Global Market Comments
September 18, 2019
Fiat Lux
Featured Trade:
(HOW TO HANDLE THE FRIDAY, SEPTEMBER 20 OPTIONS EXPIRATION),
(AMZN), (DIS), (FB), (MSFT), (VIX),
(INDUSTRIES YOU WILL NEVER HEAR FROM ME ABOUT)
Mad Hedge Technology Letter
September 18, 2019
Fiat Lux
Featured Trade:
(WHY YOU SHOULD AVOID CHINESE TECH IPOS LIKE THE PLAGUE)
(TSLA), (BIDU), (NIO)
Millennials usually stick with the stocks that they know.
That’s all fine until it takes a bite out of their wallet.
Some of these decisions based on the products that represent this generation have been stock market disasters of late.
Sadly, many Millennials were too young to catch the ride up for Tesla.
Many older generations got into the stock at $20, $40 and $100 and rode the elevator up with an ultra low-cost basis.
I can’t say the same for Millennials as many came of age and finally had the money to splurge for shares after the stock had plateaued.
This was a cringe-worthy lesson that just because a company has a great product doesn’t always mean the stock is just as great.
Electric Vehicles (EV) are front and center of the Millennial consciousness and that also meant that many scooped up NIO which is the Chinese version of Tesla.
After peaking at $10 in March, the stock is now trading at $3.
Many Chinese IPOs that go public in New York are of a pump-and-dump mentality as they shower the public with losses.
In fact, many Chinese IPOs only have the goal of going public without the goal of doing much more after that.
NIO has yet to be found out completely, but the Chinese economy is hurting and the Chinese consumer has reigned back the purse strings as times become lean.
As we head into a global slow down, electric car companies that lose boatloads of money will be in the firing line for value revaluations.
In fact, I would urge any reader to steer clear of any Chinese company traded on the public markets because of opaque financials that are intentionally obfuscated.
Baidu is another favorite of the Millennial generation pigeonholed as the “Google search of China.”
That moniker is an impressive catchphrase but it doesn’t do much to rejuvenate the large loss in market share that Baidu has ceded to Alibaba and WeChat platforms.
Baidu has lost its mojo and is bleeding usership and it will be hard to reverse it as Baidu never evolved with the changing trends of Chinese consumers.
Baidu peaked in April 2018, at $250 and is now trading at less than $108 and the slide isn’t over yet as Baidu has no adequate response to the domination of the other Chinese tech behemoths.
Yes, many tech trends have legs and are secular shifts that have major ramifications to the global economy.
But the devil is in the details and peels back the layers to be aware of developments such as CEO of Tesla Elon Musk building an American Gigafactory in Shanghai at the worse time in economic history as a legitimate canary in the coal mine.
As robust as the Chinese consumer has been, the latest contagion of African swine flu that culled a major amount of Chinese pigs has raised the price of pork by over 45%.
Chinese consumers are hyper-aware of these economic developments in the year of the pig.
After a massive ride up in Chinese tech shares and electric car story that took many investors breath away, we are at the beginning of a meaningful revaluation that will change the narrative moving forward.
Timing is everything in this game.
The focus of this letter is to show people how to make money through investing in fast-growing, highly profitable companies which have stiff, long-term macroeconomic winds at their backs.
That means I ignore a large part of the US economy, possibly as much as 80%, whose time has passed and are headed for the dustbin of history.
According to the Department of Labor's Bureau of Labor Statistics, the seven industries listed below are least likely to generate positive job growth in the next decade.
As most of these stocks are already bombed out, it is way too late to short them. As an investor, you should consider this a “no go” list no matter how low they go. I have added my comments, not all of which should be taken seriously.
1) Realtors - The number of realtors is only down 10% from its 1.3 million peak in 2006. I have always been amazed at how realtors who add so little in value take home so much in fees, still around 6% of the gross sales price. Someone is going to figure out how to break this monopoly.
2) Newspapers - these probably won't exist in five years, as five decades of hurtling technological advances have already shrunk the labor force by 90%. Go online, or go away.
3) Airline employees - This is your worst nightmare of an industry, as management has no idea what interest rates, fuel costs, or the economy will do, which are the largest inputs into their business. Pilots will eventually work for minimum wage just to keep their flight hours up.
4) Big telecom - Can you hear me now? Nobody uses landlines anymore, leaving these companies with giant rusting networks that are costly to maintain. Since cell phone market penetration is 90%, survivors are slugging it out through price competition, cost-cutting, and all that annoying advertising.
5) State and Local Government - With employment still at levels private industry hasn't seen since the seventies, firing state and municipal workers will be the principal method of balancing ailing budgets. Expect class sizes to soar to 80 or go entirely online, to put out your own damn fires, and keep the 9 mm loaded and the back door booby-trapped for home protection.
6) Installation, Maintenance, and Repair - I have explained to my mechanic that the motor in my new electric car has only eleven moving parts, compared to 1,500 in my old clunker, and this won't be good for business. But he just doesn't get it.
The winding down of our wars in the Middle East is about to dump a million more applicants into this sector. The last refuge of the trained blue-collar worker is about to get cleaned out.
7) Bank Tellers - Since the ATM made its debut in 1968, this profession has been on a long downhill slide. Banks have lost so much money in the financial crisis, they can't afford to hire humans anymore.
It hasn't helped that hundreds of banks have closed during the recession, with many survivors merging to cut costs. Your next bank teller may be a Terminator.
Out With the Old
And in With the New
“I don't care about revenue.” – Said Founder of Alibaba Jack Ma
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
this can be deleted - its a test
Biotech access
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
September 17, 2019
Fiat Lux
Featured Trade:
(PROFITING FROM AMERICA’S DEMOGRAPHIC COLLAPSE)
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