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Mad Hedge Fund Trader

May 29, 2020 - MDT Pro Tips

MDT Alert

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

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-29 09:25:342020-05-31 22:33:36May 29, 2020 - MDT Pro Tips
Mad Hedge Fund Trader

May 29, 2020

Diary, Newsletter, Summary

Global Market Comments
May 29, 2020
Fiat Lux

Featured Trade:

(JOIN THE JUNE 4 TRADERS & INVESTORS SUMMIT),
(THE CONTINUING DEATH OF RETAIL),
(AMZN), (WMT), (M), (JWN),
(TESTIMONIAL)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-29 09:08:062020-05-29 09:27:55May 29, 2020
The Mad Hedge Fund Trader

The Continuing Death of Retail

Diary, Newsletter

If you had to pick the biggest loser of our ongoing pandemic and the trade wars, it would be the retail industry (XRT). Higher costs which can’t be passed on, rising minimum wages, lower selling prices, and a massive inventory glut is not what money-making is all about.

Now, take all of those problems and drop your revenues by half, thanks to the pandemic. A future where touching, feeling, and trying on things before you buy them is about to become an extravagant luxury.

The stocks have delivered as expected, providing one of the worst-performing sectors of the past three years. Half of them probably won’t even make it until Christmas.

In fact, Sears and Macy’s have announced more store closings nationwide. The overhead is killing them in a micro margin world devoid of window shopping customers.

So, I stopped at a Walmart (WMT) the other day on my way to Napa Valley to find out why.

I am not normally a customer of this establishment. But I was on my way to a meeting where a dozen red long stem roses would prove useful. I happened to know you could get these for $10 a dozen at Walmart, 60% cheaper than anywhere else.

After I found my flowers, I browsed around the store to see what else they had for sale. The first thing I noticed was that half the employees were missing their front teeth.

The clothing offered was out of style and made of cheap material. It might as well have been the Chinese embassy. Most concerning, there was almost no one there, customers OR employees.

The Macy’s downsizing is only the latest evidence of a major change in the global economy that has been evolving over the last two decades.

However, it now appears we have reached both a tipping point and a point of no return. The future is happening faster than anyone thought possible. The pandemic has forced business evolution to move at hyper fast forward and the Death of Retail is no exception.

I remember the first purchases I made at Amazon 20 years ago. I personally knew the founder, Jeff Bezos, from my Morgan Stanley days. The idea sounded so dubious that I made my initial purchases with a credit card with only a low $1,000 limit. That way, if the wheels fell off, my losses would be limited.

And how stupid was that name, Amazon, anyway? At least he didn’t call it “Yahoo” because it was already taken.

Today, I do almost all of my shopping at Amazon (AMZN). It saves me immense amounts of time while expanding my choices exponentially. And I don’t have to fight traffic, engage in the parking space wars, or wait in line to pay.

It can accommodate all of my requests, no matter how bizarre or esoteric. A WWII reproduction Army Air Corps canvas flight jacket in size XXL? No problem!

A used 42-inch Sub Zero refrigerator with a front door ice maker and water dispenser? Have it there in two days, with free shipping at one fifth the $17,000 full retail price.

So I was not surprised when I learned that Amazon accounted for 25% of all new online sales in 2019 in a market that is already growing at a breathtaking 20% YOY.

In 2000, after the great “Y2K” disaster that failed to show, I met with Bill Gates Sr. to discuss his foundation’s investments.

It turned out that they had liquidated their entire equity portfolio and placed all their money into bonds. It turned out to be a brilliant move, coming mere months before the Dotcom bust and a 20-year bull market in fixed income which only peaked two months ago.

Mr. Gates (another Eagle Scout) mentioned something fascinating to me. He said that unlike most other foundations their size, they hadn’t invested a dollar in commercial real estate. Today, that looks like a prescient move in the extreme with 60% of mall tenants skipping their rent.

It was his view that the US economy would move entirely online, everyone would work from home, emptying out city centers, and rendering commuting unnecessary. Shopping malls would become low rent climbing walls and paintball game centers.

Mr. Gates’ prediction may finally be occurring. In the San Francisco Bay area, the only employed people are those who are telecommuting.

Even before the pandemic, it was common for staff to work Tuesday-Thursday at the office, and from home on Monday and Friday. Productivity increases. People are bending their jobs to fit their lifestyles. And oh yes, happy people work for less money in exchange for personal freedom, boosting profits.

The Mad Hedge Fund Trader itself may be a model for the future. We are entirely a virtual company, with no office. Everyone works at home in four countries around the world. Oh, and we all use Amazon to do our shopping.

The downside to this is that whenever there is a snowstorm anywhere in the country, it affects our output. Two storms are a disaster, and at three, such as last winter, we grind to a virtual halt.

The main thing I am worried about is the Internet in the Philippines which is unable to handle the tenfold increase in demand since the start of the pandemic. They don’t have our infrastructure. If you wonder why your customer support at any company has suddenly gotten poor, that is the reason.

