How to Gain an Advantage with Parallel Trading

Diary, Homepage Posts, Newsletter, Research

One of the most fascinating things I learned when I first joined the equity trading desk at Morgan Stanley during the early 1980s was how to parallel trade.

A customer order would come in to buy a million shares of General Motors (GM), and what did the in-house proprietary trading book do immediately?

It loaded the boat with the shares of Ford Motors (F).

When I asked about this tactic, I was taken away to a quiet corner of the office and read the riot act.

“This is how you legally front-run a customer,” I was told.

Buy (GM) in front of a customer order, and you will find yourself in Sing Sing shortly.

Ford (F), Toyota (TM), Nissan (NSANY), Daimler Benz (DDAIF), BMW (BMWYY), and Volkswagen (VWAPY), were all fair game.

The logic here was very simple.

Perhaps the client completed an exhaustive piece of research concluding that (GM) earnings were about to rise.

Or maybe a client's old boy network picked up some valuable insider information.

(GM) doesn’t do business in isolation. It has thousands of parts suppliers for a start. While whatever is good for (GM) is good for America, it is GREAT for the auto industry.

So through buying (F) on the back of a (GM) might not only match the (GM) share performance, it might even exceed it.

This is known as a Primary Parallel Trade.

This understanding led me on a lifelong quest to understand Cross Asset Class Correlations, which continues to this day.

Whenever you buy one thing, you buy another related thing as well, which might do considerably better.

I eventually made friends with a senior trader at Salomon Brothers while they were attempting to recruit me to run their Japanese desk.

I asked if this kind of legal front-running happened on their desk.

“Absolutely,” he responded. But he then took Cross Asset Class Correlations to a whole new level for me.

Not only did Salomon’s buy (F) in that situation, they also bought palladium (PALL).

I was puzzled. Why palladium?

Because palladium is the principal metal used in catalytic converters, it removes toxic emissions from car exhaust and has been required for every U.S.-manufactured car since 1975.

Lots of car sales, which the (GM) buying implied, ALSO meant lots of palladium buying.

And here’s the sweetener.

Palladium trading is relatively illiquid.

So, if you catch a surge in the price of this white metal, you would earn a multiple of what you would make on your boring old parallel (F) trade.

This is known in the trade as a Secondary Parallel Trade.

A few months later, Morgan Stanley sent me to an investment conference to represent the firm.

I was having lunch with a trader at Goldman Sachs (GS) who would later become a famous hedge fund manager, and asked him about the (GM)-(F)-(PALL) trade.

He said I would be an IDIOT not to take advantage of such correlations. Then he one-upped me.

You can do a Tertiary Parallel Trade here by buying mining equipment companies such as Caterpillar (CAT), Cummins (CMI), and Komatsu (KMTUY).

Since this guy was one of the smartest traders I ever ran into, I asked him if there was such a thing as a Quaternary Parallel Trade.

He answered “Abso******lutely,” as was his way.

But the first thing he always did when searching for Quaternary Parallel Trades would be to buy the country ETF for the world’s largest supplier of the commodity in question.

In the case of palladium, that would be South Africa (EZA).

Since then, I have discovered hundreds of what I call Parallel Trading Chains and have been actively making money off of them. So have you, you just haven’t realized it yet.

I could go on and on.

If you ever become puzzled or confused about a trade alert I am sending out (Why on earth is he doing THAT?), there is often a parallel trade in play.

Do this for decades as I have and you learn that some parallel trades break down and die. The cross relationships no longer function.

The best example I can think of is the photography/silver connection. When the photography business was booming, silver prices rose smartly.

Digital photography wiped out this trade, and silver-based film development is still only used by a handful of professionals and hobbyists.

Oh, and Eastman Kodak (KODK) went bankrupt in 2012.

However, it seems that whenever one Parallel Trading Chain disappears, many more replace it.

You could build chains a mile long simply based on how well Apple (AAPL) or NVIDIA (NVDA) is doing.

And guess what? There is a new parallel trade in silver developing. Whenever someone builds a solar panel anywhere in the world, they use a small amount of silver for the wiring. Build several tens of millions of solar panels and that can add up to quite a lot of silver.

What goes around comes around.

Suffice it to say that parallel trading is an incredibly useful trading strategy.

Ignore it at your peril.

March 27, 2025/by MHFTR

Why The "Underground" Economy is Growing So Fast

Diary, Homepage Posts, Newsletter, Research

There is no doubt that the “underground” economy is growing.

No, I’m not talking about violent crime, drug dealing, or prostitution.

Those are all largely driven by demographics, which right now are at a low ebb.

I’m referring to the portion of the economy that the government can’t see and therefore is not counted in its daily data releases.

This is a big problem.

Most investors rely on economic data to dictate their trading strategies.

When the data is strong, they aggressively buy stocks, assuming that a healthy economy will boost corporate profits.

When data is weak, we get the flip side, and investors bail on equities. They also sell commodities, precious metals, and oil, and plow their spare cash into the bond market.

We are now halfway through a decade that has delivered unrelentingly low annual GDP growth, around the 2% to 2.5% level.

We all know the reasons. Retiring baby boomers, some 85 million of them, are a huge drag on the system, as they save and don’t spend.

Generation X-ers do spend, but there are only 58 million of them. And many Millennials are still living in their parents’ basements—broke and unable to land paying jobs in this ultra-cost-conscious world.

But what if these numbers were wrong? What if the Feds were missing a big part of the picture?

I believe this is, in fact, what is happening.

I think the economy is now evolving so fast, thanks to the simultaneous hyper-acceleration of multiple new technologies that the government is unable to keep up.

Further complicating matters is the fact that many new Internet services are FREE, and therefore are invisible to government statisticians.

They are, in effect, reading from a playbook that is decades or more old.

What if the economy was really growing at a 3% to 4% pace, but we just didn’t know it?

I’ll give you a good example.

The government’s Consumer Price Index is a basket of hundreds of different prices for the things we buy. But the Index rarely changes, while we do.

The figure the Index uses for Internet connections hasn’t changed in 20 years.

Gee, do you think that the price of broadband has risen in a decade, with the 1,000-fold increase in speeds?

In the early 2000s, you could barely watch a snippet of video on YouTube without your computer freezing up.

Now, I can live stream a two-hour movie in High Definition on my Comcast Xfinity 1 terabyte per second business line. And many people now watch movies on their iPhones. I see them in rush-hour traffic and on planes.

I’ll give you another example of the burgeoning black economy: Me.

My business shows up nowhere in the government economic data because it is entirely online. No bricks and mortar here!

Yet, I employ 15 people, provide services to thousands of individuals, institutions, and governments in 140 countries, and take in millions of dollars in revenues in the process.

