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
Mad Hedge Biotech and Healthcare Letter
October 3, 2023
Fiat Lux
Featured Trade:
(REDEFINING RESILIENCE)
(VRTX), (ABBV), (AMGN), (JNJ)
It’s not surprising that a number of investors might be hesitant to purchase stocks this month. A few might remember that a number of the most significant stock market downturns in history took place in October. Numerous stocks continue to be high-priced despite the stock market shedding a considerable portion of its earlier momentum from this year.
However, October has often proven to be a favorable month for the stock market — if you know how to choose. Moreover, while a multitude of stocks carry a high price tag, there are those that do not.
Now, imagine a pharmaceutical giant, a singular entity reigning supreme in a market valued in the billions, poised to unveil three revolutionary products by 2025, each potentially generating sales eclipsing $1 billion. Picture this company at the forefront, pioneering a cure for type 1 diabetes (T1D).
The fascinating part? This isn’t a fragment of imagination—it’s the reality of Vertex Pharmaceuticals (VRTX).
With its towering presence in the biotech sector, Vertex has a market cap surpassing $90 billion, establishing itself as the largest entity among U.S.-headquartered firms. Unlike its contemporaries—AbbVie (ABBV), Amgen (AMGN), and Johnson & Johnson (JNJ)—Vertex doesn’t distribute dividends.
Still, it remains one of the most consistent companies thanks to its remarkable trajectory starting from its inception in 1989. Since the advent of the SPDR S&P Biotech ETF (XBI) in 2006, Vertex has soared, achieving over 900% return, overshadowing the ETF’s 380% return.
The journey of Vertex is not just a tale of numbers and percentages; it’s a narrative of resilience and innovation. The company distinguishes itself with its innovative approach to addressing serious diseases, particularly focusing on cystic fibrosis (CF), and its continuous expansion in the CF treatment market.
As expected, the question of whether Vertex is a one-dimensional entity, solely reliant on CF therapies arises. Far from it.
CF isn't anticipated to be the sole catalyst for Vertex's expansion for much longer. The firm, alongside its partner CRISPR Therapeutics (CRSP), is aspiring to secure approval from U.S. regulatory bodies for exa-cel to treat uncommon hematological conditions such as sickle cell anemia and transfusion-reliant beta-thalassemia in the upcoming months. Additionally, the company envisions an imminent market introduction for VX-548, a potent, non-opioid pain medication.
Looking ahead, the future seems even more promising for this major biotech entity. Vertex is conducting a crucial clinical trial on inaxaplin, focusing on APOL1-mediated renal disease, affecting a broader patient demographic compared to CF.
Meanwhile, the financial prowess of Vertex is another facet of its diverse identity. The company has been a consistent beacon of positive free cash flow since 2016, and its financial robustness was highlighted by a 14% revenue growth in the second quarter, driven by robust international sales.
The company’s strategic investments in R&D and commercial capabilities are pivotal to leveraging the multibillion-dollar market opportunities looming on the horizon. These investments are not mere allocations of resources; they are the building blocks of Vertex’s future, the seeds sown today to reap innovations tomorrow.
An excellent example of this is Vertex’s ambitious stride into the type 1 diabetes market, marked by its acquisition of ViaCyte in a $315 million deal. Ultimately, the goal is to deliver innovative stem cell-derived cell replacement therapies as a functional cure for type 1 diabetes.
While the diabetes products are still navigating through phase 2, the anticipation is palpable regarding their role in fueling Vertex’s future growth. The company’s resilience against elevated rates and its propensity to bounce back make it a fascinating stock to consider during market corrections. It’s not just about the numbers on a balance sheet or the ticks on a stock chart; it’s about the relentless pursuit of innovation, and the unwavering commitment to making a difference in the lives of patients around the globe.
So, do these make Vertex the unstoppable stock poised to rule the next two decades? The signs are pointing to a resounding yes.
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
October 3, 2023
Fiat Lux
Featured Trade:
(FRIDAY OCTOBER 6 FRANKFURT GERMANY STRATEGY DINNER)
(CHINA’S COMING DEMOGRAPHIC NIGHTMARE)
(WHO SAYS THERE AREN’T ANY GOOD JOBS?)
Come join me for the Mad Hedge Fund Trader’s Global Strategy Dinner, which I will be conducting in Frankfurt, Germany. The event begins at 7:00 PM on Friday, October 6, 2023.
