Your order is executed
Growing Hair on It – Keeping a position for too long
The Greeks – Greek alphabet letters that refer to option valuation components, such as delta, theta, gamma, and vega
High-Frequency Traders (HFT) – Firms using sophisticated computer programs to take positions for infinitesimally short periods of time taking microscopic profits in enormous volumes. They account for roughly 70% of daily trading volume
Holding the Bag – you are left holding stock in a falling market or short in a rising one
Honor Your Stops - don’t make excuses for ignoring stop losses. This is where the really big hits come from
Killing It – Making a series of successful trades
Locked Market – When the bid and offer are identical
Market Makers – firms that provide market liquidity with two-sided bids and offers, now largely replaced by computers
Melt Up – A straight line move upward in shares with no pullbacks whatsoever, usually triggered by a news or earnings release
Momo – Momentum-based trading, buying rising markets and selling falling ones
Never Short a Dull Market – Quiet markets can often rally sharply because the selling is done
Noise – Random media reporting that has no true impact on the direction of stock prices
Pain Trade – the market is moving against the positions of the trading community
Permabear – A persona who is always bearish, usually driven by some bizarre Armageddon-type ideology, or suffering from paranoia
Permabull – a person who is always bullish, despite deteriorating fundamental conditions
Picking Up Pennies in Front of a Steamroller – Sell short naked put options
Pump and Dump – Unethical brokers run of the prices of small illiquid stocks and then sell them to clients at market tops. The shares usually collapse afterwards. See the movie Wolf of Wall Street
Resistance Level – A price on a stock chart offering technical resistance to further price appreciation
Sell in May and Go Away – The preference for selling shares ahead of a period of seasonal weakness
Sell the Rip – STR/STFR/ STMFR
Short Squeeze – A sharp run-up in share prices that forces short sellers to buy to avoid accelerating losses.
Smart Money – what the best informed, most experienced investors are doing. Not as smart as they used to be.
Snakebit – A surprise news development that comes out of the blue and costs you money
Spoofing – entering orders without any intention of executing them and cancelling them before they can be executed. It is a common tactic of high-frequency traders
Spoos – S&P 500 futures contracts
Squak Box – A small loudspeaker on a desktop in a trading room constantly broadcasting news reports and large trades
Support Level – A price on a stock chart offering significant technical support
Stop Loss - a price at which, when reached, a liquidation of the position is automatically triggered
The Trend is Your Friend – Trade with the market direction, not against it
Theta Burn – Time decay on options
Ticker Tape – A white ¾ inch wide paper tape used to transmit stock prices by telegraph at the rate of 500 characters a minute that was used until the 1950s to transmit stock prices. See ticker tape parade and delayed tape.
Topping Process – occurs when a market makes several failed attempts to make a new high, creating a medium term top
Turnaround Tuesday – the tendency of markets to reverse direction after the markets digest weekend news on a Monday
Yellen Put – an assumption that the Fed will come to the rescue with a monetary easing on any substantial market selloff.
Quote of the Day
When asked how he manages the time to be chairman of Microsoft, run the world's largest charity, and raise three kids, Bill Gates answered, "I don't mow the lawn."
March 18, 2021 |
| Good morning. (Was this newsletter forwarded to you? Sign up here.) |
|
| [h=2]Penny stocks are back[/h] |
| Of all the trading manias in recent months — Bitcoin, SPACs, meme stocks, nonfungible tokens — the latest has a long history of fraud and scandal. That’s right, penny stocks are booming, according to The Times’s Matt Phillips, who visited the “low-rent district of Wall Street.” |
| There were 1.9 trillion transactions last month on the over-the-counter markets, where such stocks trade, according to the industry regulator Finra. That’s up more than 2,000 percent from a year earlier, driven in large part by the surge in retail trading — enabled by commission-free trading from online brokerages — that has also stoked the frenzy for shares in GameStop and other speculative assets. |
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| Penny stocks have always lent themselves to quick fortunes, given that small inflows to these low-priced, thinly traded shares can make prices go berserk. That also makes them prone to fraud like pump and dumps, updated for the modern age with schemes hatched on social media. “It’s all just a pool filled with sharks,” said Urska Velikonja, a law professor at Georgetown. “It’s where the unwary go to get eaten.” |
| Penny-stock frenzies are common in raging bull markets. The current fervor among retail traders presents unnerving echoes from the past, according to Tyler Gellasch of the nonprofit Healthy Markets Association. Based on the scale of the recent mania, “the only relevant historical precedent seems to increasingly be the days before the Great Depression,” he said. |
[h=3]ADVERTISEMENT[/h]
| ||||
| Take it from Jordan Belfort, of “The Wolf of Wall Street.” “Everyone wants to get rich,” Mr. Belfort, a former “boiler-room” operator who pleaded guilty to market manipulation, told Matt, “and they want to get rich quick.” He added that an element of naïveté underpinned such trading: “We all want to believe in Santa Claus, the Tooth Fairy and Bernie Madoff.” |
| [h=3]HERE’S WHAT’S HAPPENING[/h] |
| The Fed keeps its policies steady. As expected, the central bank left interest rates at rock-bottom levels, despite improving economic growth forecasts. But the Upshot’s Neil Irwin notes that it may become harder for Jay Powell, the Fed chair, to wave away criticism of those who think monetary policy is too loose. |
| The I.R.S. delays the tax filing deadline. Americans have until May 17 to filetheir federal income taxes, a delay meant to help people cope with the pandemic’s economic upheaval and account for changes from the rescue plan. |
| Credit Suisse overhauls its business after the Greensill scandal. The Swiss bank will separate its asset-management division, replace its chief and suspend bonuses over the unit’s role in financing Greensill Capital, the supply-chain financing lender that collapsed this month. |
[h=3]ADVERTISEMENT[/h]
| ||||
| Gasoline may have hit its peak. Global demand may never return to pre-pandemic levels, the International Energy Agency said, as more electric vehicles hit the roads and transportation habits change. Use may rise for a bit in places like China and India, but overall consumption in industrialized economies will fall by 2023. |
| Senate confirms President Biden’s top trade official. Katherine Tai will become the U.S. trade representative. She is a prominent critic of China’s trade practices, signaling that the White House won’t completely walk back the Trump administration’s tough stance. Top U.S. officials are to meet their Chinese counterparts for the first time today, at a summit meeting in Alaska. |
| [h=2]Google is doubling down on office space[/h] |
| Google said today that it planned to invest $7 billion in offices and data centersin 19 U.S. states, making it the latest tech giant to expand its footprint while other companies retrench in a commercial real estate market roiled by the pandemic. Google’s C.E.O., Sundar Pichai, shared the plans in a blog post, saying that the move would create 10,000 jobs at the company this year. (Alphabet, Google’s parent company, employed around 135,000 people at the end of 2020.) |
[h=3]ADVERTISEMENT[/h]
| ||||
| Google is expanding across the country. The plan includes investments in data centers in places like Nebraska, South Carolina and Texas. The company recently opened its first office in Minnesota and an operations center in Mississippi. It will open its first office in Houston this year. |
