January 2023

January 20, 2023

Tuesday morning
January 17, 2023

Hello everyone,

Let’s talk about gambling. It seems to be a topic that is close to receiving “taboo” status. Some people become prickly when this topic is raised. And some have responded defensively by arguing that dabbling in the share market is just like gambling.

I beg to differ.

Do you sit mindlessly pressing a button on a slot machine when you select a stock to invest in or do you do your analysis and research and read John’s reasoning behind investing in the stock?

Do you receive a return on your investment twice a year in the form of dividends when you gamble?

Does your investment in gambling – what you receive from it – grow for you or does it grow in government coffers and big business bank accounts?

Australia holds the unenviable position of having the biggest gambling losses in the world. 40% greater than the country holding second place. Hong Kong, Singapore, and New Zealand feature in the top five. Governments and big businesses make a fortune from it, while the users burn through their capital. 35% of the world’s pokies are in New South Wales clubs and pubs. This state enjoys a $95 billion turnover each year.

The introduction of a universal cashless gambling card is being proposed in New South Wales. This card requires a commitment to a spending limit. The loss limit could be capped at 1,500 a day. It would be great to see bipartisan political support for this proposal. Tasmania is already legislating the universal cashless card on a bipartisan basis.

Psychologists are employed to design poker machines to ensure they have the maximum addictive qualities, which then enables that machine to extract the maximum amount of money from people. Truly sad.

I have landed in both Reno and Las Vegas airports. As you walk through these airports to exit, you pass by lines of poker machines, many of which are being used by people – young and old. A cigarette in one hand, a drink close by in a specially designed holder and the colours, movement, sounds/noises of the machine seem to hold them in a hypnotic state until their money runs out. Waitresses are seen replenishing their drinks – the user typically doesn’t even look up. It all goes on their tab. I asked one lady why she was playing the pokies. She replied she didn’t have anything else to do.

Oh dear!

Let’s go to Bonds

The downtrend in US 10-year yields persists with potential for this decline to extend considerably lower over the coming weeks. John will strap on more bond trades soon after the current trades reach expiration. Target is 2.00% by year-end.

Have a great weekend.

Cheers,

Jacque

“For every minute you are angry you lose sixty seconds of happiness.” - Ralph Waldo Emerson

Get rid of the time wasters as described on the next page.

On the following image, you will see my son Alexander’s reaction to going on a long walk.

Trade Alert - (AMD) January 19, 2023 - BUY

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

Trade Alert - (QQQ) January 19, 2023 - TAKE PROFITS - SELL

Trade 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

Trade Alert - (TLT) January 20, 2023 - EXPIRATION AT MAX PROFIT

Trade 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

January 19, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 19, 2023
Fiat Lux

Featured Trade:

(AN UNBEATABLE BIOTECH AMID A MARKET BEATDOWN)
(GILD), (PFE), (MRNA)

An Unbeatable Biotech Amid a Market Beatdown

Biotech Letter

With 2022 in the books, it’s easy to assume investors won’t be reminiscing about it too fondly. The world economy and the stock market struggled the entire year, severely depleting the resources of many businesses across the globe. These headwinds dragged down several quality stocks.

This year doesn’t look like an improvement, with experts predicting a recession. Such a debilitating economic event would extensively impact practically all sectors. If this is what we’re looking forward to in 2023, then it’s high time to look for stocks that are safe to hold.

Fortunately, some businesses have proven resilient to significant downturns' adverse consequences. Actually, there are a handful of companies that managed to perform so much better than the rest despite all the economic and financial woes of the world.

One of the companies that successfully delivered market-beating returns is biotechnology giant Gilead Sciences (GILD). More importantly, this business has the tools to do it again in 2023.

Gilead Sciences recently announced promising data on its antiviral pill, dubbed GS-5245. Before this, the company had Remdesivir, now marketed as Veklury, which was the first authorized treatment for COVID-19 back in May 2020.

Unlike the ultra-blockbuster sales of the COVID-19 candidates of Pfizer (PFE) and Moderna (MRNA), Veklury only raked in $3.4 billion in 2022.

This is because the treatment is administered intravenously, which poses limitations in terms of its usefulness. With the new GS-5245, however, Gilead Sciences holds a better chance of competing against the market leaders.

While it is similar to Veklury, GS-5245 is in pill form, making it far more convenient and helpful. Although Gilead Sciences’ antiviral pill works very differently from Pfizer’s Paxlovid, the two are expected to become close competitors.

For context concerning potential revenue, Paxlovid alone could add a jaw-dropping $67.1 billion to Pfizer leading up to 2024.

Prior to COVID-19, Gilead Sciences had already been considered a top biotechnology stock that is notably safer than its peers in a recession.

A key reason for this confidence is rooted in the nature of the treatments the company develops. Most of the products in its portfolio and candidates in its pipeline are vital to patients.

HIV treatments are crucial parts of Gilead Sciences’ operations, with drugs in that sector accounting for about 75% of its core business.

For the first nine months of 2022, the company’s HIV-related sales reached $12.4 billion and climbed by 5% year over year. These figures demonstrate resiliency despite the inflation.

Its highest-selling drug in this field, Biktarvy, recorded a revenue run rate that exceeded $10 billion. Sales of this product continue to sustain their momentum and possibly grow rapidly as it expands its 45% market share in the HIV treatment market in the US.

