August 2023

Your Next Financial Advisor Could Be an AI

In recent years, artificial intelligence (AI) has made remarkable strides across various industries, revolutionizing the way businesses operate and the services they offer. One such area where AI is rapidly gaining prominence is in the field of financial advisory services. As technology evolves and AI capabilities continue to advance, it's becoming increasingly evident that your next financial advisor could very well be an AI. This transformation has the potential to reshape how individuals and institutions approach financial planning, investment strategies, and wealth management.

The Rise of AI in Financial Advisory

Traditional financial advisory services have long been associated with human advisors who offer personalized recommendations based on their expertise and market insights. However, this model is now being challenged by AI-powered platforms that have the ability to process vast amounts of data, identify patterns, and generate tailored investment strategies in a fraction of the time it would take a human advisor.

AI's entry into financial advisory brings several advantages to the table. First, AI-driven platforms can analyze an extensive range of data sources, including market trends, historical performance, economic indicators, and even social media sentiment. This holistic approach ensures that the advice provided is not only well-informed but also takes into account a broader spectrum of information that human advisors might overlook.

Second, AI's speed and efficiency enable real-time decision-making. Market conditions can change rapidly, and AI algorithms can swiftly adjust investment portfolios and strategies to capitalize on emerging opportunities or mitigate risks. This agility is particularly advantageous in volatile markets where timely responses are crucial.

Customization and Personalization

One of the most significant benefits of AI-driven financial advisory is its capacity to deliver highly personalized recommendations. AI algorithms can take into account an individual's financial goals, risk tolerance, investment preferences, and even life events. This level of customization ensures that the advice offered aligns closely with each investor's unique circumstances.

Furthermore, AI's ability to continuously learn and adapt means that the advice provided becomes more refined over time. As an AI advisor gains insights into an individual's behavior and responses to different investment strategies, it can fine-tune its recommendations to achieve better outcomes.

Risk Management and Behavioral Bias

Human emotions often play a significant role in financial decision-making, and they can lead to biases and errors that affect investment performance. AI advisors are immune to these emotional fluctuations, making them ideal for maintaining a disciplined and rational approach to investing. By adhering to a predetermined set of rules and strategies, AI can help mitigate the impact of behavioral biases that often hinder human investors.

Furthermore, AI's advanced risk management capabilities can provide investors with a clearer understanding of the potential risks associated with their investment choices. Through sophisticated modeling and scenario analysis, AI can simulate various market conditions and their effects on investment portfolios, empowering investors to make informed decisions while minimizing uncertainties.

Transparency and Accessibility

AI-powered financial advisory services also bring transparency and accessibility to a new level. Human advisors might sometimes lack transparency in disclosing their fees or explaining the rationale behind their recommendations. AI algorithms, on the other hand, operate based on predefined rules and data-driven insights, making their decision-making process more transparent and understandable.

Additionally, the accessibility of AI-driven advisory services is unprecedented. Investors can access their AI advisor 24/7 through various platforms, such as web applications and mobile apps. This accessibility eliminates the constraints of traditional working hours and geographical locations, allowing investors to manage their finances conveniently and efficiently.

Challenges and Ethical Considerations

While the prospects of AI-driven financial advisory are promising, several challenges and ethical considerations must be addressed. One concern is the potential for overreliance on AI recommendations without fully understanding the underlying strategies. Investors must ensure they have a basic understanding of how the AI advisor operates to make well-informed decisions.

Data security and privacy are also critical issues. AI advisors require access to sensitive financial information, which raises concerns about data breaches and unauthorized access. Developers of AI platforms must implement robust security measures to protect user data.

Conclusion

The convergence of AI and financial advisory services represents a fundamental shift in how individuals and institutions manage their investments. The capabilities of AI to analyze vast amounts of data, provide personalized recommendations, and manage risks in real time are transforming the landscape of finance. While challenges and ethical considerations persist, the potential benefits of having an AI as your financial advisor are too significant to ignore. As technology continues to evolve, embracing AI-driven financial advisory could redefine how we approach wealth management and secure our financial futures. Your next financial advisor could indeed be an AI, offering you insights and strategies tailored to your needs with unprecedented efficiency and precision.

Midjourney prompt “Your Next Financial Advisor Could Be an AI”

August 23, 2023

Diary, Newsletter, Summary

Global Market Comments
August 23, 2023
Fiat Lux

Featured Trades:

(COFFEE WITH RAY KURZWEIL), (GOOG)

CLICK HERE to download today's position sheet.

August 22, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 22, 2023
Fiat Lux

Featured Trade:

(A BARGAIN HUNTER'S GUIDE)
(PFE)

A Bargain Hunter's Guide

Biotech Letter

The winds of change are blowing in the financial markets, teetering on the cusp of a new bull era. The trajectory of the S&P 500 stirs heated debates; some market seers assert the bull has already charged, while others counter that the index must first conquer its zenith.