| “Coming together in person to collaborate and build community is core to Google’s culture,” Mr. Pichai wrote. Google was one of the first companies to tell employees to work from home, and it expects workers to begin returning to offices in September. When that happens, it will test a “flexible workweek,” with employees spending at least three days a week in the office. |
| [h=2]“Many have framed the GameStop mania as a David versus Goliath struggle. I believe it is more likely that, when we have full information about this episode, the story will more closely resemble Goliath vs. Goliath.”[/h] |
| — Alexis Goldstein, a senior policy analyst for Americans for Financial Reform, at a Congressional hearing which focused on the relationship between brokers like Robinhood and market makers like Citadel Securities. |
| [h=2]Charting the blank-check boom[/h] |
| SPACs have already raised more money this year than in all of 2020, setting a record for blank-check deal volume. More than $84 billion has been raised by 264 SPACs to date, according to Dealogic, compared with $83 billion raised by 256 acquisition vehicles last year. |
|
| SPACs sitting on some $135 billion are currently seeking takeover targets, according to SPAC Research. Since they typically buy companies five times their size, that implies buying power of well over $600 billion, setting up a scramble for deals within the two-year window written into the rules of most SPACs. |
|
|
| [h=2]The S.E.C.’s crypto commissioner[/h] |
| Hester Peirce is one of the few financial regulators with an online fan base and a nickname. Known to some as “Crypto Mom,” she’s been raising the profile of cryptocurrencies and blockchain technology since being appointed an S.E.C. commissioner in 2018. On “Blockchain Policy Matters,” an online show by the Blockchain Association, a trade group, Ms. Peirce described her hopes for innovation and regulation of the crypto world. DealBook got a preview of the show, which posts today. |
| “Everyone is getting smarter on this stuff,” Ms. Peirce said of regulators considering crypto issues. Engaging more with the private sector “can help us regulators sharpen our thinking,” she said, which could be “more nuanced.” |
| “We’ve dug ourselves into a little bit of a hole,” Ms. Pierce said of the S.E.C.’s refusal thus far to approve a Bitcoin exchange traded fund. “A lot of people are looking for a way to access the asset class.” In the past month, three bitcoin E.T.F.s have begun trading in Canada. |
| She welcomes Gary Gensler, the blockchain professor, as the agency’s next chief. President Biden’s pick to lead the S.E.C. has lectured on cryptocurrency and blockchain at M.I.T. since 2018. Ms. Peirce said she was “hopeful” that he will help the agency think “in a more sophisticated way.” She added that Mr. Gensler has “more inclination to regulate” than she does, but that she believes he’ can provide the regulatory clarity on crypto she has sought. |
| Blockchain technology could address the issues raised by meme-stock mania. That includes “concerns around settlement times, tracking where shares are, and who owns what shares when,” Ms. Pierce said. Distributed ledger technology like blockchain could eliminate common failure points in the financial system, rather than centralizing them, Ms. Peirce said, adding: “I hope that a lot of that innovation happens in the private sector as opposed to us taking it over as a securities regulator.” |
| Thank you for your support. Want to share The New York Times? Friends and family can enjoy unlimited digital access to our journalism with this special offer. |
| [h=3]THE SPEED READ[/h] |
| Deals |
|
| Politics and policy |
|
| Tech |
|
| Best of the rest |
|
CCP keeps ripping little chucks outa BABAs holdings...I'm not to worried but the moves have held this down for months now.
The google move is a head scratcher. I just sorta wonder if the office will have a new renascence? People are sick of being home trapped the kids/spouses Ect. Work from home becomes a hassle to some or at least for a few good friends I've had beers with lately.
Here any restaurant/Bar that is open is jammed..Good or bad seems like people just want "out" is the way I'm looking at it.
I think the economy is about to fire back up in a huge way this summer based on demand.
Crazy thing here is lumber prices right now..Demand is so high the mills can't keep up and it sounds like it'll be a year till prices stabilize all because the supply chain was broken with Covid related shut downs...NUTS
common floor joist 2x8x12ft Doug fir building grade lumber 25.00 bucks a stick...Shocking.
The google move is a head scratcher. I just sorta wonder if the office will have a new renascence? People are sick of being home trapped the kids/spouses Ect. Work from home becomes a hassle to some or at least for a few good friends I've had beers with lately.
Here any restaurant/Bar that is open is jammed..Good or bad seems like people just want "out" is the way I'm looking at it.
I think the economy is about to fire back up in a huge way this summer based on demand.
Crazy thing here is lumber prices right now..Demand is so high the mills can't keep up and it sounds like it'll be a year till prices stabilize all because the supply chain was broken with Covid related shut downs...NUTS
common floor joist 2x8x12ft Doug fir building grade lumber 25.00 bucks a stick...Shocking.
My wife stayed in Big Bear after I left and her and the sister in law went to Death Valley, Joshua Tree and then to Vegas. She stayed in Vegas last night and flies home today. She said Vegas was PACKED, a complete mad house. She sent me a picture of the hotel lobby (at Caesars) and it was full. The bars in Big Bear had 2 hour waits if you didn't get a reservation.
I agree that people are tired of being holed up. The blue states are going to let loose once their dictator governors "allow" it (what a complete joke, btw!). I do think there will be a bump in the economy - for maybe 3 months or so - once summer hits. Hopefully by October we're back to "normal".
My cousin is a builder (mostly steel buildings, roofs, etc) and he said 'you'd be an idiot to build a house right now'. We're moving soon (hopefully) and I'm torn on buying or renting (wife is adamant about buying something). If we do buy it'll be a temporary house (12-24 months) that we'll use as a rental property - assuming the market 'corrects' and we find our more permanent/nicer home. I'd like to build, but finding a reasonably priced lot is tough.
I agree that people are tired of being holed up. The blue states are going to let loose once their dictator governors "allow" it (what a complete joke, btw!). I do think there will be a bump in the economy - for maybe 3 months or so - once summer hits. Hopefully by October we're back to "normal".
My cousin is a builder (mostly steel buildings, roofs, etc) and he said 'you'd be an idiot to build a house right now'. We're moving soon (hopefully) and I'm torn on buying or renting (wife is adamant about buying something). If we do buy it'll be a temporary house (12-24 months) that we'll use as a rental property - assuming the market 'corrects' and we find our more permanent/nicer home. I'd like to build, but finding a reasonably priced lot is tough.
Yeah..we are putting the new barn off for a bit..Just doing the repairs on the house till we move in and that's expensive as it is.
Channel siding/ cedar 10 inches wide 1 3/8 thick 12 foot was 1.80 a running ft Now 3.75 a RF or roughly 40.00 a board.
Guys at the lumber stores won't even stock it because most smart builders a holding on projects and it sits..prices change every day at the mills both up and down..Lumber is an interesting economy.
BTW our governor is a joke..I've never thought shutting down the world a good idea but it's all been manageable in reality and hasn't effected our lives much besides restaurants and gyms..we've traveled, seen friends and done just about anything else you can think of that wasn't closed down..I'll be very happy when normal returns...The mask..I don't shave as often a I like that about it, when I meet sub contractors who don't wear one I'll take mine off too..For me it's been a courtesy to others more than anything.