I pay a lot of American taxes, too.

How many more MEs are out there? I would bet millions.

If the government were understating the strength of the economy, what would the stock market look like?

It would keep going up every year like clockwork, as ever-rising profits feed into stronger share prices.

But multiples would never get very high (now at 20 times earnings) because no one believed in the rally, since the visible economic data was so weak.

That would leave them constantly underweight equities in a bull market.

Stocks would miraculously and eternally climb a wall of worry, as they did until February.

On the other hand, bonds would remain strong as well, and interest rates low, because so many individuals and corporations were plowing excess, unexpected profits into fixed-income securities.

Structural deflation would also give them a big tailwind.

If any of this sounds familiar, please raise your hand.

I have been analyzing economic data for a half-century, so I am used to government statistics being incorrect.

It was a particular problem in emerging economies, like Japan and China, which were just getting a handle on what comprised their economies for the first time.

But to make this claim about the United States government, which has been counting things for 240 years, is a bit like saying the emperor has no clothes.

Sure, there has always been a lag between the government numbers and reality.

In the old days, they used horses to collect data, and during the Great Depression, numbers were kept on 3” X 5” index cards filled out with fountain pens.

But today, the disconnect is greater than it ever has been, by a large margin, thanks to technology.

Is this unbelievable?

Yes, but you better get used to the unbelievable.

There May Be More Here Than Meets the Eye

March 26, 2025/by MHFTR

The Ultra Bull Case for Gold

Diary, Homepage Posts, Newsletter

I am constantly barraged with emails from gold bugs who passionately argue that their beloved metal is trading at a tiny fraction of its true value and that the barbaric relic is really worth $5,000, $10,000, or even $50,000 an ounce (GLD).

They claim the move in the yellow metal we are seeing is only the beginning of a 30-fold rise in prices similar to what we saw from 1972 to 1979, when it leaped from $33 to $950.

To match the 1936 peak value, when the monetary base was collapsing, and the double top in 1979 when gold futures first tickled $950, the precious metal has to increase in value by eight times, or to $9,600 an ounce.

I am long-term bullish on gold, other precious metals, and virtually all commodities for that matter. But I am not that bullish. It makes my own one-year $5,000 prediction positively wimp-like by comparison.

The seven-year spike up in prices we saw in 1979, which found me in a very long line in Johannesburg, South Africa to unload my own Krugerrands, was triggered by a number of one-off events that will never be repeated.

Some 40 years’ worth of demand was unleashed all at once when Richard Nixon took the US off the gold standard and decriminalized private ownership in 1972. Inflation later peaked at around 20%.

Newly enriched sellers of oil had a strong historical affinity with gold. South Africa, the world's largest gold producer, was then a boycotted international pariah and teetering on the edge of disaster, threatening gold supplies. We are nowhere near the same geopolitical neighborhood today, and hence my more subdued forecast.

But then again, I could be wrong.

If you took all the gold in the world and melted it into a cube, it would only have 63 feet on a side. That includes all the yellow metal accumulated by the ancient Pharos of Egypt, mined by the Spanish in Latin America, and discovered by 49ers during the California gold rush. I‘m not counting all the gold sitting at the bottom of the ocean, sunk by storms and privateers.

Suffice it to say, there isn’t much of element 79 on the periodic chart (AU) around. Its value is in its scarcity.

The geopolitical outlook has also changed in favor of gold. China, Russia, and Iran have become large-scale accumulators to bypass international sanctions. Gold is also a depleting asset. Barrick Gold (GOLD) isn’t opening new mines at 15,000 feet in the Andes Mountains because they like the clear air.

The cost of gold mining equipment is also rising at four times the inflation rate. You know those tires on those huge Caterpillar 797 trucks? They cost $200,000 each, and there is a one-year waiting list.

All this makes the barbarous relic a strong “BUY” for me.

Do You Have any Retreads?

March 25, 2025/by Mad Hedge Fund Trader

The Market Outlook for the Week Ahead, or The Special No Confidence Issue

Diary, Homepage Posts, Newsletter

It’s official: Absolutely no one is confident in their long-term economic forecasts right now. I heard it from none other than the chairman of the Federal Reserve himself. The investment rule book has been run through the shredder.

It has in fact been deleted.

That explains a lot about how markets have been trading this year. It looks like it is going to be a reversion to the mean year. Forecasters, strategists, and gurus alike are rapidly paring down their stock performance targets for 2025 to zero.

When someone calls the fire department, it’s safe to assume that there is a fire out there somewhere. That’s what Fed governor Jay Powell did last week. It raises the question of what Jay Powell really knows that we don’t. Given the opportunity, markets will always assume the worst, that there’s not only a fire, but a major conflagration about to engulf us all. Jay Powell’s judicious comments last week certainly had the flavor of a president breathing down the back of his neck.

It's interesting that a government that ran on deficit reduction pressured the Fed to end quantitative tightening. That’s easing the money supply through the back door.

For those unfamiliar with the ins and outs of monetary policy, let me explain to you how this works.

Since the 2008 financial crisis, the Fed bought $9.1 trillion worth of debt securities from the US Treasury, a policy known as “quantitative easing”. This lowers interest rates and helps stimulate the economy when it needs it the most. “Quantitative easing” continued for 15 years through the 2020 pandemic, reaching a peak of $9.1 trillion by 2022. For beginners who want to know more about “quantitative easing” in simple terms, please watch this very funny video.

The problem is that an astronomically high Fed balance sheet like the one we have now is bad for the economy in the long term. They create bubbles in financial assets, inflation, and malinvestment in risky things like cryptocurrencies. That’s why the Fed has been trying to whittle down its enormous balance sheet since 2022.

By letting ten-year Treasury bonds it holds expire instead of rolling them over with new issues, the Fed is effectively shrinking the money supply. This is how the Fed has managed to reduce its balance sheet from $9.1 trillion three years ago to $6.7 trillion today and to near zero eventually. This is known as “quantitative tightening.” At its peak a year ago, the Fed was executing $120 billion a month quantitative tightening.

By cutting quantitative tightening, from $25 billion a month to only $5 billion a month, or effectively zero, the Fed has suddenly started supporting asset prices like stocks and increasing inflation. At least that is how the markets took it to mean by rallying last week.

Why did the Fed do this?

To head off a coming recession. Oops, there’s that politically incorrect “R” word again! This isn’t me smoking California’s largest export. Powell later provided the forecasts that back up this analysis. The Fed expects GDP growth to drop from 2.8% to 1.7% and inflation to rise from 2.5% to 2.8% by the end of this year. That’s called deflation. Private sector forecasts are much worse.