A full dinner will be provided and there will be an open discussion on the crucial issues facing investors today.
I’ll be giving you my up-to-date view on stocks, bonds, foreign currencies, commodities, precious metals, energy, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there too. Tickets are available for $287.
I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.
The event will be held at a downtown Frankfurt hotel, the details of which will be emailed directly to you with your confirmation.
I look forward to meeting you and thank you for supporting my research.
To purchase tickets for the luncheons, please click here.
Thanks to China's “one child only” policy adopted 40 years ago, and a cultural preference for children who grow up to become family safety nets, there are now 32 million more boys under the age of 20 than girls.
Large-scale interference with the natural male-to-female ratio has been tracked with some fascination by demographers for years and is constantly generating unintended consequences.
Until early in the last century, starving rural mothers abandoned unwanted female newborns in the hills to be taken away by “spirits.” Today, pregnant women resort to the modern-day equivalent by getting ultrasounds and undergoing abortions when they learn they are carrying girls.
Millions of children are “little emperors,” spoiled male-only children who have been raised to expect the world to revolve around them. The resulting shortage of women has led to an epidemic of “bride kidnapping” in surrounding countries. Stealing of male children is widespread in Vietnam, Cambodia, Laos, and Mongolia.
The end result has been a barbell-shaped demographic curve unlike that seen in any other country. The Beijing government says the program has succeeded in bringing the fertility rate from 3.0 down to 1.8, well below the 2.1 replacement rate. As a result, the Middle Kingdom's population today is only 1.2 billion instead of the 1.8 billion it would have been.
Political scientists have long speculated that an excess of young men would lead to more bellicose foreign policies by the Middle Kingdom. But so far the choice has been for commerce, to the detriment of America's trade balance and Internet security.
In practice, the one-child policy has only been applied to those who live in cities or have government jobs. That is about two-thirds of the population. On my last trip to China, I spent a weekend walking around Shenzhen city parks. The locals doted over their single children, while visitors from the countryside played games with their three, four, or five children. The contrast couldn’t have been more striking.
Economists now wonder if the practice will also shave points off China's long-term economic growth rate. The early evidence is that it did. Parents with boys tend to be bigger savers, so they can help sons with the initial big-ticket items in life, like education, homes, and even cars.
The end game for this policy has to be the Japanese disease; a huge population of senior citizens with insufficient numbers of young workers to support them. The markets won't ignore this.
In the latest round of reforms announced by the Chinese government was the demise of the one-child policy. But no matter how hard you try; you can’t change the number of people born 40 years ago. The boomerang effects of this policy could last for centuries.
While recently winging my way across the South Pacific a few years ago and browsing the local papers, I spotted an unusual job offer:
WANTED: Social worker, tax-free salary of $60,000 with free accommodation and transportation, no experience necessary, must be flexible and self-sufficient.
With the unemployment rate rising for recent college grads, I was amazed that they were even advertising for such a job. Usually, such plum positions get farmed out to a close relative of the hiring officials involved.
Intrigued, I read on.
To apply, you first had to fly to Auckland, New Zealand, then catch a flight to Tahiti. After that you must endure another long flight to the remote Gambler Island, then charter a boat for a 36-hour voyage.
Once there, you had to row ashore to a hidden cove on the island, as there was no dock or even a beach.
It turns out that the job of a lifetime is on remote Pitcairn Island, some 2,700 miles ENE of New Zealand, home to the modern descendants of the mutineers of the HMS Bounty.
History buffs will recall that in 1790, Fletcher Christian led a rebellion against the tyrannical Captain William Bligh, casting him adrift in a lifeboat.
He then kidnapped several Tahitian women and disappeared off the face of the earth. When he stumbled across Pitcairn, which was absent from contemporary naval charts, he burned the ship to avoid detection.
An off-course British ship didn’t find the island until some 40 years later, only to find that Christian had been killed for his involvement in a love triangle decades earlier.
The job is not without its challenges. There is only one doctor, and electric power is switched on only 10 hours a day. Supply ships visit every three months. The local language is a blend of 18th century English and Tahitian called Pitkern, for which there is no dictionary.
Previous workers have a history of going native. Oh, and 10% of the island’s 54 residents are registered sex offenders, due to its long history of incest.
The next time someone you know complains about being unable to find a job, just tell them they are not looking hard enough, and to brush up on their Pitkern.
