Mad Hedge Bitcoin Letter
April 14, 2022
Fiat Lux
Featured Trade:
(GOING TO THE MOON WITH CRYPTO)
(GME), (AMC), (SAFEMOON)
One pocket of the asset world that has really taken off in the last few years are the meme assets.
Meme assets don’t just pertain to equities like GameStop (GME) and AMC (AMC).
Truth be told, these assets are incredibly speculative and it's frequent when stock prices don’t mesh nicely with the cash flow or PE multiple.
Crypto also has meme coins which can border on the edge of insanity to the edge of speculation.
These types of bets are for the strong-willed.
Enter SafeMoon.
Coined after the phrase that profits are “going to the moon”, yes, I kid you not, this meme coin has been drumming up quite a following on social media where many of these speculative ideas incubate.
What Is SafeMoon?
SafeMoon is a cryptocurrency token that launched in early 2021, using blockchain technology developed by Binance.
A feature unique to SafeMoon is that it charges a 10% fee whenever you sell the token, well, that was until an upgrade reduced this fee to 2%.
The high fee is explained as a fee that discourages selling, but I would argue that it creates more of a centralized feel to this meme coin and kills liquidity in a marginal coin.
Anybody knows that without ample liquidity, markets can dry up and become untradeable.
In fact, many retail traders I hear from refrain from going too deep into speculative crypto territory for fear that they won’t be able to fill an order upon exit.
For the developers of SafeMoon to force participants into high transaction fees screams scarcity mentality to me instead of focusing on creating a high-quality coin.
This ploy also breeds distrust in the incremental investor who won’t jump off the fence and into SafeMoon if they know they can’t cut losses easily.
SafeMoon takes the proceeds of all sales fees and gives 50% to current token holders in a distribution that is called a “reflection.” The other half of the fee goes into a liquidity pool that SafeMoon uses to maintain price stability.
Rerouting proceeds to existing coin holders are poor practice and a big red flag.
This practice, again, encourages the centralization of the coin which is in fact what many coin holders hate.
The structure is set up to reward only existing participants and clearly, the ones that gain the most are the founders and developers who have skin in the game from the start.
This doesn’t sound too fair to me.
I also noticed that since much of the SafeMoon community is based on social media platforms, members who decide to sell some of their coins are prone to harassment from other members of the social media groups.
Vilifying others for selling an asset is another large red flag.
In the world of buy low and sell high, sometimes traders must take profits, and to frame the selling of one SafeMoon coin as sabotaging the asset speaks volumes about who is involved in this.
I am not interested in being cyber stalked by an unruly SafeMoon mob and most others aren’t as well.
Such a poor mentality would in fact turn off many incremental buyers from pulling the trigger.
SafeMoon does not have any other special use case besides being a store of value. It doesn’t facilitate any automated contracts or decentralized applications, like Ethereum.
Another massive problem with SafeMoon is the challenge of simply investing in it.
Investors cannot buy SafeMoon with the US dollar or any other fiat currency.
The only way to pay for purchases of SafeMoon is with other cryptocurrencies.
To buy it, one must need to buy a coin on an exchange that supports SafeMoon, then use that other coin to buy into SafeMoon.
Ease of transaction is something SafeMoon glamorously fails at.
Another red flag is that no reputable exchanges like CoinBase and Kraken will touch the trading of SafeMoon. It’s also not available on apps like Robinhood or SoFi Invest.
There is no way I could in good faith recommend investing in something so abstract as SafeMoon. I get it that SafeMoon is trying to pour that pixie dust on themselves like Dogecoin, but I have unearthed too many negatives in this coin to ever even consider it aside for a good laugh.
It’s not surprising that the coin has crashed since its debut in 2021.
“When we first announced it, we had over a million people sign up to use Robinhood Crypto in the first couple of days.” - Said Robinhood Co-Founder Baiju Bhatt
Global Market Comments
April 14, 2022
Fiat Lux
Featured Trade:
(JULY 22 ZERMATT, SWITZERLAND STRATEGY SEMINAR)
(THE BULL CASE FOR BANKS),
(JPM), (BAC), (C), (WFC), (GS), (MS)
Mad Hedge Technology Letter
April 13, 2022
Fiat Lux
Featured Trade:
(THE RISE AND FALL OF SEMICONDUCTORS)
(NVDA), (AMD), (SMH)
The once smoking hot semiconductor industry and its stock prices have rolled over.
First, let me refresh some memories of how we got here in the first place.
During the pandemic and lockdowns, it was thought that semiconductor companies were the winners as consumers, unable to leave their homes, were forced to huddle inside glued to their screens.
Never had the world’s demand for electronics been so elevated and the bringing forward of economic overperformance is now on the downtrend.
It appears that chip companies will be unable to follow up that performance with an encore.
November 2021 represented the short-term high-water mark for chip companies as many stocks in the best of breed have cratered by 50% since then.
AMD (AMD) has dropped to $97 from $155 and the price action is emblematic of boom-bust cycles that chip companies are infamous for.
Now the short-term future doesn’t seem as rosy as it once was and the current uncertainty has delayed investments as chip companies have read the tea leaves and given up capital investments like new chip factories.
Top dog Nvidia (NVDA) which produces CPUs and is at the core of every cutting-edge technology in the world has also been stung by its share price dropping around 30% since the peak in November 2021.
This isn’t the death of the chip industry, and the share price will need to digest the confluence of bad news.