Just to be ultra clear here, the Fed is currently engaging in neither “quantitative easing nor “quantitative tightening,” it is only giving press conferences.

Bottom line: Keep selling stock rallies and buying bonds and gold on dips.

Another discussion you will hear a lot about is the debate over hard data versus soft data.

I’ll skip all the jokes about senior citizens and cut to the chase. Soft data are opinion polls, which are notoriously unreliable, fickle, and can flip back and forth between positive and negative. A good example is the University of Michigan Consumer Confidence, which last week posted its sharpest drop in its history. Consumers are panicking. The problem is that this is the first data series we get and is the only thing we forecasters can hang our hats on.

Hard data are actual reported numbers after the fact, like GDP growth, Unemployment Rates, and Consumer Price Indexes. The problem with hard data is that they can lag one to three months, and sometimes a whole year. This is why by the time a recession is confirmed by the hard data, it is usually over. Hard data often follows soft data, but not always, which is why both investors and politicians in Washington DC are freaking out now.

Bottom line: Keep selling stock rallies and buying bonds and gold (GLD) on dips.

A question I am getting a lot these days is what to buy at the next market bottom, whether that takes place in 2025 or 2026. It’s very simple. You dance with the guy who brought you to the dance. Those are:

Best Quality Big Tech: (NVDA), (GOOGL), (AAPL), (META), (AMZN)
Big tech is justified by Nvidia CEO Jensen Huang’s comment last week that there will be $1 trillion in Artificial Intelligence capital spending by the end of 2028. While we argue over trade wars, AI technology and earnings are accelerating.

Cybersecurity: (PANW), (ZS), (CYBR), (FTNT)
Never goes out of style, never sees customers cut spending, and is growing as fast as AI.

Best Retailer: (COST)
Costco is a permanent earnings compounder. You should have at least one of those.

Best Big Pharma: (AMGN), (ABBV), (BMY)
Big pharma acts as a safety play, is cheap, and acts as a hedge for the three sectors above.

March is now up +2.92% so far. That takes us to a year-to-date profit of +12.29% in 2025. That means Mad Hedge has been operating as a perfect -1X short S&P 500 ETF since the February top. My trailing one-year return stands at a spectacular +82.50%. That takes my average annualized return to +51.12% and my performance since inception to +764.28%.

It has been another busy week for trading. I had four March positions expire at their maximum profit points on the Friday options expiration, shorts in (GM), and longs in (GLD), (SH), and (NVDA). I added new longs in (TSLA) and (NVDA). This is in addition to my existing longs in the (TLT) and shorts in (TSLA), (NVDA), and (GM).

Some 63 of my 70 round trips, or 90%, were profitable in 2023. Some 74 of 94 trades have been profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.

UCLA Andersen School of Business announced a “Recession Watch,” the first ever issued. UCLA, which has been issuing forecasts since 1952, said the administration’s tariff and immigration policies and plans to reduce the federal workforce could combine to cause the economy to contract. Recessions occur when multiple sectors of the economy contract at the same time.

Retail Sales Fade, with consumers battening down the hatches for the approaching economic storm. Retail sales rose by less than forecast in February and the prior month was revised down to mark the biggest drop since July 2021.

This Has Been One of the Most Rapid Corrections in History, leaving no time to readjust portfolios and put on short positions.

The rapid descent in the S&P 500 is unusual, given that it was accomplished in just 22 calendar days, far shorter than the average of 80 days in 38 other examples of declines of 10% or more going back to World War II.

Home Builder Sentiment Craters to a seven-month low in March as tariffs on imported materials raised construction costs, a survey showed on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index dropped three points to 39 this month, the lowest level since August 2024. Economists polled by Reuters had forecast the index at 42, well below the boom/bust level of 50.

BYD Motors (BYDDF) Shares Rocket, up 72% this year, on news of technology that it claims can charge electric vehicles almost as quickly as it takes to fill a gasoline car. BYD on Monday unveiled a new “Super e-Platform” technology, which it says will be capable of peak charging speeds of 1,000 kilowatts/hr. The EV giant and Tesla rival say this will allow cars that use the technology to achieve 400 kilometers (roughly 249 miles) of range with just 5 minutes of charging. Buy BYD on dips. It’s going up faster than Tesla is going down.

Weekly Jobless Claims Rise 2,000, to 223,000. The number of Americans filing new applications for unemployment benefits increased slightly last week, suggesting the labor market remained stable in March, though the outlook is darkening amid rising trade tensions and deep cuts in government spending.

Copper Hits New All-Time High, at $5.02 a pound. The red metal has outperformed gold by 25% to 15% YTD. It’s now a global economic recovery that is doing this, but flight to safety. Chinese savers are stockpiling copper ingots and storing them at home distrusting their own banks, currency, and government. I have been a long-term copper bull for years as you well know. New copper tariffs are also pushing prices up. Buy (FCX) on dips, the world’s largest producer of element 29 on the Periodic Table.

Boeing (BA) Beats Lockheed for Next Gen Fighter Contract for the F-47, beating out rival Lockheed Martin (LMT) for the multibillion-dollar program. Unusually, Trump announced the decision Friday morning at the White House alongside Defense Secretary Pete Hegseth. Boeing shares rose 5.7% while Lockheed erased earlier gains to fall 6.8%. The deal raises more questions than answers, in the wake of (BA) stranding astronauts in space, their 737 MAX crashes, and a new Air Force One that is years late. Was politics involved? You have to ask this question about every deal from now on.

Carnival Cruise Lines (CCL) Raises Forecasts, on burgeoning demand from vacationers, including me. The company’s published cruises are now 80% booked. Cruise lines continue to hammer away at the value travel proposition they are offering. However, the threat of heavy port taxes from the administration looms over the sector.

My Ten-Year View – A Reassessment

We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.

On Monday, March 24, at 8:30 AM EST, the S&P Global Flash PMI is announced.

On Tuesday, March 25, at 8:30 AM, the S&P Case Shiller National Home Price Index is released.

On Wednesday, March 26, at 1:00 PM, the Durable Goods are published.

On Thursday, March 27, at 8:30 AM, the Weekly Jobless Claims are disclosed. We also get the final report for Q1 GDP.

On Friday, March 28, the Core PCE is released, and important inflation indicator. At 2:00 PM, the Baker Hughes Rig Count is printed.

As for me, I received calls from six readers last week saying I remind them of Ernest Hemingway. This, no doubt, was the result of Ken Burns’ excellent documentary about the Nobel Prize-winning writer on PBS last week.

It is no accident.

My grandfather drove for the Italian Red Cross on the Alpine front during WWI, where Hemingway got his start, so we had a connection right there.