The Art of staying warm while having a beer outdoors has been perfected this winter on the coast
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| Global Market Comments March 18, 2021 Fiat Lux Featured Trade: (LEARNING THE ART OF RISK CONTROL) 
|
Learning the Art of Risk ControlNow that you know how to make money in the market, I’m going to teach you how to hang on to it with a death grip. There is no point in booking winning trades only to lose the money by making careless beginner’s mistakes. So today, I am going to talk about risk control. The first goal of risk control is to conserve whatever capital you have. I tell people that I am too old to start over again as a junior trader if I lose all my money. With my attitude, nobody would hire me anyway. So I’m pretty careful when it comes to risk control. The art of risk control is to make sure your portfolio is profitable, no matter what happens to the market. You want to be a winner, whether the market goes up, down, or sideways. This is what I do. Remember, we are not trying to beat an index here. Our goal is the make actual dollars at all times, to keep the P&L chart always moving from the lower left to the upper right. You can’t eat relative performance, nor can you use it to pay your bills. The second goal of a portfolio manager is to make your portfolio bomb-proof. You never know when a flock of black swans is about to alight on the market, or a geopolitical shock comes out of the blue causing markets to crash. What if a pandemic happens? The biggest mistake I see beginning traders make is that they are in too much of a hurry to get rich. As a result, they make too much money too soon. I can’t tell you how many times I have heard of first-time traders losing all their money on their first trade, well before they got a handle on the basics. I’m usually right 80% to 90% of the time (this year it’s 95%). That means I’m wrong 10% to 20% of the time. If you bet the ranch on one of my losing trades, you’ll get taken to the cleaners. Never bet the ranch. If you do, you are turning calculated list into random risk. It is akin to buying a lottery ticket. I often tell clients they have gambling addictions. Make sure you’re not one of them. You can’t trade yourself back from zero with no money. If you can master the skills which I am teaching you, you can make a living at this FOREVER! So, what’s the hurry? As my old trading mentor used to tell me, the late Barton Biggs of Morgan Stanley, “invest in haste, repent in leisure,” a time-tested nostrum that is always true in this business. I recommend that you use NO real money on your first few trades. Start with paper trading only. All of the online trading platforms offer wonderful tools that allow you to practice trading before they try the real thing. If you lose their “pretend money”, no harm, no foul. They don’t want you to go broke either. Broke customers don’t pay commissions. They also sue. The more time you spend learning trading, the more money you will get out of it. Remember, work in, money out. Spend at least an hour or two getting to know your own trading platform well. Broker support is never there when you need it. Once you start trading with real money, it will become a totally different experience. Your heart rate steps up. Your hands get sweaty. You start checking your watch. It’s a lot like going into combat. As a Marine, I know. In fact, combat veterans make great traders, which is why the military recruits so actively from the military. I think all these instincts trace back to our Neanderthal days when our main concern was being chased by a saber tooth tiger. The smart ones survived. The dumb ones didn’t. The time to learn a trading discipline is NOW. All of a sudden, your opinions, your ego, and your savings are on the line. It’s crucial for you to always start small when using real money. That way, making a beginner’s mistake, like confusing “BUY” and “SELL” (I see it every day) will only cost you a cup of coffee at Starbucks, and not your kids' college education, your house, or your retirement. It won’t take long for you to grow from one contract to thousands, as I have done myself for many years. It’s all about finding your comfort level and risk tolerance. You never want to have a position that is so large that you can’t sleep at night, or worse, call me in the middle of the night and ask what to do with it. My answer is always the same. Cut your position in half. If you still can’t sleep, cut it in half again. I make a bold prediction here. The more experience you gain, the faster your risk tolerance goes up. I’ll give you one more piece of advice. Take your broker's technical support phone number and paste it to the top of your computer monitor. You don’t want to go looking for it when you can’t figure out how to get out of a position, or your platform breaks. These are machines. It happens. As they teach in flight school, it’s not a matter of if, but when, a machine breaks. There’s one more thing. When you’re ready to commit real money, don’t forget to take your account off of paper trading. The profits you make can’t be spent. Risk management is an important part of the position sheet I'm publishing on the website every day. Take a look below at a recent position sheet during sharply rising markets, which I update every day. 
The important thing to see here is my long/short balance. On the left is the position name and on the right is the position weighting. I usually run 10% positions, so I don’t have all my eggs in one basket. Maybe twice a year, I’ll run a 20% position in a single stock, and once a year I’ll have a 30% weighting. Above that, I start to lose sleep. I have further subdivided the portfolio into “RISK ON” and “RISK OFF.” “RISK ON” means the world is getting better, while “RISK OFF” means the world is getting worse. The long positions have positive numbers, while the short positions have negative ones. I like to balance “RISK ON” and “RISK OFF” to remove overall market risk from the portfolio. When markets are rising, I tilt positive. When markets are falling, I tilt negative. At the bottom, I have my total net exposure. On this particular day, I was running 50% in long and 30% in shorts, for a total net position of 20% long. This is an aggressively bullish portfolio. When I’m bullish, the net position is positive. When I’m bearish the net position is negative. When I have no strong views, the net position is zero. That way, if nothing happens, you still get to rake the money in. I have no positions at all only a few days a year. I only play when the risk/reward is overwhelmingly in my favor, and sometimes that is just not possible. One more warning to the wise. There are literally hundreds of gurus out there marketing services promising 100% a year, if not a 100% a month, or even 100% a day. They are all fake, created by 25-year-old marketing types who have never worked in the stock market, or even traded, and their great achievement in life is to get an “A” in creative writing. Unfortunately, I work in an industry where almost everyone else is a crook. I have worked in the markets for more than 50 years and have seen everything. Ray Dalio is the top performing hedge fund manager in history and he only averages 35% a year. My friend David Tepper is around 40%. The number of real traders who are right more than 80% of the time you can almost count on one hand and usually run the trading division at Morgan Stanley. If returns sound too good to be true, they never are. I want to offer special caution about naked put shorting strategies which are promoted by 90% of these other newsletters. This is where a trader sells short a put position without any accompanying hedge, hence the word “naked.” This is an unlimited risk position. You might take in a $1 of premium with this approach, but if the market turns against you, and implied volatilities go through the roof, your losses could balloon exponentially to $100 or more, wiping you out. The newsletters recommending these have absolutely no idea when or if this is going to happen. And none of them have been around very long. That’s why we post our 13-year trade history. I call this the “picking up the pennies in front of the steamroller strategy.” No professional trader worth his salt will put money into it. It is banned by most investing institutions. And only a few brokers will still let you do this, and then only with 100% margin requirements, because when losses exceed 100% of capital, they’re left carrying the bag. Many of those strategies you see being hawked online look great on paper but can’t actually be executed. In other words, you just paid thousands of dollars for a service that is utterly useless. Sounds like a “No Go” to me. Stop losses are an important part of any trading strategy. No one is right 100% of the time. If they claim so, they are lying. The only way to avoid a big loss is to take a small one. There are many possible places to use stop losses. I use 2% of my total capital. If I start to lose more than that, I am out of there. It’s easy for me to do this because 95% of the time, the next trade will be a winner and I’ll make back all the money I just lost. Others use a 10% decline in the underlying stock as a good arbitrary point to limit losses. Others rely on Fibonacci levels (I’ll get to him later). Many traders rely on key moving averages, like the 50-Day or the 200-day. The problem with this is that high-frequency traders have access to the same charting data as you do. They’ll program their algorithms to quickly take a stock through your stop loss level, buy your stock for cheap, and then take it right back up again to book a quick profit. You are left with a “SELL” confirmation in your inbox and no position in a rising market. No wonder people think Wall Street is rigged. Another concept is the “trailing stop”. That’s when after an initial rise, you place a stop-loss order at your cost. That way you CAN’T lose money. This is known as “playing with the house’s money.” This approach has one shortfall. You can’t place stop losses in the options market that are executed automatically. The same is true for options spreads. In this case, you use what is known as a “pocket stop loss” where you set your own mental level on when to get out. Also, these are not automatic. They do establish a trading discipline. Caution: You can’t execute a pocket stop loss when you’re playing golf, having lunch with your biggest client, or on a one-week cruise in the Caribbean. I’ve seen all of these happen. So, there you have it. By managing your risk prudently, you can tip the risk/reward balance in your favor. I hope this helps. 
