“Simply put: We don't build services to make money; we make money to build better services.” - said Facebook CEO Mark Zuckerberg.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Mad Hedge Hot Tips
January 25, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) The Semis Have Bottomed in the Wake of Spectacular Earnings Reports from (LRCX), (AMD), and (XLNX). The great artificial intelligence play is back in action after a severe spanking. I never had any doubt they would come back. Now for an entry point. Click here.
2) “Let Them Eat Cake,” said Commerce Secretary Wilber Ross in telling starving federal employees to borrow against their future paychecks. This kind of detachment from the fate of the working man is common among the many billionaires I have known. Maybe Wilber should read his French history and find out what happened to the last leader who took this attitude? Click here.
3) The US and China are “Miles and Miles” from a Trade Deal, was the other great insight we obtained from Wilber Ross. Just what the stock market didn’t want to hear. That’s what happens when you negotiate with a country that doesn’t have real elections or opinion polls. Click here.
4) Farmers are Leaving Crops to Rot in the Field, as the trade war with China destroys prices and the Mexicans needed to harvest them are trapped at the border. There’s got to be an easier way to earn a living. Avoid the ags and all ag plays. Click here.
5) Check Out Boeing’s New Flying Car. Yes, I know you’re thinking “Pull the other one.” But it really does exist. My question is how many new pilots can we fit in the air when the air traffic controllers are NOT getting paid? Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(JANUARY 9 BIWEEKLY STRATEGY WEBINAR Q&A),
(TSLA), (EDIT), (NTLA), (CRSP), (SJB), (TLT), (FXB), (GLD),
(THE PRICE OF STARDOM AT DAVOS)
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
January 25, 2019
Fiat Lux
Featured Trade:
(JANUARY 9 BIWEEKLY STRATEGY WEBINAR Q&A),
(TSLA), (EDIT), (NTLA), (CRSP), (SJB), (TLT), (FXB), (GLD),
(THE PRICE OF STARDOM AT DAVOS)
Below please find subscribers’ Q&A for the Mad Hedge Fund Trader January 23 Global Strategy Webinar with my guest and co-host Bill Davis of the Mad Day Trader. Keep those questions coming!
Q: Would you buy Tesla (TSLA) right now?
A: It’s tempting; I’m waiting to see if we take a run at the $250-$260 level that we saw at last October’s low. If so, it’s a screaming buy. Tesla is one of a handful of stocks that have a shot at rising tenfold in the next ten years.
Q: CRISPR stocks are getting killed. I know you like the science—do you have a bottom call?
A: What impacted CRISPR stocks was the genetic engineering done on unborn twins in China that completely freaked out the entire industry and killed all the stocks. That being said, CRISPR has a great long-term future. They will either become ten-baggers or get taken over by major drug companies. The first major CRISPR generated cure will take place for childhood blindness later this year. The ones you want to own are Editas (EDIT), Intellia Therapeutics (NTLA), and CRISPR Therapeutics (CRSP).
Q: Do you ever reposition a trade and add contracts?
A: I very rarely double up. I’d rather go on to a new trade with different strike prices. A bad double up can turn a small loss into a big one. Sometimes I will do a “roll down,” or buy back one spread for a loss to earn back that loss with a spread farther in-the-money.
Q: For us newbies, can you please explain your trading philosophy regarding purchasing deep in the money call spreads and how that translates to risk management?
A: I did a research piece in Global Trading Dispatch yesterday on deep in-the-money call spreads, and today on deep-in-the-money put spreads. The idea is to have a position where you make money whether the market goes up, down, or sideways. Your risk is defined, and you always have time decay working for you, writing you a check every day. Here are the links: Vertical Bull Call Spread and Vertical Bear Put Spread.
Q: What’s the risk reward of floating rate corporate debts?
A: Number one: interest rates go down—if we go into recession, rates will fall. That wipes out the principal value of the security. Number two: with corporate debts, you run the risk of the corporation going bankrupt or having their business severely impacted in the next recession and their credit rating cut. It’s far safer to invest in a bank deposits yielding 2-2.5% right now. Some smaller banks are offering certificates of deposit with 4% yields.
Q: What are your thoughts on the British pound (FXB)?
A: I think Brexit will fail eventually and the pound will increase 25%; so play from the long side on the (FXB). It would be economic suicide for Britain to leave the EC and eventually people there will figure this out. If the Brexit vote were held today, it would lose and that may be how they eventually get out of this.
Q: Is it a bear market for bonds (TLT)?
A: Yes, it’s back on again. I expect we will visit $112 in the (TLT) sometime this year, down from the current $121. That brings us back up to the 3.25% yield on the ten-year US Treasury bond. That is down nine points from here, so it’s certainly worth taking a bite out of.
Q: What’s the best time to buy the ProShares Short High Yield (SJB)?