Regardless of the stance, savvy investors stand poised, curating their ideal catalogs of stocks for purchase, with Pfizer (PFE) at a tumultuous intersection.

Pfizer wrestles with remarkable dips in yearly revenue and earnings. The shadow of imminent patent expirations over key drugs looms large, posing a serious challenge to future profits. However, a closer examination of Pfizer's situation reveals threads of optimism and inventive vision.

Its sturdy dividend yield is an example of resilience, and Pfizer's future sparkles with upcoming product debuts, potential harbingers of a revenue revival. Trading at a pivotal support level, a detailed look at the stock's historical patterns suggests glimmers of a lucrative long-term acquisition opportunity.

For Q2 2023, Pfizer unveiled revenues of $12.73 billion, a staggering 54% reduction, a decline of $15 billion year-over-year. This abrupt decline can be attributed to shrinking global returns from Paxlovid and Comirnaty, intertwined with a significant foreign exchange impact.

Paxlovid's revenue plummeted by 98% or $8 billion, mainly due to a pause in U.S. sales and reduced contractual deliveries in various global markets. Comirnaty also suffered, with revenue plunging 82% or $7.3 billion, primarily because of softened demand and contractual pullbacks.

Amid this storm, however, a beacon of growth gleams.

Excluding Comirnaty and Paxlovid, a 5% operational growth emerged, gathering $537 million. This growth is spurred by fresh entrants like Nurtec ODT/Vydura and Oxbryta, which raked in $247 million and $77 million, respectively, and boosted by the Vyndaqel family's robust 43% rise. Some products, such as Inflectra and Ibrance, faced contractions, revealing a varied performance landscape.

Despite subdued quarterly outcomes, the broader earnings picture radiates a potent positive trend. Pfizer's 4.6% dividend yield remains hearty, reflecting the company's strong financial base, even as challenges arise.

This resilience springs from upcoming product launches, positioned to infuse an additional $20 billion by 2030, potentially offsetting the impending patent cliff.

Innovations like Litfulo for alopecia areata and the respiratory syncytial virus vaccine, Abrysvo, echo Pfizer's dedication to medical breakthroughs. Furthermore, prospective drugs like Elrexfio and etrasimod shine on the regulatory horizon, further boosting the anticipation of revenue fortification.

Pfizer's ambitions include projected business development activities, potentially adding $25 billion in revenue by 2030.

The forthcoming acquisition of Seagen, planned for completion by early 2024, could pump over $10 billion into Pfizer's coffers, complemented by Seagen's impressive cancer drug roster.

Strategic procurements like Arena Pharmaceuticals, Biohaven, and Global Blood Therapeutics emphasize Pfizer's commitment to future revenue growth.

Moreover, Pfizer's stock trajectory paints a bullish long-term panorama.

Historically, between 1999 and 2009, a bull flag pattern emerged, only to be interrupted by global turmoil.

A significant revival post-2009 heralded a new era, culminating in a peak of $57.95, set against global recovery, strategic mergers, cost efficiencies, and Pfizer's pivotal role in the COVID-19 fight.

The recent decline appears normal, and the stock is nearing a sturdy support range of $30-$35. This range, examined alongside historical patterns, seems an ideal foundation for the coming years.

Understandably, sharp revenue declines could shake investor faith and obstruct Pfizer's progress, but a keen analysis suggests underlying resilience.

Investors must tread with awareness of inherent risks, from commercial success uncertainty to global economic volatility. Nevertheless, Pfizer's narrative of undervalued potential and its robust financial standing and strategic positioning offer a compelling investment prospect.

Current levels signal opportunities for buying, with room to increase holdings if the price further softens.

In conclusion, Pfizer's recent trials, from revenue falls to patent cliffs, mask an underlying resilience and forward-thinking prowess that hints at a potential resurgence.

The stock, settling near a robust support zone, conveys signs of price reversals and long-term promise. Though risks remain, the combination of financial acumen, strategic growth plans, and anticipation of new product launches make Pfizer an intriguing investment opportunity.

Investors looking for growth and stability in the pharmaceutical sector would do well to consider Pfizer as a part of their portfolio, bearing in mind the importance of vigilance in the face of potential challenges.

August 22, 2023

Diary, Newsletter, Summary

Global Market Comments
August 22, 2023
Fiat Lux

Featured Trades:

(WHY YOU MUST AVOID ALL EV PLAYS EXCEPT TESLA),
(TSLA), (GM)

CLICK HERE to download today's position sheet.

August 22, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

“The car business is hell,” said founder Elon Musk, when announcing he would sleep in the Fremont Tesla factory until Model S production reached 2,500 units a week.