Chip companies are also highly volatile in their price action with the same type of pullback in Apple or Microsoft 3X less volatile.
Peeling back the layers, what is the situation closer to the ground?
The US Central Bank turning on the hawkish turbo boosters mean that many parts of the equity market are feeling their impulsive reaction.
No doubt the Fed has been behind the curve for almost a year, but that’s another topic.
Their sudden reversal means they have no choice but to bring forward a recession by hiking rates faster than expectations and the losers in this is growth tech.
At the consumer level, higher inflation means that sticker prices for electronics have trended higher for various items.
Not only that, the inflation across the board and deep hits to the overall cost of living have taken purchasing power out of the pockets of the median US shopper.
The math simply doesn’t work out if shoppers are paying more for gas, groceries, and housing, they are simply less inclined to refresh their phones, iPads, TVs, and so on.
Other big-ticket items on the chopping block are products like appliances.
There is a major guzzler of chips like washing machines, fridges, and heating and cooling systems that all require sensors.
The semiconductor market is cyclical. When the economy is thriving, it is doing well because when consumers are confident, they tend to spend on the incremental device.
Adding insult to industry is that the tightening of capital markets will make borrowing more expensive and the path to profits narrower.
Just as critical, no CEO or CFO likes to discover that the cost of capital has jumped to a prohibitive rate, because these are the tool they tap to build multi-billion dollar factories.
Holding off on investments sacrifices long-term growth and capacity for short-term balance sheet strength.
Without too much pretentious banter, high interest rates mean relatively less profit.
Much of the decline is starting to get priced into the stock prices of NVDA and AMD.
I believe investors should be dollar cost averaging as these stocks fall possibly another 5-10%.
I would be shocked if these stocks fall another 20% from here.
“Our industry does not respect tradition – it only respects innovation.” – Said CEO of Microsoft Satya Nadella
Global Market Comments
April 13, 2022
Fiat Lux
Featured Trade:
(JOIN ME ON CUNARD’S MS QUEEN VICTORIA
FOR MY JULY 9, 2022 SEMINAR AT SEA)
(SOME BASIC TRICKS FOR TRADING OPTIONS)
With Covid cases down 70% in two weeks and headed much lower, it's time for me to re-introduce you to the Mad Hedge Seminar at Sea. I firmly believe that the pandemic will be over by the summer, and what better way to celebrate than with an elegant Norwegian Fjord cruise.
Come join me on Cunard Line’s elegant and luxurious Queen Victoria on a seven-day Norwegian Fjord Cruise.
For the first time in ten years, I am hosting a Seminar at Sea. I had planned to do this earlier but ran head-on into the pandemic, which should be gone by next summer. On the last Seminar at Sea, I and a group of subscribers crossed the Atlantic Ocean on the Queen Mary 2, passing over the Titanic wreck.
The Queen Victoria departs Southampton, England at 12:00 noon on July 3, 2022 and returns to Southampton on July 10. There I will be conducting the Mad Hedge Fund Trader’s Strategy Update, a three-hour discussion on the global financial markets. You will have to get to Southampton under your own steam, which is about an hour south of Victoria Station by train.
I’ll be giving you my up-to-date view on stocks, bonds, currencies, commodities, precious metals, and real estate. I’ll highlight the best long and short opportunities. And to keep you in suspense, I’ll be tossing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week.
Tickets are available for $499 for the seminar only.
Attendees will be responsible for booking their own cabins through Cunard, which is offering staterooms for this cruise for as little as $959 a person. To book your cruise, please click here. The cruise you need to book is no. V216. The Queen Victoria has not sailed for two years and this will be one of the first post-pandemic voyages.
To get the details of the cruise, please click here. The July 9 seminar will be held in the ship owner’s suite while we are crossing the North Sea in of the most elegant accommodations afloat on the seven seas. For a video of the owner’s suite, please click here.
Just visit Cunard’s website, or call them directly at 800-528-6273 to make your own arrangements.
The weather this time of year can range from balmy to tempestuous, depending on our luck. A brisk walk three times around the boat deck adds up to a mile. Full Internet access will be available for a price to follow the markets. Every dinner during the voyage will be black tie, so you might want to stop at Saks Fifth Avenue in Manhattan to get fitted for a second tux. I have arranged a few dinners with the captain for myself and will pass on any nuggets I gain in a future letter.
Don’t forget to bring your Dramamine and sea legs, although the 90,049-tonne, 964.5-foot long billion-dollar ship is so big, I doubt you’ll need them. Her facilities include seven restaurants, thirteen bars, three swimming pools, a ballroom, and a theater. I spend most of my time on these cruises writing deep research pieces, although I might take a few fencing classes.
Cunard is requiring Covid vaccination cards of all passengers, and so am I. They may also require a negative Covid test within three days of departure, as are most cruise lines these days. We’ll be sailing all the way up to 61 degrees, 81 minutes north latitude, about the same latitude as Anchorage, Alaska.
I look forward to meeting you and thank you for supporting my research. To purchase tickets for the seminar alone, click here or go to my online store at www.madhedgefundtrader.com and click on the “LUNCHEONS” tab.
Join Me for Lunch?
Mad Hedge Biotech and Healthcare Letter
April 12, 2022
Fiat Lux
Featured Trade:
(CAN THIS BE THE NEXT 10-BAGGER BIOPHARMA STOCK?)
(PFE), (BNTX), (GSK), (SNY), (AZN)