Since I read Hemingway’s books in my mid-teens I decided I wanted to be him and became a war correspondent. In those days, you traveled by ship a lot, leaving ample time to finish off his complete work.

I visited his homes in Key West, Cuba, and Ketchum Idaho.

I used to stay in the Hemingway Suite at the Ritz Hotel on Place Vendome in Paris where he lived during WWII. I had drinks at the Hemingway Bar downstairs where war correspondent Ernest shot a German colonel in the face at point-blank range. I still have the ashtrays.

Harry’s Bar in Venice, a Hemingway favorite, was a regular stopping-off point for me. I have those ashtrays too.

I even dated his granddaughter from his first wife, Hadley, the movie star Mariel Hemingway, before she got married, and when she was also being pursued by Robert de Niro and Woody Allen. Some genes skip generations and she was a dead ringer for her grandfather. She was the only Playboy centerfold I ever went out with. We still keep in touch.

So, I’ll spend the weekend watching Farewell to Arms….again, after I finish my writing.

Oh, and if you visit the Ritz Hotel today, you’ll find the ashtrays are now glued to the tables.

As for last summer, I stayed in the Hemingway Suite at the Hotel Post in Cortina d’Ampezzo Italy where he stayed in the late 1940’s to finish a book. Maybe some inspiration will run off on me.

Hemingway’s Living Room in Cuba, Untouched Since 1960

Earnest in 1918

Typing at Hemingway’s Typewriter in Italy from the 1940’s

The Red Cross Uniform Hemingway Wore when He was Blown Up in 1917

Good Luck and Good Trading

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

March 24, 2025/by april@madhedgefundtrader.com

The Mad Hedge March Traders & Investors Summit Replays are Up!

Diary, Homepage Posts, Newsletter

Learn from 24 of the best professionals in the market with decades of experience and the track records to prove it. They are offering a smorgasbord of successful trading strategies.

Every strategy and asset class will be covered, including stocks, bonds, foreign exchange, precious metals, commodities, energy, and real estate.

Get the tools to build an outstanding performance for your own portfolio. To view, click here.

March 21, 2025/by april@madhedgefundtrader.com

March 19 Biweekly Strategy Webinar Q&A

Diary, Homepage Posts, Newsletter

Below please find subscribers’ Q&A for the March 19 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.

Q: I tried to get into ProShares Short S&P500 (SH), it seems pretty illiquid. How did you get in?

A: Well, before I actually sent out the trade alert, I tested the liquidity of the SH seeing if you could get anything done. This is an easy thing to buy on up days in the market when others are taking profits. It is a really difficult thing to get into on down days in the market because you have so many long-only mutual funds trying to hedge their exposure through buying the (SH). We literally had just one up day at the beginning of the month, and I was able to increase my position tenfold and had no trouble getting my price on the LEAPS at $0.50. If you waited one day, you would have had to pay $0.60 for the same position, and that’s because the volatility explodes on this thing. If you look at the charts, the 1x short play has actually delivered enormous returns, as well as the 2x. It’s outperforming 2 to 1. So you have to buy when other people are selling, that’s the only way to get in and out of the (SH). Of course, I’m buying these things with the intention of running these to expiration.

Q: Is it time to sell US stocks?

A: Yes but only on the up days like today. Don’t sell into a pit, don’t sell into bottoms—wait for rally days like today. That's a good place to reduce risk and add some short positions like the ProShares Short S&P500 (SH) and the ProShares UltraShort S&P500 (SDS).

Q: How did you miss the rotation to Europe and China in emerging markets?

A: Very simple—if you ignore something for 15 years, it’s easy to miss a turn. I also missed the turn in Japan, which I ignored for 35 years. The real reason though is that I underestimated the extremity of this government, its economic policies, and the chaos it would create. I think almost everyone underestimated what the new government would actually do and how it would affect the stock market. If I knew ahead of time that the government would adopt recessionary policies, I would have done everything to get my money out of the US and into Europe and China, but this kind of unfolded with a shock a day, sometimes a shock an hour, and markets don’t like shocks and surprises, so they sold off. The more a stock had gone up in the last six months, the more it went down when the new government came into office.

Q: What are your downside targets for the market?

A: Now that we are in recession, I think any 5% rally off the recent low at 5500, you want to sell. The market could rally 3-5% off the bottom—that would be half of the recent loss. Then you’d want to get rid of more longs, cut your portfolio down to a few very high-quality positions, and add downside protection by buying the ProShares Short S&P500 (SH), the ProShares UltraShort S&P500 (SDS), doing buy rights on the calls and buying outright puts. That would be my recommendation. Eventually I see the S&P 500 falling to 5,000 by the summer, and if I’m wrong, it’s going down 30% to 4,500. That is a deep recession scenario, which we are on the track for unless the government suddenly reverses its draconian policies. This is the most extreme government in American history.

Q: Are you going to use the selloff to get into Costco (COST) after a 20% selloff?

A: Absolutely. I’ve been trying to get into Costco for years and it’s just always been too expensive. They keep increasing earnings every year —investors are willing to pay very high multiples for that. This time around, I am going to get into Costco because they are an absolutely outstanding company. By the way, my mentor at Morgan Stanley was a guy named Barton Biggs, who created the asset management division some 40 years ago. He was close friends with Sam Walton, the founder of Walmart, and Sam Walton was a huge admirer of Costco, which was just starting up then. I’m surprised they never took over the company, which is too big to take over now.

Q: What to buy at the bottom?

A: You want to buy what was leading right before we went into this collapse. Those are financials, and the highest quality profit making of the Mag7 which include Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOGL), Meta (META), as well as cybersecurity stocks like Palo Alto Networks (PANW), Fortinet (FTNT), Zscaler (ZS) and so on.

Q: Why are you making your recession call when we have no evidence of that fact?

A: If you wait for proof of recession, that often is the market bottom. And that could be August of this year. You know, I talk to hundreds of businessmen around the world, and everyone is saying business is slowing. Companies stop making decisions. Customers stop buying. Everyone's afraid of the tariffs. Nobody knows what's going to happen next. Business confidence is terrible. That adds up to a recession, but data tends to move very slowly, so we won't see it in the data for months. If you're a stock trader, you don't have the luxury of waiting for confirmation of the data. By the time you get it, the move is over. But if you cut half of government spending or 12% of GDP, the recession outcome is guaranteed. It's not a speculation. That is the government's goal: to cause a recession, so they can have a recovery going into the next election to take credit for.

Q: If Alphabet (GOOGL) is broken up, what will happen to the company?