|
Quote of the Day"In the US you had ten bad years in a row (during the Great Depression) and it still turned out to be a pretty good century," said Lloyd Blankfein, CEO of Goldman Sachs. 
|
| This is not a solicitation to buy or sell securities The Mad Hedge Fund Trader is not an Investment advisor For full disclosures click here at: http://www.madhedgefundtrader.com/disclosures The "Diary of a Mad Hedge Fund Trader"(TM) and the "Mad Hedge Fund Trader" (TM) are protected by the United States Patent and Trademark Office The "Diary of the Mad Hedge Fund Trader" (C) is protected by the United States Copyright Office |
|
March 19, 2021 |
| Good morning. (Was this newsletter forwarded to you? Sign up here.) |
|
| [h=2]‘I’m in a really dark place’[/h] |
| A group of 13 disgruntled first-year analysts at Goldman Sachs made waves this week by assembling a professional-looking presentation in the company style about their experiences at the investment bank. The resulting “Working Conditions Survey” (sample size: 13) said that the junior bankers worked an average of around 100 hours per week, with most saying that they considered themselves victims of workplace abuse. |
| The analysts rated their job satisfaction as two out of 10 and said they were unlikely to stay at Goldman in six months if working conditions remained the same. In addition to the long hours, the analysts cited unrealistic deadlines, being ignored in meetings and micromanagement as major sources of stress. Goldman said that it was listening to employees’ concerns and taking steps to address them. |
| In their own words, the analysts described their angst in stark terms: |
|
| That last comment is key. So here is the question of the day: In a highly paid industry, when do the hours worked become exploitative? There are two sides to the debate: |
| The no-sympathy crowd says that first-year analysts at Goldman and other similar firms have no right to complain about long hours. They are highly educated and chose to go into investment banking, in part, because it pays $150,000 or more straight out of college with the promise that within a decade compensation can reach seven figures. A first-year analyst instantly becomes a member of the 0.1 percent for their age and experience. The long hours shouldn’t come as a surprise: Every recruiting website, book and Hollywood film about Wall Street makes that part of the job clear. It is, in truth, the pact that employees make with employers in exchange for lots of money. |
[h=3]ADVERTISEMENT[/h]
| ||||
| The violin-playing crowd says that Wall Street isn’t focused enough on the mental health of young workers. Nobody should be forced to work that much. What’s more, the long hours are inefficient, unproductive and simply part of an ego-driven hazing ritual by older bankers who suffered the same fate in less enlightened times. Abuse is abuse, no matter how much money someone is paid. Banks, they say, misrepresent the workload during the hiring process by talking about improving work-life balance but not doing anything about it. |
| Which side are you on? Tell us at dealbook@nytimes.com. Include your name and location, and we may feature your response in a future newsletter. (If you prefer to remain anonymous to discuss your own experience, let us know.) |
| [h=3]HERE’S WHAT’S HAPPENING[/h] |
| Diplomatic talks between the U.S. and China get off to a testy start. At the first face-to-face meeting between Chinese officials and the Biden administration, the traditional first few minutes of greetings and remarks dissolved into more than an hour of recriminations and name-calling. In other news, Beijing rebuked LinkedIn for not censoring political content on the platform. |
| Several regions in France, including Paris, go back into lockdown. The restrictions in response to a sharp rise in coronavirus cases will last for a month. France was among the countries that paused the use of AstraZeneca’s Covid-19 vaccine because of fears over side effects, but Europe’s top drug regulator said yesterday that the shot was safe, and the countries, including France, Germany and Italy, said they would resume inoculation drives. |
[h=3]ADVERTISEMENT[/h]
| ||||
| The N.F.L. signs media deals worth over $100 billion. The agreements with CBS, NBC, Fox, ESPN and Amazon run through the 2033 season, and nearly double the value of the league’s previous contracts. Most games will still be shown on traditional broadcast channels, although digital rights and streaming services are making more inroads. |
| For the first time in a long time, U.S. retailers are opening more stores than they close. Cheaper rents have convinced some companies that now is the time to expand. Dollar General, for example, plans to open more than 1,000 locations this year, and is testing larger-format store concepts. |
| Start-ups are fielding a flood of offers from SPACs. With mountains of cash, the blank-check companies are hounding potential acquisition targets, The Times’s Erin Griffith reports. “The market seems crazy,” said the finance chief of a firm thinking about going public this year. “They want to go so fast.” |
| [h=2]The wines of Wall Street[/h] |
| Duckhorn, a premium winemaker, began trading on the N.Y.S.E. on Thursday (ticker: NAPA) after raising $300 million in an I.P.O. that valued the company at around $2 billion. The California-based group’s business picked up during the pandemic, with sales up 12 percent in its latest fiscal year. DealBook spoke with the company’s C.E.O., Alex Ryan, about changing drinking habits, SPACs and wildfires. |
[h=3]ADVERTISEMENT[/h]
| ||||
| The pandemic has been good for the wine industry. According to data from IRI, premium wine sales grew by 20 percent last year. Mr. Ryan said he’s not worried about sales slowing as people spend more time outside their homes, pointing to the company’s relationships with retailers and restaurants that are planning to serve more customers as pandemic restrictions relax. As for millennials’ embrace of sobriety, Mr. Ryan said that, too, isn’t a big concern. “Younger consumers are interested in the wine experience,” he said. “It’s fun, it’s celebratory.” |
| Duckhorn decided a traditional I.P.O. was better than a SPAC. “We’re perfectionist winemakers so control is very important to us,” Mr. Ryan said. “We wanted to control the message, how to design it, all the details surrounding it, how to market it.” Duckhorn may use proceeds from the listing to buy other wine brands. |
| Wildfires are a risk factor. Duckhorn’s varied winery locations helped the business withstand fires that blazed through Napa last year, Mr. Ryan said, “with a proper amount of wine, with proper styles, proper costs — so our preparation and diversification paid dividends.” |
| [h=2]“We see more of what we call ‘above the mask,’ like eyes and brows and lashes, and we see that makeup in general is starting to come back.”[/h] |
| — Mary Dillon, the C.E.O. of cosmetics retailer Ulta, speaking to CNBC about pandemic makeup trends. |
| [h=2]Test your knowledge of Bitcoin trivia[/h] |
| A big new report about cryptocurrencies by Bank of America landed on our desk this week. Here are three stats that caught our eye, in quiz form. (Scroll to the end of the email for the correct answers.) |
| 1. How much of a net inflow does it take to raise Bitcoin’s price by 1 percent? |
| A) $93 million B) $930 million C) $9.3 billion |
| 2. Bitcoin’s annual energy consumption is equivalent to that of which country? |
| A) Australia B) The Netherlands C) Chile |
| 3. 95 percent of all Bitcoin is held by what share of crypto wallets? |
| A) 50 percent B) 20 percent C) 2 percent |
|
| [h=2]Weekend reading: Why pandemic aesthetics matter[/h] |
