September 2023

The Mad Hedge September Traders & Investors Summit is On!

The Fed has stopped raising interest rates, inflation is falling, and tech stocks are about to catch are fire!

What should you do about it?

Attend the Mad Hedge Traders & Investors Summit during September 12-14. Learn from 15 of the best professionals in the market with decades of experience and the track records to prove it. Every strategy and asset class will be covered, including stocks, bonds, foreign exchange, precious metals, commodities, energy, and real estate.

Best of all, by signing up you will automatically have a chance to win up to $100,000 in prizes.

Usually, access to an exclusive conference like this costs thousands of dollars. You can attend for free!

Listening to this webinar will change your life! To register, please click here.

The Long View on Emerging Markets

Diary, Newsletter

I managed to catch a few comments in the distinct northern English accent of Jim O'Neil, the fabled analyst who invented the 'BRIC' term, and who was later kicked upstairs to the chairman's seat at Goldman Sachs International (GS) in London.

Jim thinks that it is still the early days for space and that these countries have another ten years of high growth ahead of them. As I have been pushing emerging markets since the inception of this letter in 2008, this is music to my ears.

By 2025, the combined GDP of these emerging markets, Brazil (EWZ), India (PIN), and China (FXI), will match that of the US. The “BRIC” term is no longer used because the Ukraine War has made Russia the Pariah of international investment.

China alone will reach two-thirds of the American figure for gross domestic product. All that is required is for China to maintain a steady 5% annual growth rate for four more years, the official Beijing forecast, while the US plods along at an arthritic 2.5% rate. China's most recent quarterly growth rate came in at low single digits.

“BRIC” almost became the 'RIC' when O'Neil was formulating his strategy a decade ago. Conservative Brazilian businessmen were convinced that the newly elected Luiz Ignacio Lula da Silva would wreck the country with his socialist ways.

He ignored them and Brazil became the top-performing market of the G-20 since 2000. An independent central bank that adopted a strategy of inflation targeting was transformative.

This is not to say that you should rush out and load up on emerging markets tomorrow, as they are still being weighed down by the prospect of higher American interest rates, a strong US dollar, and weak commodity prices.

American big cap technology stocks are the flavor of the day, and as long as this is the case, emerging markets will continue to blend in with the wallpaper. Still, with growth rates triple or quadruple our own, they will not stay “resting” for long.

September 6, 2023

Jacque's Post

(MICROFINANCE CAN MAKE ALL THE DIFFERENCE)

September 6, 2023

Hello everyone,

I came to understand a lot about microfinance when I was living in the U.K. while my son was at school there. My sister-in-law runs a charity based in Uganda. She saw first-hand the difference microfinance made for women in rural Ugandan communities. During many of our lengthy discussions about her experiences with these Ugandan women, I came to appreciate the power of microfinancing and how empowering it is for women in undeveloped parts of the world and developed parts of the world.

What is Microfinance?

Microfinance is typically seen as a financial service that many financial institutions and non-.

profit organisations provide to an individual or group of people who are excluded from traditional banking services. Many microfinancing entities offer small portions of working capital loans as credits. The small portions of capital loans are called microloans or microcredits.

Types of microfinancing.

Microcredit is a part of the larger microfinance industry which focuses on providing individuals having low income with credit, savings, insurance, and other possible financial services. The interest on the loan and the amount of the loan will depend on the size of the business and whether it is in an urban or rural area. For example, a farmer may require small funds to buy seeds for the season. In this case, the microcredit institution or non-profit can offer the farmer small lines of credit and small loans.

Microloans are short term loans in small amounts for entrepreneurs, small business owners, who need an injection of capital to start a business. These loans can also be used to pay salaries of newly appointed employees or simply for maintaining cash flow. The main purpose of these loans is to promote socio-economic development and support new start-ups.

