“A squirrel dying in front of your house may be more relevant to your interests right now than people dying in Africa.” – Said Co-Founder and CEO of Facebook Mark Zuckerberg
Global Market Comments
February 26, 2019
Fiat Lux
Featured Trade:
(ABOUT THE TRADE ALERT DROUGHT),
(SPY), (GLD), (TLT), (MSFT),
(THE NEW OFFSHORE CENTER: AMERICA)
(TESTIMONIAL)
Long term subscribers are well aware that I sent out a flurry of Trade Alerts at the beginning of the year, almost all of which turned out to be profitable.
Unfortunately, if you came in any time after January 17 you watched us merrily take profits on position after position, whetting your appetite for more.
However, there was nary a new Trade Alert to be had, nothing, nada, and even bupkiss. This has been particularly true with particular in technology stocks.
There is a method to my madness.
I was willing to bet big that the Christmas Eve massacre on December 24 was the final capitulation bottom of the whole Q4 move down, and might even comprise the grand finale for an entire bear market.
So when the calendar turned the page, I went super aggressive, piling into a 60% leverage long positions in technology stocks. My theory was that the stocks that had the biggest falls would lead the recovery with the largest rises. That is exactly how things turned out.
As the market rose, I steadily fed my long positions into it. As of today we are 80% cash and are up a ballistic 13.51% in 2019. My only remaining positions are a long in gold (GLD) and a short in US Treasury bonds (TLT), both of which are making money.
So, you’re asking yourself, “Where’s my freakin' Trade Alert?
To quote my late friend, Chinese premier Deng Xiaoping, “There is a time to fish, and there is time to mend the nets.” This is now time to mend the nets.
Stocks have just enjoyed one of their most prolific straight line moves in history, up some 20% in nine weeks. Indexes are now more overbought than at any time in history. We have gone from the best time on record to buy shares to the worst time in little more than two months.
My own Mad Hedge Market Timing Index is now reading a nosebleed 74. Not to put too fine a point on it, but you would be out of your mind to buy stocks here. It would be trading malpractice and professional negligent to rush you into stocks at these high priced level.
Yes, I know the competition is pounding you with trade alerts every day. If they work, it is by accident as these are entirely generated by young marketing people. Notice that none of them publish their performance, let alone on a daily basis like I do.
You can’t sell short either because the “I’s” have not yet been dotted nor the “T’s” crossed on the China trade deal. It is impossible to quantify greed in rising markets, nor to measure the limit of the insanity of buyers.
When I sold you this service I promised to show you the “sweet spots” for market entry points. Sweet spots don’t occur every day, and there are certainly none now. If you get a couple dozen a year, you are lucky.
What do you buy at market highs? Cheap stuff. That would include all the weak dollar plays, including commodities, oil, gold, silver, copper, platinum, emerging markets, and yes, China, all of which are just coming out of seven-year BEAR markets.
After all, you have to trade the market you have in front of you, not the one you wish you had.
So, now is the time to engage in deep research on countries, sectors, and individual names so when a sweet spot doesn’t arrive, you can jump in with confidence and size. In other words, mend your net.
Sweet spots come and sweet spots go. Suffice it to say that there are plenty ahead of us. But if you lose all your money first chasing margin trades, you won’t be able to participate.
By the way, if you did buy my service recently, you received an immediate Trade Alert to by Microsoft (MSFT). Let’s see how those did.
In December, you received a Trade Alert to buy the Microsoft (MSFT) January 2019 $90-$95 in-the-money vertical BULL CALL spread at $4.40 or best.
That expired at a maximum profit point of $1,380. If you bought the stock it rose by 10%.
In January, you received a Trade Alert to buy the Microsoft (MSFT) February 2019 $85-$90 in-the-money vertical BULL CALL spread at $4.00 or best.
That expired last week at a maximum profit point of $1,380. If you bought the stock it rose by 12%.
So, as promised, you made enough on your first Trade Alert to cover the entire cost of your one-year subscription ON THE FIRST TRADE!
The most important thing you can do now is to maintain discipline. Preventing people from doing the wrong thing is often more valuable than encouraging them to do the right thing.
That is what I am attempting to accomplish today with this letter.
I hope you have great plans for the weekend. I am absolutely loving your trades. They have paid for my membership. I wish I was able to catch them all.
Best regards,
Robert
Oregon
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
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
February 25, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Merger Fever Hits the Gold Industry, with Barrick Gold (GOLD) taking a run at Newmont Mining (NEM), the world’s first and second largest producers. It’s all about efficiencies of scale. Take this as a long-term bottom in gold prices. Click here.
2) China Tariff Hike Postponed Indefinitely, and Chinese stocks love it. Import duties stay at 10%, instead of rising by 25% starting on Friday. We knew it was never going to happen. Some 95% of the China trade deal is now already priced into the market. Click here.
3) GE Sells Biotech business for $21 Billion, They’re selling off the crown jewels to salvage the balance sheet. Stock loves it, up 11%. Click here.