A STEALTHY CONTENDER IN THE AI RACE

Mad Hedge AI

(PLTR), (GOOGL), (MSFT), (NVDA)

It's time to grab your magnifying glass and take a closer look at a story that's emerging from the shadows of the tech giants.

We're all too familiar with the A-list celebrities of the artificial intelligence (AI) world, namely Alphabet (GOOGL), Microsoft (MSFT), and Nvidia (NVDA). These are the names that echo in every conversation about AI breakthroughs.

But is there someone else knocking on the door of innovation? A name that's only just beginning to stir the echoes?

Let's talk about Palantir Technologies (PLTR).

Now, I must confess, Palantir isn't new to the game. Nearly 20 years old and famous for its U.S. Government contracts and connections to Silicon Valley's Peter Thiel, the big-data analytics firm has been flexing its AI muscles for quite some time.

Yet, it's only in the last three years since going public that Palantir's stock has danced to the highs and lows of Wall Street's fickle tune.

Remember that rocket ship known as Palantir's stock, shooting up by an astonishing 130% in just over a quarter? That was something to watch.

But let's not just gawk at the numbers; we need to ask: Does Palantir deserve the fanfare? Is it time to crown this company as one of the market's best AI stocks?

I don't toss crowns around lightly, so let's dig into the specifics.

Palantir's second-quarter revenue grew a respectable 13% YoY to $533 million, just a hair above the high end of management's guidance. And while a 13% increase might not set the world on fire, it’s good to take a pause and appreciate the masterpiece in the margins.

Operating expenses? A mere 1% rise in Q2, leading Palantir to the golden gates of profitability.

Here's the kicker: Palantir reported its third consecutive quarter with $0.01 in earnings per share (EPS) based on generally accepted accounting principles (GAAP). A mere penny, you say? Ah, but remember, the journey to towering profits always starts at ground level.

Was this a bad quarter for Palantir? Far from it. Still, before we christen AI as the ultimate game-changer, let's face the reality that Palantir could be posting higher growth. The crown will have to wait.

What has me leaning forward in my seat, however, is the company's consistent profitability and free cash flow. A GAAP profitable record for the third quarter in a row and a whopping $285 million in adjusted free cash flow in the first half of 2023, marking a 213% YoY growth, are figures you can't simply shrug off.

Let's revisit Palantir's Artificial Intelligence Platform (AIP), a subject I have been following and will urge you to watch closely in the coming months.

The world of large language models (LLMs) is no longer a future concept; it's a current reality. Integrating with Palantir's Foundry applications, AIP isn't just technical jargon but a practical step into untapped potential.

Foundry's value lies in its practicality and adaptability. Whether for a seasoned data analyst or a novice explorer, Foundry delivers various analytical tools.

Rather than painting it as a Swiss army knife or turbo engine, it's worth considering Foundry as a tailored solution for different data needs. It offers table-based scrutiny, geospatial pattern recognition, time series dissections, scenario simulations, and more.

In a business environment awash with data, Foundry stands as a robust tool that ensures no essential information escapes notice.

Now, moving to AIP's integration within Foundry, it's more than a vibrant addition; it's a strategic enhancement. AIP augments Foundry's capabilities, not just boosting its existing functions but adding a whole new layer of opportunity.

Imagine it as a software update for a craftsman's toolbox, one that is attentive to the precise requirements of modern data analysis.

This combination isn't about fanciful upgrades; it's about empowering users in practical ways. With AIP integrated right into Foundry, users can tap into additional features and capabilities with minimal fuss. It's not merely a novelty; it's a strategic move by Palantir to stay ahead of the curve.

In 2023, where artificial intelligence has transitioned from buzzword to business necessity, Palantir's alignment of AIP and Foundry isn't just innovation for innovation's sake. It's a calculated play, one that is in tune with market demands and technological progress.

Already active across 100 enterprises and under discussion with another 300 firms, this platform is making significant inroads. The numbers are an early indication of Palantir's short-term and long-term growth prospects.

Palantir's stock, trading at 16 times price to sales (P/S), might seem a premium compared to its competition, but there is robust justification for the demand that AIP is generating.

Coupled with Palantir's unwavering stand on profitability and liquidity, the convergence of AIP and Foundry adds an analytical depth that is both refreshing and relevant.

Investors seeking sustainable growth might find Palantir's technological foresight and fiscal responsibility an inviting combination. After all, this may just be a story that's only beginning to tell itself.

August 21, 2023

Jacque's Post

(AUSTRALIA WEIGHED DOWN BY A FALTERING CHINESE ECONOMY)

August 21, 2023

Hello everyone,

The Australian Dollar has been tumbling recently –down from 68.8 U.S. on June 15 to 64 U.S. last week - and this is a direct reflection of growing anxiety about the global economy and the financial markets.