Microinsurance targets people in the informal sector and is available for people on low incomes. Microinsurance can help in one-time events such as a day trip or emergency health requirements. It is available to people who hold few or no assets. It may be used to cover an agricultural crop.

Micro savings are the savings accounts that allow individuals and businesses to save money in smaller amounts or increments. Usually has zero service fees and flexibility on withdrawals.

The main characteristics of Microfinance:

Collateral is rarely required. Many microfinancing institutions offer collateral-free financing services to individuals and businesses.

Most borrowers have low incomes. The purpose then is to provide financial assistance to people – businesspeople or entrepreneurs - who do not have access to easy banking solutions.

The type and amount of the loan varies according to location and business. Microfinancing institutions usually provides lines of credit and loans in smaller amounts. The amount may vary depending on the type of business and the location.

Loan tenure is usually short. Individuals can repay the amount in smaller installments. The borrowers repay the amount of the loan within the time that micro-financing institutions decide.

The purpose of microfinancing is to generate business income for people in undeveloped parts of the world.

Benefits of Microfinance

Microfinance can help small businesses and individuals in both financial and social ways. They create self-dependency and sustainability in the economic aspects of their business. Microfinance motivates entrepreneurs and gives them the confidence to start a small business. It also helps individuals spend their savings on basic requirements, such as installing power or other necessary goals. With the help of microfinance, small businesses and individuals can put their ideas into reality. Microfinance provides security, economic growth, and business opportunities.

Provide accessibility. Imagine you were a woman living in rural Uganda with six kids. You cannot afford medication for your chronic ailments, education for your children, or birth control pills to stop having children. You have no identification papers that we mostly take for granted. I’m talking about a birth certificate, driver’s license, etc. Arguably, there are many, many women in Uganda who have zero assets and often fail to get loans from major banks. They also don’t have the necessary paperwork or certifications traditional banks require for loans. Microfinance makes it easier for these individuals to get financial assistance.

Microfinancing offers better loan repayment to women entrepreneurs. So, this helps empower women in their communities.

Microfinancing provides education opportunities. Many small families in rural areas depend on farming for their income. This can make it difficult for them to invest a lot of money in the education of their children. Additionally, such families may require men at the farm, so their children usually work with them. In such cases, microfinance can help families to focus on providing better education to their children.

Microfinancing can help create job opportunities. Microfinancing often provides businesses with an opportunity to create employment. Businesses can hire employees for different job roles. A business properly funded through microfinance can create local job opportunities can help in local economic growth.

Relieving financial burdens when starting a new business is made possible through microfinancing. Anyone knows that the immediate costs of a new business venture can create stress and worry. Microfinancing reduces monetary issues by providing them with financial services that allow them to pay their monthly bills. Therefore, with the heavy lifting done by microfinance, the business owner can focus on improving products and services for his/her target audience. It follows then that entrepreneurial activities become less stressful and allow other community members to engage in such businesses.

Have a great week.

Cheers,

Jacquie

Unveiling the Power of Artificial Intelligence at Goldman Sachs: Transforming Finance and Beyond

Mad Hedge AI

Goldman Sachs, a global financial powerhouse, has long been at the forefront of innovation within the financial industry. One of the key technological advancements driving this innovation is Artificial Intelligence (AI). In this article, we will delve into how Goldman Sachs utilizes AI to enhance its operations, drive financial success, and pioneer the future of finance. With a focus on machine learning, natural language processing, and predictive analytics, Goldman Sachs is leveraging AI in various aspects of its business, from trading and risk management to client services and compliance

AI in Trading and Investment

Goldman Sachs has a rich history in trading and investment banking, and AI has become an integral part of these operations. Algorithmic trading, one of the earliest AI applications in finance, has been widely adopted by the firm. AI algorithms analyze vast amounts of market data in real-time to make split-second trading decisions, optimizing trading strategies and managing risk more efficiently than human traders.