4) Most Economists See Recession by 2021, at the latest. That really means it will really start in late 2020. Sell those rallies. You don’t want to be left standing when the music stops playing. Click here.
5) Wholesale Inventories Rising Sharply, up 1.1% in another recession indicator.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(THE MARKET FOR THE WEEK AHEAD, or THE BEST OF TIMES AND THE WORST OF TIMES),
(SPY), (TLT), (TLT), (VIX), (KHC), (MAT), (MMT), (GLD)
(THE CLEANEST INTERNET PLAY OUT THERE),
(GDDY), (WIX), (CSCO)
My Pick Won Best Picture!
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
Mad Hedge Technology Letter
February 25, 2019
Fiat Lux
Featured Trade:
(THE CLEANEST INTERNET PLAY OUT THERE),
(GDDY), (WIX), (CSCO),
Check out GoDaddy (GDDY).
It’s a general bet on more people using the internet.
This trade dovetails nicely with my broader thesis of the dramatic migration to digital.
Brick and mortar stores will have no choice but to create a unique website and one of the most prominent web hosting services is GoDaddy.
The Mad Hedge Technology Letter is even powered by its services.
Lately, I’ve been all about this digital migration mantra and we are in the early innings of this seminal trend.
I gave you Cisco (CSCO) as a hot pick which is a bet on an increase in enterprise software business.
This is more of a question of how fast than if or when.
Are you ready for 5G?
The technology is on the verge of rolling-out to select cities around the US, and it will juice of web usage simply because users can navigate around more in a smaller time window.
GoDaddy was established by fellow Marine Bob Parsons in Baltimore 22 years ago and before GoDaddy, Parsons sold off his financial software services company, Parsons Technology to Intuit for $65 million.
He then launched Jomax Technologies which later morphed into GoDaddy in 1999 when employees were collaborating to change the company name and someone jokingly shouted out, "How about Big Daddy?"
Sadly, when the company found out that domain name had already been registered, Parsons replied, "How about Go Daddy?" and that was that.
What do I like about GoDaddy’s financials?
Better than expected profitability.
EPS forecasts were beaten handily with the company posting 24 cents, almost a double of the forecasted 13 cents.
Estimates of $693.5 million for the top line were marginally beaten by $2.3 million.
The company gave positive all-important guidance indicating robust momentum.
The firm is expecting $3 billion in 2019 sales and that is after doing $2.23 billion of sales in 2017.
Management has kept sales growth strong with a 3-year sales growth rate of 19%.
Customer renewal strength and higher average revenue per user (ARPU) growth is resonating with investors, and fused with higher operating margin could propel this firm’s shares higher.
ARPU mushroomed to $148.00 up 7% YOY while total customers rose 7% bringing the total customer base to over 18.5 million.
In 2018, over 1 million new customers were lured into the ecosystem.
The reason for this successful rise in domestic ARPU is enhanced site and product experiences, interactions focused on details and conversational marketing.
In a tech climate where a good portion of company outlooks are tepid at best, GoDaddy didn’t mince its words offering a better than expected positive outlook.
The financials look solid but allow me to explain a little more about its core products.
Almost 35% of websites on the internet is already constructed using WordPress’s platform and GoDaddy is the biggest host of paid WordPress at the end of last year.
GoDaddy’s supported WordPress offering automates the entire process of operating a secure WordPress website making it easy to use and highly popular to its customer base.
The role GoCentral's, GoDaddy’s flagship DIY website building product, plays is expanding as its numerous features increase and efficient performance is a consistent highlight for the firm.
The journey started in 2017 when GoDaddy established this service as a simple website building tool.
Concrete foundations were set and this service was integrated across a myriad of relevant third-party platforms while boosting product functions that are seeing outsized growth.
Daily entrepreneurs can now produce robust websites and carry out syndicate marketing across the e-commerce landscape.
The tandem of WordPress and GoCentral are growing subscriptions more than 40% YOY.
North America and Canada are the main revenue drivers, but international business is a wide-open opportunity waiting for management to pick off whether that's Latin America, Asia, or even in the Middle East.
The strategy for Europe is extracting the capability and product portfolio of North America, whether it be conversational marketing or features like security, backup, malware scans, plug-ins, and proactively migrate it to Europe because the model in America is obviously working and using that model will be a great development point.
Mexico and Brazil possess great growth potential and Asia continues to be about customer adds because the willingness to pay is different.
Competitor Wix (WIX) lately announced a shift in strategy, removing Domain Connect, and some of the low-end products and saying that they're going to come after WordPress.
But Chief Executive Officer of GoDaddy Scott Wagner is not worried about this nascent threat and is sure that this is the case of GoDaddy is in control of its own destiny than Wix being a viable threat.
As long as the company reinvests in its offerings and maximizes the user experience, Wix has a long way to go to compete with WordPress and are substantially smaller than GoDaddy.
And as GoDaddy keeps working on offering great value propositions and expanding the ecosphere with integrated and high-quality software, the stock is bound to jump further.
The momentum is palpable with this website hosting service a top player in its industry.
Wait for a pullback to buy some shares.