| Before so many people began to work from home, it was common to judge each other by our clothes. But then came workdays spent in sweatpants, which can’t be seen onscreen, and it seemed we’d briefly let go of aesthetic judgment — though it was not so, one expert says. “The social function of dress codes was too powerful,” said the Stanford Law professor Richard Thomson Ford, author of a new book, “Dress Codes: How the Laws of Fashion Made History.” |
| Enter the age of Room Rater. Last April, a Twitter account started saying aloud what everyone was telling themselves — “so and so has an impressive bookshelf!” We sought context in the details people revealed onscreen because aesthetic clues, whether in bookshelves or clothes, tell us where to place each other socially, Mr. Ford said: “This goes back to the Middle Ages when dress codes were enforced by law and then, later, by social systems.” It is information we are programmed to rely on. |
| We are all asking the same question: Does this person have good taste?The answer is always a matter of status and shared reference points, according to Mr. Ford. On the brighter side, the reason we make these judgments in the first place is because we’re curious about who people are, and we tend to like them better when they reveal themselves in an authentic way. |
| “We should take this seriously,” Mr. Ford said. Fashion and design organize society, even now, when many of us think we are free of such codes. A year of working from home may have dissolved some of the rules, but the staging and rating of Zoom backgrounds also proved the persistence of our social programming. And as for post-pandemic fashion trends, Mr. Ford — perhaps hopefully — suspects dressing up may become more celebratory and less professionally mandatory. |
| Thank you for your support. Want to share The New York Times? Friends and family can enjoy unlimited digital access to our journalism with this special offer. |
| [h=3]THE SPEED READ[/h] |
| Deals |
|
| Politics and policy |
|
| Tech |
| Best of the rest |
| Thanks for reading! We’ll see you tomorrow. |
| Answers to the crypto quiz, according to Bank of America: |
| 1. A ($93 million). It takes 20 times more to move the price of gold by a similar amount. |
| 2. B (Netherlands). Put another way, the annual carbon emissions of the Bitcoin network is roughly the same as American Airlines. |
| 3. C (2 percent — or 2.4 percent, to be exact). In contrast, the top 1 percent of Americans control about 30 percent of all household wealth. |
| Correction: Yesterday’s newsletter misstated the name of the trade group that hosts an online show that interviewed the S.E.C. commissioner Hester Peirce: It is the Bitcoin Association, not the Blockchain Association. |
| We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. |
The opening story here is interesting. I'm watching the showtime show Billions, about a hedge fund. I'm in the crowd of 'no sympathy' - it's like a medical resident; they're expected to work 80+ hours/week, and it's all a part of it. Sure, some of it is 'tradition' (the older fund managers or doctors had to go through it, so they want to see the younger kids do the same). But in the end, they are getting a one/two/three year cram session that will set them up for the rest of their lives as top .01% of income earners. Otherwise, they could go work as a financial advisor at a 9-5 and try to earn clients the old fashioned way.
My dad sold government municipal bonds..It's a game for a mercenary, we moved all over the country as a kid chasing higher ranked trading firms.
Dallas to NY then SF...Tough game but if your good...$$$$$
I thought about doing it but was sorta discouraged as the game changed once algorithmic trading started...It was over by the late 90's at last for my pop. He almost when to work for Milken, Milken drug tested and my pop liked the electric lettuce ... luckily he dodged a bullet
Global Market Comments
March 19, 2021
Fiat LuxFeatured Trade:(MARCH 17 BIWEEKLY STRATEGY WEBINAR Q&A),
(JPM), (TLT), (TBT), (SQ), (MMM), (SIL), (QQQ), (WMP), (CCIV), (TSLA), (USO), (CRSP), (PLTR), (HYG), (FCX), (XME)
March 19, 2021
Fiat LuxFeatured Trade:(MARCH 17 BIWEEKLY STRATEGY WEBINAR Q&A),
(JPM), (TLT), (TBT), (SQ), (MMM), (SIL), (QQQ), (WMP), (CCIV), (TSLA), (USO), (CRSP), (PLTR), (HYG), (FCX), (XME)
March 17 Biweekly Strategy Webinar Q&ABelow please find subscribers’ Q&A for the March 17 Mad Hedge Fund Trader Global Strategy Webinar broadcast from frozen Incline Village, NV.
Q: I’ve heard that the COVID-19 cases are being understated by 16 million. Do you think this is true?
A: Yeah, I've always argued that the previous government's numbers were vastly underestimating the true number of cases out there for political purposes, but we are on the downslide regardless, so that’s good.
Q: When are tech stocks going to bottom out and when can I buy them?
A: I knew I would get this question. This is the question of the day. Picking bottoms is always tough because these are momentum plays and not valuation plays. I’ll give you a couple of levels though. The tech (QQQ) multiple is now at 25X earnings and the S&P 500 (SPY) is at 22X, so your first bottom will be down about 10% from here, or a 22X multiple. And I don’t think we will get much lower than that because tech stocks are growing at 20-25% a year, versus the (SPY) growing at maybe 10%, and I don’t think tech goes to much of a discount in that situation. So, you’re just waiting for interest rates to top out and start to go down, which will be the other indicator of a tech bottom. We had a slowdown in the rise of rates for just a couple of days this week, and tech stocks took off like a rocket. Those are your two big signals.
Q: With the Fed announcement, are you still in the Invesco QQQ Trust NASDAQ ETF (QQQ) bear put spread?
A: Yes, one of them expires in two days so that’s a piece of cake. The other one expires in a month, but it is way out-of-the-money—the April $240-$245 bear put spread, so I’ll keep that for a real meltdown day. But if it looks like we’re getting a breakout, I will come out of that short position so fast it will make your head spin.
Q: Do you like Palantir (PLTR)?
A: Absolutely yes—screaming LEAP candidate. It traded all the way down to $20 two weeks ago and is trading around $25 now. It’s a huge data firm, lots of CIA and defense work, huge government contracts extending out for years, cutting edge technology, and run by a nut job, so yes screaming buy at this level.
Q: Freeport McMoRan (FCX) is taking some pain here, is this still a buy and hold?
A: Yes, it’s taking the pain along with all the other domestic stocks, which is natural. In their case though, it’s up almost 10x from its bottom a year ago where we recommended it, so yeah I'd say time for a rest. So I’m still a buyer of the metals and (FCX) on dips, but like all other metals, it did get overextended. EV manufacturing is doubling this year, which uses a ton of copper. The same is true with solar panels and Chinese industrial recovery. When all your major markets are doubling in size, it’s usually good for the stock. I peaked at $50 in the last cycle and could touch $100 in this one.
Q: What are your thoughts about the Lucid EV SPAC, Churchill Capital IV (CCIV)?
A: Don’t touch it with a ten-foot pole. They only have 1 or 2 concept vehicles for high-end investors to test drive. The rumor is that their main factory will be in Saudi Arabia where the bulk of the seed capital came from. They’ll never catch up with Tesla (TSLA) on the technology. There's always going to be a few niche $250,000 cars out there, and they have no proof they can actually make these things. When they get to a million vehicles a year, then I might be interested. But they haven't done the hard part yet, which is mass-producing battery packs for a million cars. They've only done the easy part which is designing one sexy prototype to raise money. So, stay away from Lucid, I don’t think they’re going to make it.
Q: What about oil?
A: I am avoiding oil plays like the plague.
Q: When do you anticipate your luncheons to be back?
