“Americans are nothing but self-indulgent weaklings,” said Japanese admiral Isoroku Yamamoto in 1941.
Mad Hedge Technology Letter
February 8, 2023
Fiat Lux
Featured Trade:
(CHATBOT SINKS STOCK 8%)
(GOOGL), (MSFT)
Down 8% on a faulty chatbot conversation – that’s what happened to Google’s (GOOGL) stock today.
That’s why we need to pare back the euphoria and nonstop celebration of ChatGPT.
Hold your horses.
It’s an emerging technology and could end up with chatbots chatting with other chatbots for little or no value.
My point is that it can still go very wrong from here.
Google’s stock swan dived on Wednesday after its own iteration of A.I. chatbot erroneously answered a question about the first usage of space telescopes via its promotional material.
It all lends itself to surmise that Google is way behind in this game and Microsoft has the situation by the scruff of the neck.
Only just a few days ago, Microsoft integrated the AI technology into the front page of its Bing search engine, and is available for user downloads on the Bing app.
The drop in share price meant that Google lost more than $100 billion off its market cap.
The service called Bard is to compete with the popular ChatGPT.
Despite the chatbot’s claim in the ad, NASA reports that the first photo of a planet outside the Milky Way was taken by the Very Large Telescope in 2004 — nearly 19 years before NASA’s Webb telescope.
Unpreparedness by Google could translate into a significant loss of ad revenue for Google’s cash cow Google search.
The desperation of throwing Bard out there not on their timeline could mean they are exposing a product that isn’t up to Google’s standards.
An AI chatbot that consistently delivers false answers will turn off an advertiser quicker than no AI chatbot.
Investing in Google is still worth it even if it takes time to correct the quality of their AI. because it is logical to give a good company the benefit of the doubt.
Another problem is that Google could be stuck with bad AI for a few years before it turns the corner.
For better or worse, they were forced to go public with whatever they had just for the optics of competition even if they are badly lagging behind.
The worst-case scenario is receiving a direct blow to the cranium in terms of total ad revenue.
Google is still relying on search to drive the rest of its business.
They earned over $200 billion in ad revenue in 2021.
This is the first threat to Google’s search model in a generation and the threat has them on their toes.
I do believe they possess the resources to solve this issue.
No doubt that Google CEO Sundar Pichai is throwing the kitchen sink to find and poach the best AI engineers to beef up the chatbot team.
Ultimately, the real new world of higher interest rates and high inflation environment means that your father’s tech playbook must be thrown out the window.
It’s quite evident that we are in the midst of a paradigm shift and new leaders during this shift will emerge.
History shows us that tech leaders of old have a habit of falling behind because they are too set in their ways to adapt to a world with new rules.
It might be so that at some point in the not-so-near future, we might need to set the search default to Bing.
How ironic?
“Bad times are incredibly good for Palantir.” – Said CEO of Palantir Alex Karp
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
Global Market Comments
February 8, 2023
Fiat Lux
Featured Trade:
(AN EVENING WITH TRAVEL GURU ARTHUR FROMMER)
CLICK HERE to download today's position sheet.
Urgent Trader Warning: The Mad Hedge Market Timing Index moved to a one-year high yesterday and is in “STRONG SELL” territory. Any long stock positions you have for the short-term should be hedged. For more details, please visit my Refresher Course at Short Selling School by clicking here.
Caveat Emptor!
“What is America but beauty queens, millionaires, stupid records, and Hollywood,” said Adolph Hitler in 1941.
Tuesday morning
February 7, 2023
Good morning/afternoon
Chairman Powell has just spoken, and the market liked what he had to say.
He said, “The disinflationary process, the process of getting inflation down, has begun…”
This was enough to rally the market, tank the dollar, rally Gold and Oil and crypto.
The forecast is that it will take well into 2024 to get inflation down to 2% - the target eyed by the Fed.
Zoom has become the next tech company to lay off thousands of employees. 15% of its workforce or 1,300 people will be laid off soon. But don’t expect these people to be found in the unemployment lines. Tech hiring is still on fire in the U.S. and most of these employees will be swallowed up by new start-ups and other burgeoning ventures, else these employees will work from home on their own businesses.
A tech stock that should be in everyone’s portfolio is Tesla. Ron Baron, who runs one of the best performing funds, says Tesla could hit $1,500 a share by 2030. But we don’t need Baron to tell us that when John echoes those targets all the time. Bull-call spreads, buy the stock, buy the LEAP – John has been begging you for years to take the step and pull the trigger on this stock or trade. Just buy small parcels of the stock on dips, and put it in your bottom drawer and leave it.
Baron’s fund includes a 30% portfolio weighting in Tesla, the biggest holding in his portfolio. The fund has notched up a five-year total return of 26.5% on an annualized basis and 10-year return of 20.9% making it the top performing U.S. equity fund over the long term, according to Morningstar.
Baron started investing in Tesla in 2014, when the company was rolling out 31,000 cars a year …but Barron thinks 20 million cars could be reached by 2030.
Baron called Tesla “the safest car ever built in the world”; he believes that producing a lower cost model will make the company worth seven to 10 times more in the future.
Barron also speaks highly of Musk’s SpaceX company. He explains that “it used to cost you $100 million to get to space, $200 million more for a satellite. For us to get to space now, it costs…we can use a rocket over and over and over again …$20 million, its’ about to cost $6 million. The cost to get to space is going to be nothing.”
He goes on to say that the satellite as the backbone for the internet is an investing opportunity worth a trillion and a half dollars.
Mimic Baron - don’t worry about the volatility. Let your view be long term.
And mimic John too – dance via trades with the volatility – use it to your advantage. That way you won’t see yourself a victim of it.
You won’t get it right all the time, but that’s the price you pay of doing this business.
Another asset to hold is cash. If it is burning a hole in your wallet, put it into 90-day Treasury bills or 6-month Treasury bills. Last I looked they were earning 4.5%.
Wow! What a spike that was.
The Nasdaq spiked up to 12710 and has cratered back down 12460 in a 30-minute period.
The Fed speak will do it every time.
Book Recommendation: Thinking, Fast and Slow by Daniel Kahneman. An eye-opening insight into why we make the choices we make. It will change the way you think and the way you see yourself.
Happy mid-week. Celebrate life – Cheers Jacque
Mad Hedge Biotech and Healthcare Letter
February 7, 2023
Fiat Lux
Featured Trade:
(AN ICONIC BLUE-CHIP PHARMA SELLING AT A DISCOUNTED PRICE)
(PFE), (MRNA), (NVAX), (BNTX), (LLY), (NVO)