For more on the job situation, please visit my website by clicking here.
(AMZN), (GE), (XOM), (AAPL), (MSFT)
In a world perpetually fueled by technological advancements, the stock market is undergoing monumental shifts, with tech stocks solidifying their leadership.
Today's market scenario is a stark contrast to two decades ago when General Electric (GE) and ExxonMobil (XOM), valued at $319 billion and $283 billion, were the titans of market caps.
Now, the technological giants Apple (AAPL) and Microsoft (MSFT), with market caps of $2.76 trillion and $2.47 trillion, respectively, epitomize the transformative shifts in market dynamics.
In this metamorphosing terrain, Amazon emerges as a pivotal player, its $1.46 trillion market cap inching closer to the illustrious $2 trillion mark. However, its journey to this milestone is a tapestry of highs and lows, with the company nearly touching $2 trillion in July 2021 before a series of economic challenges intervened.
The economic downturn had a domino effect, impacting consumer spending and, subsequently, decelerating Amazon’s e-commerce growth. But the winds seem to be changing, with signs of an improving economy on the horizon.
Amazon’s unparalleled stronghold in the e-commerce sector, which accounted for nearly 38% of U.S. e-commerce sales in 2022, positions it strategically to harness the benefits of economic recovery and the anticipated rebound in consumer spending. This dominance is more than its next 14 competitors combined, highlighting Amazon’s significant market presence.
Here, the role of Amazon Web Services (AWS) is pivotal.
AWS, a stand-out advancement in cloud infrastructure services, commands about 30% of the market. The economic headwinds led to a tightening of budgets on cloud spending but with a renewed sense of optimism permeating the business landscape, a revival in spending seems imminent, spelling potential gains for Amazon.
Notably, the introduction of Generative AI is a pivotal development in this context.
This innovative technology, promising substantial gains in productivity, has ignited a corporate race to integrate it. However, the development of these systems and the expansive language models that power them are substantial investments accessible to only the most financially robust companies.
AWS, along with other cloud providers, is capitalizing on this golden opportunity, striving to democratize access to generative AI on their platforms.
Generative AI is not just a technological advancement; it’s a market catalyst with projections reaching up to $7 trillion. By spearheading this innovation, Amazon can tap into new revenue streams and solidify its position as a technology leader.
This technology is crucial in creating more personalized and engaging customer experiences on Amazon’s e-commerce platform, potentially leading to increased customer satisfaction and higher sales. It can optimize the company’s operational processes, including logistics and supply chain, leading to cost savings and improved efficiency.
The competitive landscape does pose intriguing questions—will AWS be the one to harvest the fruits of generative AI, or will competitors like Microsoft overshadow it and seize market dominance?
Amazon’s relentless pursuit of innovation and growth renders it a formidable contender in the cloud computing sector. The integration of generative AI is expected to enhance operational efficiencies across AWS and Amazon’s e-commerce sectors, allowing Amazon to maintain its competitive edge in the market.
Needless to say, the transformation of the stock market landscape is accentuating the rise of tech stocks, with Amazon poised to reach new heights.
The resurgence of digital retail, coupled with advancements in AI and a revival in cloud spending, are vital catalysts propelling Amazon toward the coveted $2 trillion mark. The interplay between market evolution and technological innovations is reshaping the industry, signaling a new era of technological dominance and market leadership.
The journeys of Amazon and its tech counterparts underscore the transformative power of technological advancements on market dynamics and emphasize the boundless possibilities innovation holds in shaping the market’s future.
This presents a unique opportunity for investors to observe and participate in a market shaped and driven by technological innovations.
The evolving dynamics suggest careful consideration of investment strategies to navigate and leverage the opportunities presented by tech giants like Amazon in this transformative era. It’s crucial to stay informed and make strategic decisions to leverage the potential of companies at the forefront of technological innovation and market transformation.
In this transformative journey, every step, every innovation, and every strategic decision can be a catalyst for change, shaping the future of the market and creating new possibilities and opportunities for everyone.
The boundless potential of technological advancements and their profound impact on market dynamics are crafting a new narrative, one where innovation, strategy, and foresight are the cornerstones of success. The future is unfolding, and it’s teeming with opportunities. The question is, are you ready to embrace it?
Mad Hedge Technology Letter
October 2, 2023
Fiat Lux
Featured Trade:
(THE CUPERTINO CLUNKER)
(AAPL)