A: Maybe in 2023. I don’t want to scare off my customers by inviting them to a lunch where they all get COVID-19. If I did have a lunch, I’d have a vaccine requirement and a temperature gun to hit them at the door like everywhere else. I really miss meeting subscribers in person.
Q: Should I buy banks like JP Morgan (JPM) at this level?
A: I would say no. That ship has sailed. Wait for a steeper selloff or just let it run. We’ve already had an enormous move and you don’t want to chase it with a low discipline trade, which is what that would be.
Q: What do you think of silver (SLV)?
A: It’s a buy long term, short term it’s in the grim spiral of death along with the other precious metals, which absolutely hate rising interest rates. A silver long here is the equivalent of a bond (TLT) long. When you do go into silver, buy Wheaton Precious Metals (WPM) for the leveraged long play.
Q: Is 3M (MMM) going to extend the upside?
A: Probably yes, that's a classic American industrial play and a great company. I have friends who work there. How could we live without Post-it notes, Scotch Tape, and Covid-19 N-95 masks?
Q: What about Square (SQ)?
A: I love it in the long term, buy on the dips and buy it through LEAPS (long term equity anticipation securities).
Q: Should I unwind my leveraged financial ETF?
A: I’d say take a piece off, yeah; you never get fired for taking a profit. And they have had a tremendous move. Plus of course, the flip side of taking profits on domestic recovery stocks is to buy tech with that money. And eventually, that's what the entire market will do, it just may still be a little bit early.
Q: What’s a good target for LEAPS for CRISPR (CRSP) and Palantir (PLTR)?
A: Put your first strike 30% higher than today’s stock price and go 2 years out in maturity. I noticed on some names, the June 2023’s are starting to trade, but they’re highly illiquid. But if you put a bid in there and you get a market meltdown, you will get hit.
Q: If the long-term future for oil (USO) is so bad, why is it $65?
A: A few reasons. #1, huge short covering action. #2, economy recovery faster than people expected because of the stimulus. #3, a lot of people, mostly in Texas, Oklahoma, and Louisiana, don’t believe that there will be an all-electric grid in 20 years and think that oil will be in demand forever, including the entire oil industry, so they’re in there buying. And #4, the Saudis have held back with production increases to push the price up, so they’re letting it run so they can sell at a higher price. When they do sell, oil crashes again.
Q: Can we re-watch this presentation?
A: Yes, we post it about 2 hours later on the website so all our people in about 135 countries can access it whenever they like. 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 ten years are there in all their glory.
Q: How often do you have these webinars?
A: Every two weeks, and if you need help accessing it on your account page, email customer support at support@madhedgefundtrader.com.
Q: Is it time to initiate short positions on oil companies?
A: Not yet but keep it in the back of your mind. When some of the super-hot economic data come out after Q2, that may be your short in oil—then we may get into the $70’s a barrel. But not yet, there’s still too much upward momentum.
Q: Do you think we will see the 30-year fix below a 3.00% yield again?
A: Yes, in the next recession, which may be 5 or 10 years off because we’re starting at such a low base.
Q: Regarding copper, EV motors require a ton of copper. Doesn’t that make the metals a BUY?
A: That is true, and why we recommended Freeport McMoRan at $4 a year ago and recommended buying every dip. Each one of these rotor motors on each wheel of a Tesla weighs about 100 lbs—I’ve lifted them. Remember I tore apart a Tesla once just to see what made it tick, and they’re really heavy, and they use a lot of copper, and silver as well. So that has always been the bull market case for copper, as well as the fact that China re-emerged as a major buyer for their industrial buildout. That’s why we had a long in the SPDR S&P Metals and Mining ETF (XME).
Q: Do you foresee a good opportunity to go heavy into margin again?
A: Maybe if we get a decent selloff this summer, but you’ll never get the opportunity we had a year ago when you really wanted to put 100% of your portfolio into 2-year LEAPS. The people who did that made many tens of millions of dollars, which is why I get a free bottle of Bourbon every month. That was a once in 20 years event.
Q: What is your 2021 target for the S&P 500 (SPX)?
A: $4,860. It’s in my strategy letter which I sent out on January 6th, and that is all still posted on the website, click here for it.
Q: How do I renew my subscription with your company, and how do I figure out what I bought?
A: Email customer support at support@madhedgefundtrader.com and they will answer you immediately.
Q: Do you follow the iShares IBoxx High Yield Corporate Bond ETF (HYG)?
A: Yes, that is the high yield junk bond fund, but I have been avoiding long bond plays, as you may have noticed with my screaming short of the past year. We list (HYG) in these slides in the Bonds section.
To watch a replay of this webinar, just log in to www.madhedgefundtrader.com , go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH or TECHNOLOGY LETTER (as the case may be), then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Q: I’ve heard that the COVID-19 cases are being understated by 16 million. Do you think this is true?
A: Yeah, I've always argued that the previous government's numbers were vastly underestimating the true number of cases out there for political purposes, but we are on the downslide regardless, so that’s good.
Q: When are tech stocks going to bottom out and when can I buy them?
A: I knew I would get this question. This is the question of the day. Picking bottoms is always tough because these are momentum plays and not valuation plays. I’ll give you a couple of levels though. The tech (QQQ) multiple is now at 25X earnings and the S&P 500 (SPY) is at 22X, so your first bottom will be down about 10% from here, or a 22X multiple. And I don’t think we will get much lower than that because tech stocks are growing at 20-25% a year, versus the (SPY) growing at maybe 10%, and I don’t think tech goes to much of a discount in that situation. So, you’re just waiting for interest rates to top out and start to go down, which will be the other indicator of a tech bottom. We had a slowdown in the rise of rates for just a couple of days this week, and tech stocks took off like a rocket. Those are your two big signals.
Q: With the Fed announcement, are you still in the Invesco QQQ Trust NASDAQ ETF (QQQ) bear put spread?
A: Yes, one of them expires in two days so that’s a piece of cake. The other one expires in a month, but it is way out-of-the-money—the April $240-$245 bear put spread, so I’ll keep that for a real meltdown day. But if it looks like we’re getting a breakout, I will come out of that short position so fast it will make your head spin.
Q: Do you like Palantir (PLTR)?
A: Absolutely yes—screaming LEAP candidate. It traded all the way down to $20 two weeks ago and is trading around $25 now. It’s a huge data firm, lots of CIA and defense work, huge government contracts extending out for years, cutting edge technology, and run by a nut job, so yes screaming buy at this level.
Q: Freeport McMoRan (FCX) is taking some pain here, is this still a buy and hold?
A: Yes, it’s taking the pain along with all the other domestic stocks, which is natural. In their case though, it’s up almost 10x from its bottom a year ago where we recommended it, so yeah I'd say time for a rest. So I’m still a buyer of the metals and (FCX) on dips, but like all other metals, it did get overextended. EV manufacturing is doubling this year, which uses a ton of copper. The same is true with solar panels and Chinese industrial recovery. When all your major markets are doubling in size, it’s usually good for the stock. I peaked at $50 in the last cycle and could touch $100 in this one.
Q: What are your thoughts about the Lucid EV SPAC, Churchill Capital IV (CCIV)?
A: Don’t touch it with a ten-foot pole. They only have 1 or 2 concept vehicles for high-end investors to test drive. The rumor is that their main factory will be in Saudi Arabia where the bulk of the seed capital came from. They’ll never catch up with Tesla (TSLA) on the technology. There's always going to be a few niche $250,000 cars out there, and they have no proof they can actually make these things. When they get to a million vehicles a year, then I might be interested. But they haven't done the hard part yet, which is mass-producing battery packs for a million cars. They've only done the easy part which is designing one sexy prototype to raise money. So, stay away from Lucid, I don’t think they’re going to make it.