A: With all of these big tech breakups, the parts will be worth a lot more than the whole. The individual pieces can be sold off at much bigger premiums creating new companies with more stock liquidity. This is what happened with AT&T (T) in 1982. I participated in that, and the parts were worth more than the original AT&T was within two years. I expect that to happen to Alphabet, and I expect that to happen if Amazon (AMZN) is broken up— eventually, these companies become so big, they become too big to manage. And if the management sees they can get 100% premium on a spinoff, they'll take it so fast it makes your head spin.

Q: None of the 90% gain in stock prices during the Biden administration was a result of his policies.

A: That's absolutely correct. He stayed out of the way, which is the best thing that governments can do—get the hell out of the way. American capitalism on its own will innovate and create profits far faster than any other economic system in history. Biden did quite a good job of staying away.

Q: Why are credit spreads still okay to do in this environment?

A: Because the implied volatility on the options are so high, you can get insane amounts of money—in the money like 30% or 40% —and get trades done and have a 0% chance of taking a loss on that. Suddenly you're being paid double to take risks on these option trades. The classic example is the $88-$90 call spread in Nvidia (NVDA), which we have expiring on Friday, March 21. We never even got close to $90, but the implied volatility on the day we added that trade was a ridiculous 75%. So, it's almost impossible to lose money when you put on trades with implied volatility in the options of 75%.

Q: What's your long-term target on gold now that your last long-term target of 3,000 finally got hit?

A: Yes, we've been recommending gold (GLD) for seven years now. In that time, it's doubled: $1,500 to $3,000. I'm now looking for $5,000 in gold by 2030, in five years. I got a feeling that flight-to-safety plays are going to be very popular in the world going forward. And by the way, people who did look for Bitcoin to protect them in any downturns: Bitcoin actually went down three times faster than the S&P 500 in the last month.

Q: Will stocks rise if the Fed cuts interest rates?

A: No, they won't, because the only reason the Fed will cut interest rates is if inflation falls, and right now, inflation is about to see a big upturn as those import duties of 25% or 50% work their way through the system. A lot of companies are front-running price increases before they even pay the tariffs and try to carve out some extra margin for themselves in advance. On Wednesday, Jay Powell said he expects inflation to rise from 2.5% to 2.8% by yearend and this will prove to be a low number. That is his “president breathing down the back of his next” forecast.

Q: What are your favorite Chinese stocks?

A: Well, a lot of these leading stocks have already gone up 50% or more since the beginning of the year as capital flees the United States and goes abroad. But if you held a gun to my head and said you had to buy two, I would buy Baidu (BIDU), and I would buy Alibaba (BABA). Those would be my Chinese picks. Alibaba is the closest thing you get to an Amazon in China.

Q: Has the dollar hit its lows this year?

A: No. Risk of the next Fed rate move is an interest rate cut. That is going to hang over the dollar and the currency markets for the entire year. And I don't see any recovery in the dollar this year. In fact, it's easy to see much lower lows, and higher highs in the foreign currencies. Buy (FXA), (FXE), (FXC), and (FXB) on dips.

Q: How do you feel about natural gas?

A: I would not be a buyer here. I think we've had a terrific run off of extreme cold weather—believe me, we got some of that in Nevada too—and that is starting to fade now. This is historically when that gas starts to fade for the year. Long term, my view on gas is bullish because of increased exports to China. We have a very pro-energy administration here; that means taking off the export restraints on natural gas, which can only be good for the gas companies and the gas price. China has basically told us they'll take all the natural gas they can get from us because every shipload of gas they buy (LNG) means less coal they have to burn.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Good Trading

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

March 21, 2025/by april@madhedgefundtrader.com

Please Use My Free Database Search

Diary, Homepage Posts, Newsletter

The original purpose of this letter was to build a database of ideas to draw on in the management of my hedge fund.

When a certain trade comes into play, I merely type in the symbol, name, currency, or commodity into the search box, and the entire fundamental argument in favor of that position pops up.

You can do the same. Just type anything into the search box with the little magnifying glass in the upper right-hand corner of my home page, and a cornucopia of data, charts, and opinions will appear.

Even the prices of camels in India (click here to find out why they’re going up).

The database goes back to February 2008, totaling 4 million words. Watching the traffic over time, I can tell you how the database is being used:

1) Small hedge funds want to see what the large hedge funds are doing.

2) Large hedge funds look to see what they have missed, which is usually nothing.

3) Midwestern advisors to find out what is happening in New York and Chicago.

4) American investors to find out if there are any opportunities overseas (there always are).

5) Foreign investors to find out what the heck is happening in the US (about 1,000 inquiries a day come in through Google’s translation software).

6) Specialist traders in stocks, bonds, currencies, commodities, and precious metals looking for cross-market insights which will give them a trading advantage with their own book.

7) High net-worth individuals managing their own portfolios so they don’t get screwed on management fees.

8) Low net worth individuals, students, and the military looking to expand their knowledge of financial markets (lots of free online time in the Navy).

9) People at the Treasury and the Fed trying to find out what the private sector is doing.

10) Staff at the SEC and the CFTC to see if there is anything new they should be regulating.

11) More staff at the Congress and the Senate looking for new hot-button issues to distort and obfuscate.

12) Yet, even more staff in Obama’s office gauging his popularity and the reception of his policies.

13) As far as I know, no justices at the Supreme Court read my letter. They’re all closet indexers.

14) Potential investors/subscribers attempting to ascertain if I have the slightest idea of what I am talking about.

15) Me trying to remember trades that I recommended long ago, but have forgotten.

16) Me looking for trades that worked so I can say ‘I told you so.’

It’s there, it’s free, so please use it.

March 20, 2025/by april@madhedgefundtrader.com

Profiting From America’s Demographic Collapse

Diary, Homepage Posts, Newsletter

Demographics is destiny.

If you ignore it as an investor, you will be constantly behind the curve wondering why your performance is so bad.

Get ahead of it, and people will think you are a genius.

I figured all this out when I was about 20.

I realized then, back in 1972, that if I could just get ahead of the baby boomer generation, everything magically seemed to work.

Buy what boomers want to buy next, and the world will be your oyster.

That strategy is still working today.

Back then, that meant buying residential real estate in California and New York, which has since risen in value 100 fold, and more, once the generous tax breaks of homeownership are added in.

Now it means investing in health care and big pharma, this year’s best performers in the stock market.

Except now, there is a new crowd in town: The Millennials.

As a long-term observer of America’s demographic picture, I was shocked to hear of a recent report from the US Census Bureau.

The US population grew by 1.75 million, or a scant 0.53% in 2023, the lowest since 1942.

You can’t start or expand a family when an essential partner in the process is off fighting WWII, and there were 17 million of them back then.

This is far below the 2.09% replacement rate that the country was holding on to only a few years ago.