Machine learning models at Goldman Sachs are constantly evolving, improving the accuracy of trading predictions. These models take into account historical price data, market news, and even social media sentiment to anticipate market movements. The result is a significant competitive advantage in a fast-paced and data-driven industry.

Risk Management and Compliance

Risk management is paramount in the financial industry, and AI plays a crucial role in assessing and mitigating risks. Goldman Sachs employs AI models to monitor market risks, credit risks, and operational risks. These models continuously analyze vast datasets to identify potential threats and anomalies, enabling proactive risk management and reducing the likelihood of financial crises.

AI is also essential in ensuring compliance with complex financial regulations. Regulatory bodies like the SEC and FINRA have stringent requirements, and manual compliance checks can be time-consuming and error-prone. Goldman Sachs utilizes AI-driven solutions to automate regulatory compliance checks, making the process more efficient and accurate. Natural language processing (NLP) algorithms are employed to review and understand regulatory documents, ensuring that the firm's operations are always in compliance.

Client Services and Personalization

Delivering exceptional client services is a hallmark of Goldman Sachs. AI-driven chatbots and virtual assistants have been implemented to enhance client interactions. These AI-powered tools provide clients with quick access to information, account management, and even investment advice. They can answer queries, execute trades, and offer personalized investment recommendations based on a client's financial goals and risk tolerance.

Moreover, AI enables Goldman Sachs to analyze client data more comprehensively. By processing and understanding unstructured data, such as emails, transcripts, and voice recordings, AI can extract valuable insights about client preferences and behavior. This data-driven approach allows the firm to offer tailored financial products and services, strengthening client relationships and driving business growth.

Asset Management and Quantitative Analysis

Goldman Sachs is a major player in the asset management industry, and AI has transformed the way it manages portfolios and conducts quantitative analysis. Machine learning models are used to predict market trends, identify investment opportunities, and optimize asset allocation. These models are capable of processing vast datasets and spotting patterns that might be impossible for human analysts to discern.

Quantitative analysts, or "quants," rely heavily on AI to develop sophisticated trading strategies. AI-driven models can sift through enormous amounts of financial data, identifying correlations and market inefficiencies that can be exploited for profit. These strategies often involve high-frequency trading and statistical arbitrage, where AI algorithms execute thousands of trades per second to capitalize on micro-market movements.

Credit Scoring and Lending

In the realm of consumer and corporate lending, Goldman Sachs has integrated AI into its credit scoring processes. Traditional credit scoring models can be limited in their assessment of creditworthiness. AI, on the other hand, can analyze a broader range of data points, including non-traditional sources such as social media activity and online behavior, to assess credit risk more accurately.

This enhanced credit scoring enables Goldman Sachs to make more informed lending decisions, extending credit to individuals and businesses that may have been overlooked by traditional methods. Furthermore, AI-driven underwriting processes streamline the loan approval process, reducing the time it takes to provide clients with credit.

Fraud Detection and Cybersecurity

The financial sector is a prime target for cybercriminals, and the security of client data and financial transactions is paramount. AI plays a pivotal role in safeguarding Goldman Sachs and its clients from cyber threats and fraud. Machine learning algorithms analyze network traffic, detect anomalies, and identify potential security breaches in real time.

Moreover, AI-powered fraud detection systems continuously monitor transactions, flagging suspicious activities based on predefined patterns and deviations from a client's usual behavior. This proactive approach not only protects clients but also helps maintain the integrity of the financial markets.

The Future of Finance and AI at Goldman Sachs

Looking ahead, Goldman Sachs is committed to pushing the boundaries of AI in finance. The firm is exploring the potential of quantum computing to solve complex financial problems at unprecedented speeds. Quantum computing has the potential to revolutionize risk management, portfolio optimization, and algorithmic trading by processing vast datasets in near real-time.

Additionally, Goldman Sachs is heavily investing in research and development to enhance AI ethics and transparency. As AI algorithms become increasingly integrated into financial decision-making processes, ensuring fairness and accountability is of utmost importance. The firm is working on developing AI models that can explain their decisions and mitigate biases.