Q: What about oil?
A: I am avoiding oil plays like the plague.
Q: When do you anticipate your luncheons to be back?
A: Maybe in 2023. I don’t want to scare off my customers by inviting them to a lunch where they all get COVID-19. If I did have a lunch, I’d have a vaccine requirement and a temperature gun to hit them at the door like everywhere else. I really miss meeting subscribers in person.
Q: Should I buy banks like JP Morgan (JPM) at this level?
A: I would say no. That ship has sailed. Wait for a steeper selloff or just let it run. We’ve already had an enormous move and you don’t want to chase it with a low discipline trade, which is what that would be.
Q: What do you think of silver (SLV)?
A: It’s a buy long term, short term it’s in the grim spiral of death along with the other precious metals, which absolutely hate rising interest rates. A silver long here is the equivalent of a bond (TLT) long. When you do go into silver, buy Wheaton Precious Metals (WPM) for the leveraged long play.
Q: Is 3M (MMM) going to extend the upside?
A: Probably yes, that's a classic American industrial play and a great company. I have friends who work there. How could we live without Post-it notes, Scotch Tape, and Covid-19 N-95 masks?
Q: What about Square (SQ)?
A: I love it in the long term, buy on the dips and buy it through LEAPS (long term equity anticipation securities).
Q: Should I unwind my leveraged financial ETF?
A: I’d say take a piece off, yeah; you never get fired for taking a profit. And they have had a tremendous move. Plus of course, the flip side of taking profits on domestic recovery stocks is to buy tech with that money. And eventually, that's what the entire market will do, it just may still be a little bit early.
Q: What’s a good target for LEAPS for CRISPR (CRSP) and Palantir (PLTR)?
A: Put your first strike 30% higher than today’s stock price and go 2 years out in maturity. I noticed on some names, the June 2023’s are starting to trade, but they’re highly illiquid. But if you put a bid in there and you get a market meltdown, you will get hit.
Q: If the long-term future for oil (USO) is so bad, why is it $65?
A: A few reasons. #1, huge short covering action. #2, economy recovery faster than people expected because of the stimulus. #3, a lot of people, mostly in Texas, Oklahoma, and Louisiana, don’t believe that there will be an all-electric grid in 20 years and think that oil will be in demand forever, including the entire oil industry, so they’re in there buying. And #4, the Saudis have held back with production increases to push the price up, so they’re letting it run so they can sell at a higher price. When they do sell, oil crashes again.
Q: Can we re-watch this presentation?
A: Yes, we post it about 2 hours later on the website so all our people in about 135 countries can access it whenever they like. 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 ten years are there in all their glory.
Q: How often do you have these webinars?
A: Every two weeks, and if you need help accessing it on your account page, email customer support at support@madhedgefundtrader.com.
Q: Is it time to initiate short positions on oil companies?
A: Not yet but keep it in the back of your mind. When some of the super-hot economic data come out after Q2, that may be your short in oil—then we may get into the $70’s a barrel. But not yet, there’s still too much upward momentum.
Q: Do you think we will see the 30-year fix below a 3.00% yield again?
A: Yes, in the next recession, which may be 5 or 10 years off because we’re starting at such a low base.
Q: Regarding copper, EV motors require a ton of copper. Doesn’t that make the metals a BUY?
A: That is true, and why we recommended Freeport McMoRan at $4 a year ago and recommended buying every dip. Each one of these rotor motors on each wheel of a Tesla weighs about 100 lbs—I’ve lifted them. Remember I tore apart a Tesla once just to see what made it tick, and they’re really heavy, and they use a lot of copper, and silver as well. So that has always been the bull market case for copper, as well as the fact that China re-emerged as a major buyer for their industrial buildout. That’s why we had a long in the SPDR S&P Metals and Mining ETF (XME).
Q: Do you foresee a good opportunity to go heavy into margin again?
A: Maybe if we get a decent selloff this summer, but you’ll never get the opportunity we had a year ago when you really wanted to put 100% of your portfolio into 2-year LEAPS. The people who did that made many tens of millions of dollars, which is why I get a free bottle of Bourbon every month. That was a once in 20 years event.
Q: What is your 2021 target for the S&P 500 (SPX)?
A: $4,860. It’s in my strategy letter which I sent out on January 6th, and that is all still posted on the website, click here for it.
Q: How do I renew my subscription with your company, and how do I figure out what I bought?
A: Email customer support at support@madhedgefundtrader.com and they will answer you immediately.
Q: Do you follow the iShares IBoxx High Yield Corporate Bond ETF (HYG)?
A: Yes, that is the high yield junk bond fund, but I have been avoiding long bond plays, as you may have noticed with my screaming short of the past year. We list (HYG) in these slides in the Bonds section.
To watch a replay of this webinar, just log in to www.madhedgefundtrader.com , go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH or TECHNOLOGY LETTER (as the case may be), then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Quote of the Day“The moment you think you have the key to the market, they change the locks,” says an old Wall Street proverb.
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Futures trading involves a high degree of risk and may not be suitable for everyone.
#1130 great read!
Remember, we are not trying to beat an index here. Our goal is to make actual dollars at all times, to keep the P&L chart always moving from the lower left to the upper right. You can’t eat relative performance, nor can you use it to pay your bills.
It’s all about finding your comfort level and risk tolerance. You never want to have a position that is so large that you can’t sleep at night, or worse, call me in the middle of the night and ask what to do with it. My answer is always the same. Cut your position in half. If you still can’t sleep, cut it in half again.I make a bold prediction here. The more experience you gain, the faster your risk tolerance goes up.
Never bet the ranch.If you do, you are turning calculated risk into random risk. It is akin to buying a lottery ticket. I often tell clients they have gambling addictions. Make sure you’re not one of them. You can’t trade yourself back from zero with no money.
Stop losses are an important part of any trading strategy. No one is right 100% of the time. If they claim so, they are lying. The only way to avoid a big loss is to take a small one
..........
he claims to have an 80-90 % win rate? 100 trades and he wins 90?.....am assumming most of the trades are spreads , can win even if direction wasnt nailed,
...........................
Q: What is your 2021 target for the S&P 500 (SPX)?
A: $4,860. It’s in my strategy letter which I sent out on January 6th,
i think he's a bull
Remember, we are not trying to beat an index here. Our goal is to make actual dollars at all times, to keep the P&L chart always moving from the lower left to the upper right. You can’t eat relative performance, nor can you use it to pay your bills.
It’s all about finding your comfort level and risk tolerance. You never want to have a position that is so large that you can’t sleep at night, or worse, call me in the middle of the night and ask what to do with it. My answer is always the same. Cut your position in half. If you still can’t sleep, cut it in half again.I make a bold prediction here. The more experience you gain, the faster your risk tolerance goes up.
Never bet the ranch.If you do, you are turning calculated risk into random risk. It is akin to buying a lottery ticket. I often tell clients they have gambling addictions. Make sure you’re not one of them. You can’t trade yourself back from zero with no money.
Stop losses are an important part of any trading strategy. No one is right 100% of the time. If they claim so, they are lying. The only way to avoid a big loss is to take a small one
..........
he claims to have an 80-90 % win rate? 100 trades and he wins 90?.....am assumming most of the trades are spreads , can win even if direction wasnt nailed,
...........................