You may have noticed that I can work from anywhere and anytime (although sending a Trade Alert from the back of a camel in the Sahara Desert was a stretch), so was sending out an Alert while hanging on the cliff face of a Swiss Alp. But they both made money.

Moroccan cell coverage is better than ours, but the dromedary’s swaying movement made it hard to hit the right keys.

The cost of global distribution is essentially zero. Profits go into a bonus pool shared by all. Oh, and we’re hiring, especially in marketing.

It is happening because the entire “bricks and mortar” industry is getting left behind by the march of history.

Sure, they have been pouring millions into online commerce and jazzed up websites. But they all seem to be poor imitations of Amazon, with higher prices and worse service. It is all “hour late and dollar short” stuff.

In the meantime, Amazon has soared by an eye-popping 56% since the March 23 low and is one of the top-performing big-cap stocks of 2020. There is now a cluster of Amazon analyst forecasts targeting the $3,000 mark, including me.

And here is the bad news. Bricks and Mortar retailers are about to lose more of their lunch to Chinese Internet giant Alibaba (BABA), which is ramping up its US operations and is FOUR TIMES THE SIZE OF AMAZON!

There’s a good reason why you haven’t heard much from me about retailers. I made the decision 30 years ago never to touch the troubled sector.

I did this when I realized that management never knew beforehand which of their products would succeed and which would bomb, and therefore, were constantly clueless about future earnings.

The business for them was an endless roll of the dice. That is a proposition in which I was unwilling to invest. There were always better trades.

I confess that I had to look up the ticker symbols for this story, as I never use them.

You will no doubt be enticed to buy retail stocks as the deal of the century by the talking heads on TV, Internet research, and maybe even your own brokers, citing how “cheap” they are because the prices are so low.

Never confuse a low stock price with “cheap.”

It will be much like buying the coal industry (KOL) a few years ago, another industry headed for the dustbin of history. That was when “cheap” was on its way to zero for almost every company. Don’t buy the next coal company.

So the next time someone recommends that you buy retail stocks, you should probably lie down and take a long nap first. When you awaken, hopefully the temptation will be gone.

Or better yet, go shopping at Amazon. The deals are to die for.

To read “An Evening with Bill Gates Sr.,” please click here.

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 The Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png The Mad Hedge Fund Trader2020-05-29 09:04:082020-06-22 11:45:26The Continuing Death of Retail
The Mad Hedge Fund Trader

Testimonial

Diary, Newsletter, Testimonials

Thanks for the great newsletter and advice. I truly enjoy it. You are one of a kind!

Credits to you as my financial navigator, as I am finally making some serious money after years of doing it the hard and wrong way.

Kind regards

Rolf

john-by-ensure-display

https://www.madhedgefundtrader.com/wp-content/uploads/2016/10/John-by-Ensure-Display-e1477020373665.jpg 300 400 The Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png The Mad Hedge Fund Trader2020-05-29 09:02:272020-05-29 09:26:30Testimonial
Mad Hedge Fund Trader

Trade Alert - (ADBE) May 28, 2020 - SELL-TAKE PROFITS

Tech Alert

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

https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Alert-e1457452190575.jpg 135 150 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 14:22:082020-05-28 14:22:08Trade Alert - (ADBE) May 28, 2020 - SELL-TAKE PROFITS
Mad Hedge Fund Trader

May 28, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
May 28, 2020
Fiat Lux

Featured Trade:

(ASTRAZENECA’S WASHINGTON FREEBIE)
(AZN), (MRK), (PFE), (JNJ)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 11:02:592020-05-28 11:08:16May 28, 2020
Mad Hedge Fund Trader

AstraZeneca’s Washington Freebie

Biotech Letter

The coronavirus disease (COVID-19) has pushed people to gamble on unproven and untested products for as long as these can offer even just a shred of hope.

Call it the grasping for straws strategy.

The latest biotechnology company granted this kind of confidence is AstraZeneca (AZN).

The U.S. Department of Health and Human Services (HHS) recently announced its decision to provide the cardiovascular heavyweight up to $1.2 billion in funding to speed up the company’s progress on AZD1222. The problem is that the vaccine has not been proven to work.

You would think that if the US government was going to blow $1.2 billion on an unproven vaccine at least it would be on an American company. That is not the case. Pre pandemic, a drug at this stage of development would not have earned the time of day.

The experimental vaccine is a gene therapy that AstraZeneca has been working on alongside Oxford University. Aside from the funding, HHS also committed to supporting the clinical trial for this vaccine which would involve 30,000 participants.

In return, the biopharmaceutical company has agreed to send up to 300 million doses of the vaccine to the US, with the first shipment expected to be sent before 2020 ends. AstraZeneca will also provide 100 million doses to Great Britain.