Last December 2022, Gilead Sciences announced another development in this sector as its new drug, Sunlenca, received FDA approval.

This new treatment to the company’s portfolio is an important win.

For one, it all but cements Gilead Sciences as the leader in HIV treatment, as Sunlenca serves as a long-acting drug option. Instead of going through regular treatments, patients now have the option to receive this twice-a-year HIV regimen—the first of its kind.

Another reason is that the market for HIV treatments showed a decline during the pandemic. It has only just started to exhibit some recovery. Hence, launching a new and innovative treatment at this crucial period is a surefire way to attract a lot of eligible patients, mainly since the company provides a long-acting regimen.

With these in mind, Sunlenca has the clear marking of a potential blockbuster. In adding a new and more attractive treatment to the list of its top-selling HIV products, Gilead Sciences has set itself up to be strategically positioned to take advantage of the growing HIV treatment market.

The HIV drug market worldwide is estimated to be worth over $45 billion by 2028, rising at a compound annual growth rate of 5.9%.

On top of its solid and consistent core business, Gilead Sciences also offers an above-average dividend yield of 3.4%. In comparison, the average yield of the S&P 500 is 1.7%.

Overall, Gilead Sciences is a solid business, getting shots in the arm with its new long-term HIV treatment and antiviral pill. Although its valuation has been climbing as of late, this stock remains reasonably priced and is a good investment in the long run. I suggest you buy the dip.

January 19, 2023

Diary, Newsletter, Summary

Global Market Comments
January 19, 2023
Fiat Lux

Featured Trade:

(FRIDAY, FEBRUARY 17, 2023 HONOLULU, HAWAII STRATEGY LUNCHEON)
(WHY DOCTORS, PILOTS, AND ENGINEERS MAKE TERRIBLE TRADERS)

CLICK HERE to download today's position sheet.

Trade Alert - (TLT) January 20, 2023 - EXPIRATION AT MAX PROFIT

Trade 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

January 18, 2023

Tech Letter

Mad Hedge Technology Letter
January 18, 2023
Fiat Lux

Featured Trade:

(FOLLOW THE MONEY)
(PLTR)

Follow The Money

Tech Letter

In an interview with CNBC’s Andrew Ross Sorkin, the CEO of Palantir (PLTR) Alex Karp pitched us why America should view his company Palantir as a force for global good and why investors should invest in this company.

I wasn’t convinced after hearing his answer, and the dead giveaway was his avoidance of the question about why he continues to dilute the volume of shares in the software company.

On the revenue side of things, it’s been quite good, with the software business exploding in revenue from $560 million in 2018 to annual revenue of $1.54 billion in 2021.

His tech company overwhelmingly benefits from geopolitical catastrophes like kinetic wars ,which is why the military conflict in Eastern Europe is so lucrative for Palantir.

In the interview, he hyped his software as the great equalizer to Russia’s army, claiming that the reason a “small” country can fight toe to toe with Russia is with the help of the Palantir software.

That claim was a bit of a stretch, but why not use the global stage to hype up one's product and abilities?

Karp also took a victory lap on the brutal governmental lockdowns of 2020 and 2021 around the world, saying his company “saved millions of lives” by integrating Palantir with government services.

Basically, if the world is trending badly and the worse the better for the tech firm to the point of mass violence and anarchy, his company will ride those coattails to profits.

Yet the stock price has swan dived from $40 to $7.

You read that correctly.

Part of the problem of Karp’s software company is clearly the economic and financial backdrop that has forced interest rates higher and caused rampant inflation. I won’t discount that.

But the more important excuse for the appalling stock performance is because of Karp aggressively diluting shares.

The number of shares has increased by around 200% since the 2020 IPO and many of those shares have gone to upper management.

Karp and his friends have a habit of cashing out these diluted shares because they are still worth hundreds of millions even after the dilution, and Karp is still owed newly minted shares each year for around the next 10 years.

Sounds like a bad deal for the incremental investor.

In short, Palantir has served as the personal piggy bank for Alex Karp and his executive management team.

Instead of rewarding the shareholders, he has milked the company for profits while pouncing on public money to fund his software company.

In almost every interview I have seen him participate in, he doesn’t miss a chance to bash the Silicon Valley establishment either and almost calls them un-American.

Although he is highly forthright about his responsibility to be an American-first company, his shunning of external investors is why every reader should avoid this company.

If you invest hard-earned money into this firm, your money will be cashed out by Karp like his personal ATM.

It’s like an annual procession – rinse and repeat.

He’s just waiting until the end of 2023 for his new tranche of diluted shares to hit his account, and then he will sell them on the open market and withdrawal more fiat dollars.

Aside from the stock dilution circus, the company is actually quite solid with a competitive moat around its proprietary software.

The one negative I can think of is the lack of profitability with the firm losing half a billion dollars last year.

However, the company is growing too fast so that super growth justifies the loss-making.

Karp needs to stop running the company only for the purpose of his personal bank account and PLTR’s shares will never go up until he accommodates outside shareholders.

This is a $7 today, but because of Karp’s financial mismanagement of PLTR, it should be a $25-$30.

Until there is proof that Karp has changed strategies and incorporates a vision of prioritizing shareholder returns, readers will need to look elsewhere to make money in the tech sector.

karp