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
Global Market Comments
February 2, 2021
Fiat Lux
Featured Trade:
(MY NEWLY UPDATED LONG-TERM PORTFOLIO),
(PFE), (BMY), (AMGN), (CELG), (CRSP), (FB), (PYPL), (GOOGL), (AAPL), (AMZN), (SQ), (JPM), (BAC), (MS), (GS), (BABA), (EEM), (FXA), (FCX), (GLD), (SLV), (TLT)
I am really happy with the performance of the Mad Hedge Long Term Portfolio since the last update on July 21, 2020. In fact, not only did we nail the best sectors to go heavily overweight, we also completely dodged the bullets in the worst-performing ones.
For new subscribers, the Mad Hedge Long Term Portfolio is a “buy and forget” portfolio of stocks and ETFs. If trading is not your thing, these are the investments you can make, and then not touch until you start drawing down your retirement funds at age 72.
For some of you, that is not for another 50 years. For others, it was yesterday.
There is only one thing you need to do now and that is to rebalance. Buy or sell what you need to reweight every position to its appropriate 5% or 10% weighting. Rebalancing is one of the only free lunches out there and always adds performance over time. You should follow the rules assiduously.
Despite the seismic changes that have taken place in the global economy over the past nine months, I only need to make minor changes to the portfolio, which I have highlighted below.
To download the entire new portfolio in an excel spreadsheet, please go to www.madhedgefundtrader.com, log in, go “My Account”, then “Global Trading Dispatch”, then click on the “Long Term Portfolio” button.
Changes
I am cutting back my weighting in biotech from 25% to 20% because Celgene (CELG) was taken over by Bristol Myers (BMY) at a 110% profit compared to our original cost. We also earned a spectacular 145% gain on Crisper Therapeutics (CRSP). I’m keeping it because I believe it has more to run.
My 30% weighting in technology also gets pared back to 20% because virtually all of my names have doubled or more. These have been in a sideways correction for the past six months but are still an important part of any barbell portfolio. So, take out Facebook (FB) and PayPal (PYPL) and keep the rest.
I am increasing my weighting in banks from 10% to 20%. Interest rates are finally starting to rise, setting up a perfect storm in favor of bank earnings. Loan default rates are falling. Banks are overcapitalized, thanks to Dodd-Frank. And because of the trillions in government stimulus loans they are disbursing, they are now the most subsidized sector of the economy. So, add in Morgan Stanley (MS) and Goldman Sachs (GS), which will profit enormously from a continuing bull market in stocks.
Along the same vein, I am committing 10% of my portfolio to a short position in the United States Treasury Bond Fund (TLT) as I think bonds are about to go to hell in a handbasket. I rant on this sector on an almost daily basis, so go read Global Trading Dispatch.
I am keeping my 10% international exposure in Chinese Internet giant Alibaba (BABA) and the iShares MSCI Emerging Market ETF (EEM). The Biden administration will most likely dial back the recent vociferous anti-Chinese stance, setting these names on fire.
I am also keeping my foreign currency exposure unchanged, maintaining a double long in the Australian dollar (FXA). The Aussie has been the best performing currency against the US dollar and that should continue.
Australia will be a leveraged beneficiary of the synchronized global economic recovery, both through strong commodity prices and gold which has already started to rise, and the post-pandemic return of Chinese tourism and investment. I argue that the Aussie will eventually make it to parity with the US dollar, or 1:1.
As for precious metals, I’m baling on my 10% holding in gold (GLD), which delivered a nice 20% gain in 2020. From here, it is having trouble keeping up with other alternative assets, like Bitcoin, and there are better fish to fry.
Yes, in this liquidity-driven global bull market, a 20% return is just not enough to keep my interest. Instead, I add a 5% weighting in the higher beta and more volatile iShares Silver Trust (SLV), which has far wider industrial uses in solar panels and electric vehicles.
As for energy, I will keep my weighting at zero. Never confuse “gone down a lot” with “cheap”. I think the bankruptcies have only just started and will stretch on for a decade. Thanks to hyper-accelerating technology, the adoption of electric cars, and less movement overall in the new economy, energy is about to become free. You are looking at the next buggy whip industry.
My ten-year assumption for the US and the global economy remains the same. I’m looking at 3%-5% a year growth for the next decade.
When we come out the other side of this, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 400% or more in the coming decade. The America coming out the other side of the pandemic will be far more efficient, productive, and profitable than the old.
You won’t believe what’s coming your way!
I hope you find this useful and I’ll be sending out another update in six months so you can rebalance once again.
Stay healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
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
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
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 Technology Letter
February 1, 2021
Fiat Lux
Featured Trade:
(A SLAM DUNK TECHNOLOGY)
(BIG TECH)
SLAM is better known as Simultaneous Localization and Mapping technology and any tech investor needs to know about how it works because it could power your future tech portfolio.
I would emphasize the ‘Localization & ‘Mapping’ as the main portion of SLAM.
SLAM is essentially an optimization solution.
For a machine to comprehend, the device’s sensors collect visual data from the physical world in the form of reference points.
These points aid the machine in deciphering between limits.
Google’s AR platform, Tango, uses advanced SLAM to interact with the surroundings.
The device tries to simultaneously localize by finding the location of sensors with reference to its surroundings.
Then the technology will map the layout and framework of the environment that the device is in.
This is powered by various algorithms that simultaneously localize and map the objects.
Did you get all that?
Measurements are constantly taken as the device moves through the surroundings and SLAM diminishes inaccuracies of the measurement method.
It then predicts the position of unknown variables, like unknown points on 3D objects in the machine’s point of view.
One real-life example is how Google uses SLAM for its self-driving cars.
It is easy to navigate spaces that are known.
But what about unknown terrains?
SLAM negotiates an unknown environment and navigates through spaces by filling out the solution with the algorithms.
SLAM is best applicable for situations with no prior reference point.
Google’s driverless cars deploy autonomous technology that operates self-driving cars using a roof-mounted LIDAR sensor to create a 3D map of its surroundings.
A rapid response is critical in this technology since the car is moving at high speeds and acceleration.
These mappings are augmented over the already existing Google maps.
Another simple application of SLAM tech is the food business.
Machine-based SLAM technologies will most likely add value in fast food environments and could include 3D Time of Flight, for tasks like locating and placing a hot dog in a bun and placing items on a plate.
Thermal imaging could also help keep monitor the readiness of the food.
These technologies could enable robotic tasks that could include automated slicing and cutting on pre-prepped food materials, applying toppings or spices.
Combining such a low-cost sensor with a robot arm or mechanism and constraining the food production area could provide an ideal platform for defined automated tasks.
Navigation on Mars also uses SLAM tech wherein landmarks have to be revisited several times.
Autonomous systems are the obvious applications for SLAM and companies like Cortica have already built their well-known technology in localization and mapping for driverless cars in Israel.
Every tech behemoth has already made inroads in SLAM tech making the stakes higher than ever and race to refine it.
Apple in its attempt to enter the AR/VR space built ARKit that heavily depends on SLAM.
With the pandemic and many businesses shuttered, there will inevitably be less human-to-human contact giving way to robots or machines that utilize SLAM technology supplemented by 3D stereo vision, and LiDAR technology.
This will successfully provide real-time environment mapping and navigation.
Whether it is fast food, mars expeditions, autonomous driving, it is clear now that there is an influential place for this technology to drive revenue for these big tech companies that are currently refining the technology.
This could widen the capabilities between the tech Goliaths and smaller firms.
“Intellectual property has the shelf life of a banana.” – Said Co-Founder of Microsoft Bill Gates
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