These concerns are primarily centered around the health of the world’s largest economy, China. New construction starts (or new buildings) fell 24.5% in the first seven months of the year.
Property prices in some areas have “crashed”, down by 25% from their October 2021 highs.
Prices are falling as demand slides, and that’s weighed against enormous levels of debt held by property developers and asset managers.

Asset manager Zhongzi and property developers Country Garden and Evergrande are all showing signs of financial stress. Evergrande filed for Chapter 15 Bankruptcy in New York on Friday, - this move protects its U.S. assets while it seeks to negotiate with its creditors.

On Friday, last week, China’s central bank intervened to support the local currency, the Yuan – a move to stabilise its economy. According to Westpac senior currency strategist, Sean Callow, China’s central bank allows the yuan to trade +/- 2% each day either side of its fixing rate.

The Chinese economy is looking the weakest it’s been since COVID, including slipping into deflation. The Australian dollar is out of favour as global investors buy up the U.S. dollar.

U.S. interest rates, China’s fragile property market and the RBA’s comments on inflation are weighing on the Australian dollar. We could see 0.62 in the Australian dollar before this slide is over.

An uncontained financial crisis in China has the potential to sideswipe the capacity of both the government and asset-rich Australians to spend. It would also obliterate Australia’s export sector. If this happens, a deep local recession is a possibility.

The next few months see shares at high risk of a correction given high recession and earnings risk, as well as the risk of still more hikes from central banks and poor seasonality out to September/October.

The health of China’s economy could determine whether a recession is on the cards.

Have a good week.

Cheers,
Jacquie

August 21, 2023

Tech Letter

Mad Hedge Technology Letter
August 21, 2023
Fiat Lux

Featured Trade:

(ANOTHER RED FLAG FROM DIGITAL GOLD)
($BTC), ($COMPQ), (TLT)

Another Red Flag From Digital Gold

Tech Letter

When good times roll then the digital gold does too.

More often than not, these good times occur when liquidity gates widen.

Simply put, there’s more cash for alternative assets like Bitcoin ($BTC) to speculate on and that’s what people do.

Bitcoin as a standalone asset possesses no intrinsic value and delivers investors zero cash flow which are serious drawbacks in times of pain.

I wouldn’t go so far as to say this is a time of pain right now, but we are inching closer to it as the US 10-year treasury (TLT) hits 4.35%.

Sometimes, investors need that extra little bit of cash flow from that 50-year-old studio tucked away deep inside their portfolio to survive.

Call it a rainy day fund if you will.

The drawdown in Bitcoin is an ominous sign for tech shares ($COMPQ) because the logic goes that if Bitcoin goes up, so does tech.

The narrative for some time has been that Bitcoin is akin to something like crappy tech so if crappy tech shares deliver, then the good tech companies that offer cash flow and software products will do even better.

Bitcoin has just been jolted by some negative price action as we find ourselves lower than last week, at around $26,000 per BTC.

Longer-term US Treasury yields are around multi-year highs, part of a global bond selloff that reflects the risk of a prolonged period of restrictive monetary settings to bring down inflation.

Such a backdrop portends constrained liquidity that would pose a challenge for riskier assets like tech stocks and crypto.

Higher interest rates mean that assets like Bitcoin don’t look so attractive on a relative basis.

Some of the technical signals followed by chart analysts paint a mixed picture. A gauge of momentum known as the 14-day relative strength index suggests Bitcoin is close to the most oversold level since mid-2022.

Other metrics point to a reluctance among retail and institutional investors to engage with crypto following last year’s rout, blowups like FTX, and an ever-shifting regulatory landscape.

For instance, average daily spot volumes on centralized digital-asset exchanges over the past four months were the lowest since October 2020 — when Bitcoin was at about $10,000.

The last 30 days have been brutal for the Nasdaq index and narrowing the goalposts means that BTC will be one of the first casualties to get heaved into the dumpster.

The price action for tech stocks has been highly disappointing lately and there is a strong chance that we could revert to sell the rallies in the short term.

Numerous times the Nasdaq has started the morning hot out of the gate only to suffer sharp sell-offs as the afternoons rolled around.

Shares trending lower to end the trading day have epitomized tech shares lately.

Momentum is lackluster.

The reason I believe that tech shares will endure a harsher period of consolidation is because the added kick in the nuts is China weakness.

Growth forecasts are starting to get ratcheted back as it appears that China has entered the Japan-style lost decade type of slowdown that is a symbol of economic stagnation.

The Nasdaq is really searching hard under each stone to find some type of tailwind to propel us into year-end, but the window is closing quickly. Let’s hope we find that rocket fuel to get us over the line.