As of today, there are 341,233,396 Americans. This accounts for 4.21% of the global population of 8.1 billion.

This places American population growth close to the bottom of the international reproduction sweepstakes, down with Italy (0.32%), Germany (0.11%), and Poland (0.02%).

According to the World Bank, 22 countries suffered population declines, like Portugal (-0.29%) and Japan (-0.20%). Click here for the link

The tiny Sultanate of Oman, one of my old stomping grounds as a Marine Corps pilot, enjoys the planet’s highest growth rate at 9.13%.

But then it helps if you have four wives.

The obvious cause here of America’s demographic dilemma was the pandemic. There is a high correlation between economic health and fertility a year later. Not only did one million Americans die, but women were afraid to socialize in person and eventually go to hospitals to deliver children.

So, we can only hope that the improvement in the economy sent more to the maternity ward.

If it doesn’t, it could be great news for your investment portfolio. Fewer births today translate into a shortage of workers in 20 years. That brings rising wages, flying inflation, and rapid price hikes. And stock markets love inflation because companies can pass costs on to consumers, while bondholders can’t.

Corporate profits go through the roof, as do share prices. It also produces fewer relying on government services in 40 years, which makes it easier for the government to balance the budget.

This Goldilocks scenario was already scheduled for the decade of the 2020s, when a 15-year demographic headwind flipped to a tailwind, thanks to the coming demise of the “baby boomer” generation, now a big cost to the economy and the emergency of Millennials as big spenders. But the 2024 election may have canceled out these beneficial effects.

As long as I hike ten miles a day I’ll probably live forever. I’ve already outlived three doctors. Quitting smoking when my first kids came along 40 years ago was a big help.

California is the most populous state, with over 40 million, followed by Texas (29.53 million) and New York (8.5 million). Two states saw population declines, Maine and West Virginia, where the collapse of the coal industry is sucking the life out of local businesses.

Parsing through the report, it is clear that predictions of population trends are becoming vastly more complicated, thanks to the increasingly minestrone-like makeup of the US people.

By 2040 no single racial group will be in a majority in the US. That is already the case for the entire States of California and Texas now. Hispanics now account for 38% of the population of the Golden State, followed by Caucasians at 37%.

America will come to resemble other, much smaller multiethnic societies, like Singapore, South Africa, England, and Israel. This explains much about the current state of politics in the US today.

Some 80% of new Texans were Hispanic and black, confirming my belief that the Lone Star State will become the next battleground in presidential elections.

Single ethnic groups historically will only lose their majority with a fight.

This is why gerrymandering (redistricting) is such a big deal there, with the white establishment battling to hang on to power at any cost.

Further complicating any serious analysis is the rapid decline of the traditional American nuclear family, where married parents live with their children.

With a vast concentration of wealth at the top and a long-term decline in middle-class earnings, kids are increasingly becoming a luxury of a prosperous elite.

As a result, the country’s birthrate has declined by half since 1960.

Those who do are having fewer kids, with the average family size dropping from three to two. In 1964, the final year of the baby boom, 36% of Americans were under the age of 18.

Today, that figure is just 23.5% and is expected to fall to 21% by 2050. Only 80% of women have children now, compared to 90% in the 1970’s.

One possible explanation is that the full, end-to-end cost of child rearing has soared to over $250,000 per child now.

I was a bargain as a kid, costing my parents only a tenth of that. Rocketing college costs are another barrier, with 70% of high school grads at least starting some higher education.

I went to Boy Scouts and Little League baseball, each of which cost $1 a month. A full scholarship covered my college expenses.

When I look at the checks I have written for my own children for ski lessons, soccer, youth sailing, braces, international travel, and assorted master's degrees and PhDs, I recoil in horror.

Fewer women are following that old adage of “marriage before carriage.” Some 41% of children are born out of wedlock, up 400% in 40 years.

It is definitely an education and class-driven divide. Only 10% of college-educated mothers are still single, compared to 57% of those with a high school education or less.

It is a truism in the science of demographics that educated women have fewer children. It makes possible careers that enable them to bring home paychecks instead of babies, which husbands prefer.

Blame Roe versus Wade, the Equal Rights Act, and Title Nine, but every social reform benefiting women of the past half-century has helped send the birthrate plummeting.

More women wearing pants in the family hurts the fertility rate as well, as they are unable, or unwilling, to bear the large families of yore. The share of families where women are the primary breadwinners has leaped from 11% to 40% since 1960.

When couples do marry, they are sometimes of the same sex, now that gay marriage is legal, further muddying traditional data sources.

Some 2 million children are now being raised by gay parents. In fact, there is a gay baby boom underway, which those in the community call the “gayby” boom.”

All female couples have produced one million children over the last 30 years, 95% of whom select for blond-haired, blue-eyed, Aryan sperm donors who are over six feet tall ($40 a shot for donors if you guys are interested and live within walking distance from UC Berkeley).

I’m told by the sources that know that water polo players are particularly favored.

The numbers are so large that it is impacting the makeup of the US population.

There was a time when I could usually identify the people standing next to me on San Francisco cable cars. That time has long passed. Now I don’t have a clue.

Whenever we go to war, we become our enemy to a modest degree, both as a people and a culture.

After WWII, 50,000 German and 50,000 Japanese wives were brought home as war prizes. Sushi, hot tubs, Toyotas, and Volkswagens quickly followed.

The problem is that the US has invaded another 20 countries since 1945 and is now maintaining a military presence in 140. That generates a hell of a lot of green cards.

This has spawned sizeable Korean, and later, Iranian communities in Los Angeles, a Vietnamese one in Louisiana, a Somali enclave in Minneapolis, and a large minority of Afghans in San Jose, CA. The Arab population of Michigan could have decided the 2024 presidential election.

The fall of the Soviet Union in 1992 unleashed another dozen Eastern European ethnic groups and languages on the US. Haven’t you noticed the proliferation of Arab fast-food restaurants in your neighborhood since we sent 20 divisions to the Middle East?

What all this means is that the grand experiment called the United States is entering a new phase.

Different ethnic, racial, religious, and even political groups are blending with each other to create a population unseen in the history of the world, with untold economic consequences.

It is also setting up an example for other countries to follow.

Get your investment portfolio out in front of it, and you could prosper mightily.

Ignore Demographics at Your Portfolio’s Peril

March 19, 2025/by Mad Hedge Fund Trader

How to Handle the Friday, March 21 Options Expiration

Diary, Homepage Posts, Newsletter

Followers of the Mad Hedge Fund Trader alert service have the good fortune to own four in-the-money options positions that expire on Friday, March 21, and I just want to explain to the newbies how to best maximize their profits.