Q: What is your 2021 target for the S&P 500 (SPX)?
A: $4,860. It’s in my strategy letter which I sent out on January 6th,
i think he's a bull
He's been beating a roaring 20's type market for months.
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March 22, 2021 |
| Good morning. Breaking: Apollo Global Management announced this morning that Leon Black is stepping down as chairman. He cited health reasons, though he had already agreed earlier this year to give up his C.E.O. title over new revelations about his ties to Jeffrey Epstein. (Was this newsletter forwarded to you? Sign up here.) |
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| [h=2]An ‘epidemic of tax fraud’[/h] |
| As President Biden prepares to introduce more government spending plans, the price tag is rising. Economists are busy devising ways to pay for it all — and The Times’s editorial board is backing a novel approach that could capture huge amounts of uncollected taxes. |
| There are hundreds of billions in unreported taxes. A 2019 I.R.S. analysis estimated that Americans reported less than half of all income that wasn’t subject to verification like a W-2, meaning that lots of business profits, rent and royalties go untaxed. That’s the largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade. |
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| Here’s a way to capture that unreported income, proposed by Charles Rossotti, a former I.R.S. chief: a new form, drawn from bank account data, that reports inflows and outflows like a 1099 statement. Filers would need to reconcile that information with their individual tax returns. “It would have the immediate benefit of scaring people into probity,” The Times’s editorial board asserts. The proposal wouldn’t increase how much anyone owes in taxes, just how much people end up paying. |
[h=3]ADVERTISEMENT[/h]
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| The White House is already planning to collect more taxes, which may include raising rates on income and capital gains taxes for those earning more than $400,000, as well as levies on companies and expanding the estate tax. Charles Rettig, the commissioner of the I.R.S., also backed calls for more funding for enforcement: “It is not just a body count of how many people we have in enforcement. We need to have specialized agents.” |
|
| [h=3]HERE’S WHAT’S HAPPENING[/h] |
| AstraZeneca’s vaccine is 79 percent effective, according to new data. The results from a U.S. clinical trial, which also suggest complete protection against severe disease and death and no serious side effects, could bolster the shot’s appeal. The E.U. is reportedly poised to withhold doses of the vaccine from Britain, escalating a dispute over supplies. |
| A big railroad deal bets on more international trade. Canadian Pacific and Kansas City Southern agreed to combine in a $29 billion deal, which would create a network that runs from Canada through the U.S. to Mexico. The transaction must still win approval from increasingly skeptical antitrust regulators. |
| Turkey’s currency plunges after another central bank chief is fired. The lira fell as much as 14 percent after President Recep Tayyip Erdogan dismissed the official, Naci Agbal. During his four-month tenure, Mr. Agbal was credited for restoring confidence in the country’s economy. |
[h=3]ADVERTISEMENT[/h]
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| The Biden administration weighs new requirements for corporate climate disclosures. The Treasury Department and other regulators are working on ways to reduce “greenwashing” by force companies to reveal more about their environmental impact, according to Bloomberg. |
| How the stimulus is lifting the markets. Some day traders are using their $1,400 payouts from the federal economic rescue — “stimmies,” in their lingo — to invest in speculative assets like meme stocks and Bitcoin, The Times’s Matt Phillips writes. |
| [h=2]Exclusive: A bet on the future of sports media[/h] |
| As sports leagues seek new sources of income, the investment firm Bruin Sports Capital is betting on a technology that helps teams capture more advertising revenue during broadcasts. |
[h=3]ADVERTISEMENT[/h]
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| Bruin is investing in TGI Sport, an ad tech company that’s currently owned by the Australian firm Quadrant Private Equity. (A person briefed on the matter said that Bruin was investing about $100 million.) Currently a part of QMS Media, which provides outdoor advertising like digital billboards, TGI focuses on sports advertising — with a twist. Its “parallel ads” technology allows teams to display different ads on and around the field of play for audiences in different geographies. It has been used by Major League Soccer, New Zealand Rugby and others. |
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| “Why should a fan in New York look at Boston advertising?” asked George Pyne, the founder and C.E.O. of Bruin. As broadcast audiences are getting smaller and more fragmented, sports franchises want to build more of a direct relationship with viewers, and then persuade advertisers to pay to reach those fans. |
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| [h=2]“This is for people who are looking to take some risks because a lot of this stuff will absolutely go to zero.”[/h] |
| — Mike Winkelmann, the artist known as Beeple, speaking on the “Sway” podcast about the frenzy for digital art via nonfungible tokens, or NFTs. He auctioned an NFT-linked image this month that sold for $69 million. |
| [h=2]‘Who owns SoFi?’[/h] |
| The Chinese social media company Renren went public in the U.S. in 2011 with great fanfare, fizzled, and soon spun off its investment platform. The spinoff included shares in the SoftBank-backed fintech company Social Finance, or SoFi, in a deal criticized by some Renren shareholders. They sued Renren, its executives and others in New York State Court for $500 million in 2018, in a case that last week survived attempts at dismissal just as they were filing an amended complaint detailing allegations against additional defendants, SoFi and SoftBank. |
| The plaintiffs accuse insiders of stripping Renren of its value, their lead attorney, Bill Reid, told DealBook. Executives took the company’s billion-dollar investment portfolio in a complex arrangement that “split up the spoils,” he argued. He alleged that SoFi and SoftBank helped unfairly get the best of Renren. |
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| SoFi is going public via a SPAC, in a deal that values it at more than $8.5 billion. Renren’s founder and a defendant in the case, Joe Chen, is on the board of SoFi, which is in the process of merging with Social Capital Hedosophia, a blank-check firm run by Chamath Palihapitiya. In a statement to DealBook, SoFi’s general counsel, Rob Lavet, said, “While as a matter of policy we do not comment on ongoing litigation, we do believe the charges against us are meritless and we look forward to vigorously defending ourselves in court.” |
| SoftBank and Social Capital did not respond to requests for comment. |
|
| [h=2]About those Goldman analysts …[/h] |
| On Friday, we wrote about the junior bankers at Goldman Sachs who complained about what they saw as workplace abuse, including 100-hour weeks. Our inbox has overflowed with reactions, notably from current and former investment bankers. Here’s what some had to say (most requested anonymity to speak freely about their experiences). The comments have been edited and condensed for clarity: |
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| [h=3]THE SPEED READ[/h] |
| Deals |
| Politics and policy |
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| Tech |
| Best of the rest |
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| Thanks for reading! We’ll see you tomorrow. |
| We are holding a subscriber-only event tomorrow about Covid’s toll and the return to normalcy, with Gov. Larry Hogan of Maryland, San Francisco mayor London Breed and a virtual memorial by the actress Eboni Booth and jazz musician Wynton Marsalis, whose father Ellis Marsalis succumbed to the virus last April. R.S.V.P. here to join on Tuesday, March 23 at 7 p.m. Eastern. |
| We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. |
| Thank you for your support. Want to share The New York Times? Friends and family can enjoy unlimited digital access to our journalism with this special offer. |
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| Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin |
| Jason Karaian, Editor, London @jkaraian |
| Michael J. de la Merced, Reporter, London @m_delamerced |
| Lauren Hirsch, Reporter, New York @LaurenSHirsch |
| Ephrat Livni, Reporter, Washington D.C. @el72champs |