A: At the top of the next equity market run. It rose a whopping 10% during the December stock market meltdown so that gives you a taste of what can happen. Junk bonds are called “junk” for a reason.
Q: How do you see gold (GLD)?
A: Take profits now and buy back on the next dip. If we dip 5%-10% in gold, that would be a good entry point for a larger move later on in the year. To get a real move in gold, we need to see real inflation and that will eventually come. Another stock market crash will also gain you another 10% in gold.
Q: When will the government shutdown end?
A: I think it will go a lot longer than anyone realizes because Trump needs a deal worse than the Democrats do. Trump is basically saying pay for my wall or I’ll keep shooting another of MY supporters in the head every day. The Democrats can wait a really long time in that circumstance. Trump’s standing in the polls has also collapsed to new lows. By the way, the Chinese are using the same approach in the trade talks so that could be a long wait as well.
Q: There’s been a big shift in the MHFT Profit Predictor in the last 30 days—does this mean we should not be adding any positions?
A: Absolutely; this is a terrible place to be adding any new positions. The index went from 2 to 57 which shows you how valuable it is at calling market bottoms. Now we are at the top end of the middle of the range. All markets are now dead in the middle of very wide trading ranges which means the best thing you can do is take profits on existing positions, which I have been doing. Or watch Duck Dynasty and Pawn Stars replays. As for me, I am an Antiques Roadshow guy.
Q: What percentage should you be invested in the market now?
A: I’ve gone from 60% to 30% and have only 3 weeks left on my remaining position. I’m looking to go 100% cash as long as we’re stuck in the middle of this range. Better to sit on your hands than chase a high risk/low return trade.
Did I mention that we have had the best start to a New Year in a decade?
It’s that time of year again when finance ministers, central bank governors, hedge fund managers, and assorted rock stars hold their annual confab high in the Alps at Davos, Switzerland.
When I was a director of one of the largest banks in Switzerland, I found myself a frequent visitor to the Alpine village of Davos. The conference is one of those things that you only want to do once. It’s too boring.
In years gone by, we provided the loans to the Canton of Graubünden needed to build the lifts and gondolas in Davos to develop it into a world-class ski resort and watering hole for the wealthy.
Without that money, Davos would have remained a small mountain hamlet on the way to long established St. Moritz, possibly not even warranting its own train station.
Instead of renting out hotel suites for $10,000 a day, the residents would be filling their days cutting hay, milking cows, and making goat cheese. Generous government subsidies would keep the village in the green.
Thanks to our largess, I received a lifetime ski lift ticket there which I still use on occasion.
My friend, the intrepid New York Times reporter Andrew Ross Sorkin tells me that the minimum cost to attend the exclusive World Economic Forum for membership and a single ticket is $71,000.
That just gets you general admission. If you hail from an up and coming emerging market like China, you get a break on the price.
To join some of the private discussion groups, you need to upgrade to a $156,000 package. More exclusive access can be had for “Strategic Partners” for prices ranging up to $696,000 after the latest price increase and Swiss franc revaluation.
That does not include the cost of travel, meals, and accommodation which are stratospheric now that the Swiss franc is more valuable than a US dollar (I remember when it was 3:1). $75 for a hamburger? No problem!
All of this just to rub shoulders with hedge fund manager George Soros, European Central Bank governor Mario Draghi, George Soros, Julian Robertson, rock star Bono, and others of their ilk.
Certainly, you can gain many of the insights found in Davos by simply reading this newsletter at a much lower price. I can get more information from the high and the mighty by chatting over the phone for five minutes than engage in a media scrum in the mountains.
Do you suppose they still have a Youth Hostel in Davos?
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Hot Tips
January 24, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1)The ECB’s Draghi Says No Euro Rate Rises Until 2020, and the US bond market took off like a rocket. Another point or two and we’ll be in short selling territory again. Don’t count on Europe to pull us out of the next recession. Click here.
2) The Airline Industry Will Cease to Function, in a few weeks if the government shutdown doesn’t end. It will literally run out of federally inspected parts, and planes. Never mind the TSA. Click here.
3) Procter & Gamble Beats, with an upside earnings surprise. It must be all those people buying soap to wash their hands of our political system. Click here.
4) But Ford Disappoints, dragged down by weak foreign earnings. The last to get into electric cars is really starting to suffer. The last of the buggy whip makers is in a swan dive. Click here.
5) Hedge Fund Titan Pays $238 million for a New York Condo. Who says home prices are going down? Situated on the 79th floor at 220 Central Park South, Citadel’s Ken Griffin bought the most expensive US residence ever sold. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(FROM THE FRONT LINES OF THE TRADE WAR),
(AAPL), (AVGO), (QCOM), (TLT),
(HOW THE MAD HEDGE MARKET TIMING ALGORITHM TRIPLED MY PERFORMANCE),
(ACTIVISTS LAY IN ON EBAY),
(EBAY), (AMZN), (PYPL), (GOOGL)