Conclusion

Goldman Sachs, a financial giant with a rich history, is harnessing the power of AI to revolutionize the financial industry. From trading and risk management to client services and compliance, AI is deeply embedded in the firm's operations. With machine learning, natural language processing, and predictive analytics, Goldman Sachs is staying ahead of the curve, providing exceptional client services, managing risks effectively, and driving financial success. As the financial landscape continues to evolve, Goldman Sachs is committed to leading the way and shaping the future of finance through the transformative potential of AI.

Midjourney prompt: “The World of Goldman Sachs”

September 6, 2023

Tech Letter

Mad Hedge Technology Letter
September 6, 2023
Fiat Lux

Featured Trade:

(SEPARATING THE WHEAT FROM THE CHAFF)
(PTON), ($COMPQ), ($TNX)

Separating Wheat From the Chaff

Tech Letter

Part of the excesses that became ubiquitous with Silicon Valley is starting to get reigned back and that’s a good sign for the tech sector ($COMPQ).

It also means the boom years for the tech sector are over.

I am not talking about the full set of perks tech employees receive at their fingertips in order to entice them to spend most of their time at the office.

I am more referring to ideas that were hyped up as grand but never made a material dent in the tech ecosystem.

Not all tech ideas hit it big and some are complete busts.

Ideas like the Uber of battery-powered scooters are now getting the thumbs down and capital is getting pulled by from these marginal business concepts.

From the get-go, these companies presided over poor unit economics and they could only sustain operations in a world of cheap capital that doesn’t exist anymore.

Rates ($TNX) are high and could shoot higher.

Legally, cities have a say in whether they want their beautiful promenades and piazzas littered with ugly scooters.

In France, Parisians voted to ban battery-powered scooters, confirming that many regarded them as absolutely infuriating.

Banned from the French capital by popular vote, self-service electric scooters are enjoying their last day in Paris on Thursday, marking the end of five tumultuous years of controversial use, much to the dismay of their users.

From 1 September, Paris will become the first European capital to completely ban these self-service two-wheelers.

Many Parisians have become fed up with seeing them as not only an eye sore but also a safety hazard.

Since August, the 15,000 scooters have gradually been taken off the streets.

Of the 5,000 scooters going out to pasture produced by the German company Tier, a third will remain in the Paris region, in 80 communes around Marne-la-Vallée or Saint-Germain-en-Laye. The rest will go mainly to Germany.

In Paris, some 400,000 people chose a scooter to get around in 2022, according to operators.

The operators are banking on their customers switching to bicycles, which are already offered by everyone, which should enable them to avoid redundancies, at least for the time being.

There most likely will never be another boom of battery-powered scooter platforms dressed up as technology companies.

These types of low-quality tech firms are feeling the heat and examples are plentiful such as Peloton (PTON) which has also hit rock bottom.

The next big idea down the pipeline is generative artificial intelligence, but even that has been dialed back somewhat after stocks were priced in for parabolic growth rates.

As the expectation for better technology ideas results in the need to improve business models, there seems to be no room for bottom-of-the-barrel tech like the Uber of battery-powered scooters.

It seemed like a bad idea from the start so it’s surprising it took this long for them to get exposed.

Moving forward, expect tried-and-tested brand names in tech to outperform these mediocre businesses. It’s never been more difficult to grow tech companies with these high interest rates and the death of bad tech ideas will go into overdrive as interest rates continue to surge.

This will help our trading because knowing the pulse of the tech sector is half the battle.