Before getting too excited on this news though, it’s critical to note that AZD1222 is not yet proven effective against COVID-19.

This proposed vaccine from Oxford is created from a weakened version of a common cold virus. It was then genetically altered to disable it from growing in humans. So far, over 1,000 individuals already received this vaccine during an early stage test that started in April.

The plan is for the two companies to use the same technique that the Oxford University researchers applied to fight the Middle East Respiratory Syndrome (MERS).

Based on the results of a small clinical trial, this approach managed to prevent the transmission of MER-CoV among the patients. The goal is to replicate this success and halt the spread of COVID-19.

With AstraZeneca securing a manufacturing capacity of 1 billion doses, the first deliveries of the vaccine are estimated to start by September.

Apart from the US and the UK, AstraZeneca is also tapping the Serum Institute of India along with other potential collaborators to boost the production of the COVID-19 vaccine.

While all these updates sound promising, it’s undeniable that choosing which stock to invest in this chaotic market is not for the faint of heart.

The pandemic has clouded the earnings landscape of practically all companies across the board for at least the rest of 2020, with the uncertainty possibly spilling into 2021.

So far, several vital members of various industries have already sought unprecedented levels of aid from the state. A glaring example of this is the ailing airline industry, which has been receiving the most help from governments across the globe.

Meanwhile, AstraZeneca’s shares are up nearly double from the March bottom.

Looking at its financial history, it can be said that AstraZeneca’s ability to swim against the current is due in large part to its top-quality clinical pipeline.

In 2018 alone, the company received a whopping 23 regulatory approvals in various fields including oncology, cardiovascular, and kidney disorders.

The latest product to boost AstraZeneca’s already potent pipeline is its collaboration drug with Merck (MRK) called Lynparza.

Previously approved as a treatment for ovarian and breast cancer, Lynparza is now approved as medication for prostate cancer as well.

This label expansion allows AstraZeneca and Merck to go head to head against Johnson & Johnson’s (JNJ) Zytiga and even Pfizer (PFE) and Astellas Pharma’s Xtandi.

In 2019, Lynparza’s annual sales increased by 85% primarily because of label expansions. The drug is anticipated to show a surge in its 2020 sales as well thanks to this recent approval.

However, the best is yet to come for AstraZeneca.

While the company has put on hold a couple of its clinical trials, reports show that it has many late-stage data readouts up its sleeve. Hence, investors should be on the lookout for these announcements in the next 24 months.

Due to all the new growth products and label expansions, AstraZeneca’s top line is projected to jump by 13.7% in 2021, making it one of the fastest forecasted growth rates in the industry at this point.

For even more good news, this biopharmaceutical powerhouse disclosed that it has no intention of revising its annual guidance despite the pandemic. This announcement is tangible proof of the economic staying power of AstraZeneca’s portfolio.

AstraZeneca stock is not exactly cheap though. With its recent developments and track record, the company has definitely gained a following in the biotechnology and healthcare sector. Nonetheless, AstraZeneca has proven that it deserves its top-shelf valuation.

AstraZeneca

https://www.madhedgefundtrader.com/wp-content/uploads/2020/05/azn-logo.png 184 275 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 11:00:002020-12-05 01:12:31AstraZeneca’s Washington Freebie
Mad Hedge Fund Trader

May 28, 2020 - MDT Alert (OSTK)

MDT Alert

Today, I am going to suggest an adjustment to the OSTK position.

I am going to suggest you buy back this week's $18 call and roll it out to next week.

Here is how you do that.

My suggestion is to buy back the May 29th call for $0.10.

After you close the position that expires today, then Sell to Open (1) June 5th - $18 call for every 100 shares you own.

The June 5th - $18 call can be sold for $0.75.

You pick up a gain of $1.10 cents per share on the call that expires tomorrow and another $0.75 per share for the calls that expire next Friday.

This brings the total premium collected on this position to $2.25 per share.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 10:55:432020-05-28 10:55:43May 28, 2020 - MDT Alert (OSTK)
Mad Hedge Fund Trader

May 28, 2020 - MDT Alert (CTXS)

MDT Alert

The CTXS debit spread has hit a profit of just over 50% in two days, so I am going to suggest you take it.

Here is how you close the position:

Sell to Close June 12th - $138.00 call @ $4.65

Buy to Close June 12th - $142.00 call @ $2.60

The net credit will be $2.05 per spread.  And with a debit of $1.35 per spread when the trade was initiated, the gain will be $0.70 per spread.

This results in a gain of 52% in two days.

If you traded the suggested 6 lot, the cash return for two days will be $420 on an investment of $810.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 10:39:012020-05-28 10:39:31May 28, 2020 - MDT Alert (CTXS)
Mad Hedge Fund Trader

May 28, 2020 - MDT Pro Tips

MDT Alert

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

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-05-28 09:48:462020-05-28 09:48:46May 28, 2020 - MDT Pro Tips
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Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

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