These involve the:

Risk On

(NVDA) 3/$88-$90 call spread 10.00%

Risk Off

(GLD) 3/$240-$250 call spread -10.00%

(SH) 3/$38-$41 call spread -10.00%

(GM) 3/$53-$56 put spread -10.00%

Provided that we don’t have a monster move in the market in four trading days, these positions should expire at their maximum profit points.

So far, so good.

I’ll take the example of the (GM) 3/$53-$56 call spread.

Your profit can be calculated as follows:

Profit: $3.00 expiration value - $2.60 cost = $0.40 net profit

(40 contracts X 100 contracts per option X $0.40 profit per option)

= $1,600 or 15.38% in 11 trading days.

Many of you have already emailed me asking what to do with these winning positions.

The answer is very simple. You take your left hand, grab your right wrist, pull it behind your neck, and pat yourself on the back for a job well done.

You don’t have to do anything.

Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.

The entire profit will be credited to your account on Monday morning March 24 and the margin freed up.

Some firms charge you a modest $10 or $15 fee for performing this service.

If you don’t see the cash show up in your account on Monday, get on the blower immediately and find it.

Although the expiration process is now supposed to be fully automated, occasionally machines do make mistakes. Better to sort out any confusion before losses ensue.

If you want to wimp out and close the position before the expiration, it may be expensive to do so. You can probably unload them pennies below their maximum expiration value.

Keep in mind that the liquidity in the options market understandably disappears, and the spreads substantially widen, when a security has only hours, or minutes until expiration on Friday. So, if you plan to exit, do so well before the final expiration at the Friday market close.

This is known in the trade as the “expiration risk.”

One way or the other, I’m sure you’ll do OK, as long as I am looking over your shoulder, as I will be, always. Think of me as your trading guardian angel.

I am going to hang back and wait for good entry points before jumping back in. It’s all about keeping that “Buy low, sell high” thing going.

I’m looking to cherry-pick my new positions going into the next quarter's end.

Take your winnings and go out and buy yourself a well-earned dinner. Just make sure it’s take-out. I want you to stick around.

Well done, and on to the next trade.

You Can’t Do Enough Research

March 18, 2025/by april@madhedgefundtrader.com

The Market Outlook for the Week Ahead, or Sell First and Ask Questions Later

Diary, Homepage Posts, Newsletter

I have been learning a new language over the past few weeks (I already speak six).

And like learning any new language, it has been a bumpy road.

I remember a family dinner I had in Tuscany in 1968. The dessert was chocolate cake. I didn’t know how to say “cake” in Italian, so I made up one. I said “Questo e una cacca magnifico”. The entire table burst into laughter. Then my host told me, “You just said this is wonderful shit.”

Oops.

Investors lately have been suffering their own “cacca” moment.

The administration’s economic policies were obscure before the election but very clear now. Pain first, pleasure later….maybe. But they run a great risk that we get into the pain stage and can’t get out with a severe austerity budget during a recession. Investors' response has been to sell now and buy back later when the upside resumes, if and when that ever happens.

Warning: uncertain stock markets trade at big discounts, not the paltry 10% haircut we have seen so far over the past month. They drop by half. (SPY) price earnings multiples have just dropped from 22X to 20X in four weeks. 18X, where we fell to in 2018, gets you to my down 20% bear market.

Half done….half to go.

Welcome to the brave new world. A “transition” means either a “recession” or “depression,” I’m not sure which yet.

So does “disruption.”

I think that a lot of businesses are going to be committing their own errors of translation in the coming months. For example, is this a recession, or a depression? Let me know when you figure that one out.

In fact, after speaking to clients over the past week, my own vocabulary has been vastly expanded.

It turns out that if you’ve been running a successful business since the pandemic, the last thing in the world you want is for it to be disrupted.

FOMO, or fear of missing out, is long gone. Fear alone is here. Sell first and ask questions later. Market sentiment is horrible and getting worse by the day.

Delta Airlines (DAL) warned us last week that sales may dramatically fall in the coming months, taking the stock down 7%. Consumers dial back discretionary spending during recessions, and at the top of that list are vacation and business travel. With that comment, you can write off the entire travel sector, including all the airlines, hotels, online travel apps, cruise lines, and rental car companies.

And other than that, how was the play Mrs. Lincoln?

And you wanted uncertainty? This is the Golden Age of Uncertainty.

The steel tariff rose from 25% to 50%, on Tuesday, then Ontario imposed a 25% duty on electricity exports to the US, then the US cut their steel tariff back to 25% and the electricity tariff went away. Every American car requires 1,000 pounds of steel and Michigan, Minnesota, and New York get the bulk of their electricity from Canada, which has abundant hydro.

An intraday trade war?

I love following anecdotal recession indicators and one is no farther than your own television set.

When CNBC runs back-to-back promotions of its own programs, it means they haven’t been able to sell those slots. Brokers greatly dial back their advertising because customers only open new accounts in rising markets, not falling ones. Greed is gone. And you see a lot of new companies ramp up ads because the price has fallen to where they can afford them. Notice the constant ads these days from eBay and Mark Cuban?

And what is the most common expression in the English language right now? “I don’t know.”

Three places to keep an eagle eye on right now for short-term market direction and risk-taking: Tesla (TSLA), Nvidia (NVDA), and the Volatility Index ($VIX). Watch the movement of these three bellwether stocks and you can guess where the rest of the market is going right now.

And just a reminder, the average recession performance of the S&P 500 (SPY) for the past 80 years is a decline of 34%. It backs my own forecast of a 20% decline looks positively bullish and the current level of a 10% pullback looks insanely optimistic.

Yes, even down here stocks are still expensive.

And here is the cruelest math of all.

The Average American now has to work an extra seven years, to get their retirement fund back to where they were at the market top on February 19, assuming a 45-year work life. With the S&P 500 now down 10%, the typical retirement fund is off 15%, since they were overweight technology stocks. That is especially true if they were just about to retire. That is unless they have been following Mad Hedge Fund Trader, in which case they are probably up on the year like I am.

How bad can it get?

The Bull Case

We are now in a recession that will probably
cost us -6% to -7% over two to three quarters like it did during the pandemic and then
ends with a $5 trillion tax cut for 2026
(SPY) down 20%-30%, and then we recover

The Bear Case

No tax cut means we enter a depression
and lose 25% of GDP over 4 years
(SPY) down 60%, and then we recover

March is now up a spectacular +10.21% return so far. That takes us to a year-to-date profit of +19.68% so far in 2025. That means Mad Hedge has been operating as a perfect -2X short S&P 500 ETF since the February top. My trailing one-year return stands at a spectacular +92.10%. That takes my average annualized return to +50.59% and my performance since inception to +771.57%.