September 6, 2023 - Quote of the Day

Tech Letter

Quote of the Day

“It is easier to find men who will volunteer to die, than to find those who are willing to endure pain with patience.” – Said Roman Leader Julius Caesar

September 6, 2023

Diary, Newsletter, Summary

Global Market Comments
September 6, 2023
Fiat Lux

Featured Trade:

(HOW TO MAKE A KILLING IN TESLA)
(TESLA), (SPY), (VIX)

How to Make a Killing in Tesla

Diary, Newsletter

There is no doubt in my mind that a major leg up in Tesla shares is coming, possibly soon. That’s because of the increasing number of “Bigfoot” type sightings of the Cybertruck, the most revolutionary new vehicle launch in a decade.

Social media is increasingly being populated by links to secret videos, drone pictures, charging station sightings, and insider leaks.

The car will me made of flat stainless-steel panels to cut costs on those expensive curves. The windows are armor-plated. It has a towing capacity of 14,000 pounds, can accelerate from zero to 60 mph in 2.9 seconds, and boasts a 500-mile range. It moves the auto industry to a 48-volt platform to save on copper costs. You can have all of this starting at $60,000.

To get on the waiting list, please click here. But you may have to wait for two years to get one. You’ll be somewhere in the 2 million waiting list.

Not only did I pay for this year’s summer vacation with this year’s Tesla profits, and it was not exactly a cheap one, but I paid for next year’s as well. I’m taking a Queen Mary owner’s suite, Orient Express, Hotel Cipriani in Venice kind of vacation.

I’m about to make a lot more.

I get most of my ideas for trade alerts from my own trading. They’re just infinitely more aggressive than the ones I send to the Mad Hedge Trade Alert service. I am much more careful with client money than my own, as I hate losing other people’s money more than anything.

I would never recommend what I did below for mere mortals. If I did, I’d probably end up in jail.

One great high risk leveraged strategy is to sell short Tesla puts outright. All my puts that I sold short this month for $12-$16 are expiring worthless.

It’s not for the faint of heart and it takes a half-century of risk tolerance building to do this kind of trading. Never short more puts than you can afford to buy the stock.

There were a few things required to do such a trade.

Since no one ever gets the absolute bottom, the initial outcome of a large leveraged position is a big loss. Most of you would stop out of the position when this happens. I kept doubling up.

For I had the power of my own convictions.

By selling short puts, I was more than happy to buy Tesla stock lower down if the stock went against me. Using margin, I could buy a lot of stock.

Now that’s a trade!

When I added this position, I thought it highly unlikely that I would get to buy Tesla stock at low prices for the following reasons:

1) The stock market was oversold.
2) Tesla was even more oversold, having fallen 30%.
3) A classic “cup and handle” formation was setting up on the charts. Upside breakout day was July 24.
4) The Volatility Index (VIX) failed to confirm the selloff.
5) After sitting in the sidelines investors had accumulated massive amounts of cash.
6) We are about to move into strongly positive seasonals.
7) Tesla is getting ready to buy back its own stock.
8) Tesla bears, and there are always a lot of them out there, had just freshly topped up their short positions, leaving the stock ripe for a short squeeze.
9) Tesla is one of the most volatile stocks in the market, with option implied volatility regularly hitting 100%. By comparison, the S&P 500 (SPX) sits at a positively boring 20%.
10) Fears of a deep recession were wildly overblown.

The real cherry on top of the cake was the $370 billion Biden Climate bill, which no one expected, came totally out of the blue, and had a ballistic effect on Tesla shares. Tesla is the overwhelming beneficiary of this legislation.

They might as well have called it the “Tesla shareholder enrichment plan.”

It’s easy to commit to paying $245 for a stock that you think someday will be worth $10,000. Tesla is currently the fastest-growing car company in the world with a near global monopoly in EVs. Its market share is 66%. The best Henry Ford could do with Ford Motors (F) in the 1910s was a US market share of 75%.

So, I will probably be doing a lot more of these. I don’t need the money; I just love winning.

You’ll be the first to know.

Tesla Just Bought Me Another Tesla

September 6, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

“Making cars is hell”, said Tesla founder Elon Musk.

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