It has been another busy week for trading. I stopped out of my last longs in (IBKR) and (TSLA) for small losses. I added new short positions in (GM), (NVDA), (SH), and (TSLA). I took profits on a short position in (NVDA). I also strapped on a (TLT) trade betting that interest falls going into a recession.

Try beating that anywhere.

Stocks Suffer Worst Day in 3 Years but bounced off the 10% correction level at $5,550 for the (SPX). The government has abandoned Keynesianism, the principal economic model for the country for 90 years. It’s cutting spending as we head into recession. We now have a reverse hockey stick on share price valuations, with sales falling and multiples shrinking at the same time. Lower lows for everything beckon.

University of Michigan Consumer Confidence Collapses, at 57.0 versus an estimated 63.2, a four-year low. Expectations were already low, taking the Dow Average on a 300-point swoosh down, which it immediately recovered. Remember, this is a lagging indicator, and that confidence is likely much lower now.

Fed Interest Rate Cut is Back on the Table, 25 basis points on June 18, as recession fears explode. A recession will drop overnight rates to 3%, and eventually 2%.

Ceding US Leadership Will Send Stocks to Big Discounts, the guaranteed result of Trump's new foreign policies. That’s the opposite of the existing order which sent American stocks to big premiums for 80 Years. That’s why there is a massive outpouring of capital from the US to Europe causing the huge outperformance of the German stock market, up 28% YTD.

Yen Carry Trade unwind sends Japanese currency soaring, as hedge funds de-gross or reduce overall positions. That means a lot of yen buying and US dollar selling. The Japanese currency has risen by 10% against the US dollar this year.

Trump Administration to Pursue Alphabet Breakup, continuing Biden era policy. The good news? The move could enrich investors, as a breakup would double the value of the individual parts, as it did with AT&T. Buy (GOOGL) on dips.

Government to Change GDP Calculations, knocking out government spending, about a quarter of the total. The goal is to create artificially high GDP numbers and obscure the negative impact of government spending cuts. Expect multiple GDP estimates to proliferate soon from the private sector using the old model. This is against a backdrop of the sudden end of many government data services, from demographics to the weather.

Chaos Hits Economy, forcing businesses to forestall decisions and market down earnings. Job security has vaporized, forcing consumers to dial back on spending. Virtually every economic data point has rolled over and turned negative. The share buyers strike continues, with every client I have only looking to sell rallies. The Volatility Index ($VIX) hits a six-month high at $29. And we have four more years of this?

Delta Airlines Slashes Earnings Forecast, on trade wars and recession scares, taking the shares down 7%. Travel is particularly sensitive to economic slowdowns and declining discretionary spending. Cruise lines have also been hammered. For “Transition” read “Recession”. Avoid all travel plays.

Who is Sitting Pretty Now? Warren Buffet’s Berkshire Hathaway, with $335 billion in cash. Has he started buying yet? No!

US Deficit Hits New All-Time High, in February. The deficit totaled just over $307 billion for the month, nearly 2½ times what it was in January and 3.7% higher than February 2024. Five months into the government fiscal year, the national debt has grown by $5 trillion. Where are those promised savings?

Gold Hits New All-Time High, as Recession Fears Tank Interest Rates, cutting the opportunity cost of holding the Yellow Metal. Mad Hedge is already long and looking to add on dips. The central bank and Chinese retail buying continue unabated.

Tesla to Face Punitive Export Tariffs, as the trade war impact widens. Tesla warned that even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the United States, like large format Panasonic screens. Keep selling Telsa rallies. I’m looking for $160 by summer.

Stock Market Loses $5 Trillion in Market Value, in less than two months, a record loss. Thursday’s decline put the index’s market value down to $46.78 trillion. The decline has come in the shadow of President the expanding trade war with several of the United States’ major trading partners, with headlines about tariffs at times seeming to drive market moves. There have also been signs of slowing economic growth, with weak consumer sentiment surveys and tepid outlooks from retailers like Wal-Mart (WMT).

My Ten-Year View – A Reassessment

My Dow 240,000 target has been pushed back to 2035.

On Monday, March 17, at 8:30 AM EST, Retail Sales are announced.

On Tuesday, March 18, at 8:30 AM, the Housing Starts and Building Perm are released. The Federal Reserve begins its two-day Open Market Committee Meeting.

On Wednesday, March 19, at 1:00 PM, the Federal Reserve announces its interest rate decision.

On Thursday, March 20, at 8:30 AM, the Weekly Jobless Claims are disclosed. We also get the Existing Homes Sales.

On Friday, March 21, at 2:00 PM the Baker Hughes Rig Count is printed.

As for me, I was sent reeling with the passing of my old friend, comedian Robin Williams. His mother lived directly next door to my family for many years. A petite widow in her late seventies, we often looked in on her and invited her into our community social group. More than once, I came home to find my late wife chatting with her in the living room over a cup of tea.

Robin, ever the dutiful son, thanked me on many occasions. He volunteered to appear at school fundraisers for my kids. Needless to say, he was a huge hit and brought in buckets of money.

To describe Robin as a giant in his industry would be an understatement. No one could match his stream-of-consciousness outpouring of originality. I know some Disney people who worked with him on the Aladdin animated film where Robin played the genie, and he drove them nuts.

The script was just a starting point for him. You just turned him on, and it was all peripatetic improvisation after that. This forced the ultra-controlling producers to draw the animation around his monologue, no easy trick and the reverse of the usual practice.

When I attended the London premiere of Aladdin, the audience sat with there with their jaws dropped, trying to decode cultural references that were being fired at them a dozen a minute.

It was safe to say that Robin fought a lifetime battle with drug addiction. He only got out of rehab a year earlier for the umpteenth time.

His depression had to be severe. People who knew him well believed that his comedy evolved as a way of dealing with it. He used jokes as weapons to keep the demons at bay. Perhaps that is the price of true genius. In the end, it was probably genetic.

This has been reaffirmed by the many comedians I have met during my life, including Groucho Marx, Bob Hope, George Burns, Jay Leno, Chris Rock, and many others. I see Jay every year at the Pebble Beach Concourse d’Elegance vintage car show where he usually has a prime entrant, who reminds me that over the past 40 years investing in his vintage cars has done better than stocks.

Robin was a very wealthy man, at one point owning a $25 million mansion in San Francisco’s tony Pacifica district. He left behind a wife and a young child. He was at the peak of his career, with another movie coming out at Christmas, A Night at the Museum III, and a sequel to Mrs. Doubtfire in the works.

These are not normally the circumstances where one takes his own life. One can only assume that to do what he did he had to be suffering immense pain.

He will be missed.