April 2024

April 26, 2024

(TECH OF THE FUTURE: THE WORLD IN 2050)

April 26, 2024

Hello everyone,

The economic landscape at present is a little uncomfortable, to say the least. Investors’ perceptions about interest rates, inflation, and employment stability are being influenced by data the Fed is watching closely. In turn, the interpretation of this data is causing volatility in the market. We are in a long-overdue correction, which should take the froth out of the huge market rally we have recently experienced.

Tech stocks, overall, have been brought back to earth. It certainly does not mean the tech sector is dead. It’s just resting. Five, ten, twenty, thirty years in the future, we will look back on this correction as a blip. Technology will keep advancing and take tech stocks along for the ride.

So, what exactly do those tech advancements look like? An insight into some of the tech of the future shows just what is ahead of us.

Future of Education

We will probably see a shift to more interactive method of learning. Online learning platforms to more personalized learning experiences alongside the incorporation of virtual and augmented reality. The traditional lecture-based, note-taking methods may be replaced by an emphasis on collaboration and problem-solving to better prepare for the workplace.

In schools, we could see biometric scanning upon check-in, which will streamline registration. 3-D printers will be a standard appliance both in the home and at school. They will be an essential learning aid for teachers, facilitating the task of teaching complex concepts.

Learning systems driven by artificial intelligence (AI) will have been integrated into the school environment by 2050. Personalized learning experiences will consider learning styles and create adaptive assessments that adjust in real-time based on performance. AI may predict a student’s future performance, allowing teachers to step in before a student falls behind in a particular area. Furthermore, AI will ensure students receive immediate feedback with suggested areas for improvement, thereby tailoring to a student’s strengths and weaknesses.

Self-driving cars

We have all heard about the crashes because of self-driving cars, which have often made headline news. In decades to come, self-driving cars could well make our roads safer, and reduce deaths and injuries from car accidents. The insurance industry will surely be impacted by this change. This AI could also change our lifestyles as well. The grind of the daily commute will be more comfortable and less taxing on the body, and consequently, it may even change where we choose to live. Overall, AI will make our transportation systems both safer and more efficient, as AI-powered systems will coordinate traffic flows.

Plants will charge your iPhone.

Forests are set to become the energy stations of the future. Bioo is a clean-tech company capable of generating electricity from plant photosynthesis.

Delivery Drones

By 2050 the urban skyline will probably be buzzing with drones delivering all manner of things from books to medical supplies to food. I wonder how noisy that will be?

Ocean Thermal Energy

Ocean thermal energy is one of the world’s largest renewable energy sources, and it has been relatively untapped to date. However, a company called Bluerise is working on creating an energy breakthrough by generating utility-scale electricity through Ocean thermal energy conversion. It is believed it will be able to outcompete fossil fuel-based generation and other renewables that require storage and grid balancing. It will play a crucial role in the future energy mix being one of the very few constant energy sources, available day, and night, year-round.

Health Wearables

Wristbands tracking our movement came about in 2009 when the Fitbit Tracker debuted. Since then, many watches can now monitor our movement, our sleep, our heart rate, and other health data. By 2050, wearables may eliminate the annual physical because they will be loaded with sensors that transmit vital health data, hence giving us warning signs of health issues. Nanobots and wearable devices will monitor and enhance our mental and physical health continuously. Necklaces and wristbands that reduce inflammation and pain may also be common items. This will revolutionize healthcare, making it more personalized and proactive.

Augmented Reality and Virtual Reality

By 2050 technology will be seamlessly integrated into our everyday lives. AR and VR will be commonplace transforming how we work, learn, and interact.

The Job Landscape will be ‘smart’.

Half of the world’s current jobs are unlikely to exist in 2050. The jobs that will be on offer haven’t been invented yet. AI and smart assistants will be commonplace. Robots will play a significant role in the workplace as they can perform many human jobs. Everything will be ‘smart’ – connect and data-driven. This will lead to a big shift in the job market, with a greater emphasis on roles that require human creativity and emotional intelligence. Employers will need to become responsible for creating a life-long learning culture at work, so their staff can take ownership of their professional development, thereby staying up to date with skills and knowledge as their workplace transforms.

Update: On Wednesday I wrote about the metals sector and mentioned a copper stock that was worth looking at - Solaris Resources Inc (SLSR). Yesterday It rose 0.29 cents, a total of 8.49%.

Cheers,

Jacquie

Trade Alert - (AAPL) April 26, 2024 - BUY

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 - (MSFT) April 25, 2024 - BUY

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 - (NVDA) April 25, 2024 - BUY

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 - (META) April 25, 2024 - BUY

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

April 25, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 25, 2024
Fiat Lux

Featured Trade:

(RACING TO SWAP A GOLDEN GOOSE FOR A NEW FLOCK)

(MRK), (NVO), (LLY), (JNJ), (ABBV), (PFE)

Racing To Swap A Golden Goose For A New Flock

Biotech Letter

Big pharma usually makes investors smile - fat profits, juicy dividends, and stocks that crush the market.

Lately, though, some of these giants are looking more like grumpy old men. Sure, there are exceptions like Novo Nordisk (NVO) and Eli Lilly (LLY) printing money with their obesity blockbusters.

But what about the rest? Even with Washington breathing down their necks, patent cliffs, and a shaky economy, you'd think these drug titans wouldn't be lagging the market, right? Wrong.

Check out the "Big Eight" top dogs - Johnson & Johnson (JNJ), Merck (MRK), AbbVie (ABBV), Pfizer (PFE), and the rest. Only a few have really delivered the goods in the past five years. AbbVie and Merck have been alright, but the others? They make me want to take a nap.

Now, I'm not saying give up on pharma entirely - there's still money to be made. But you've got to do your homework. Today, let's take a look at Merck.

They raked in $60.1 billion in 2023, making them a heavy hitter. But without their COVID cash machine Lagevrio, growth is...less impressive. Still up, but not setting the world on fire.

The real story is spending - Merck went on a spree, burning through cash on R&D. Why? Their golden goose Keytruda, that $25 billion cancer blockbuster, is facing generic competition soon.

Merck isn't just sitting around waiting for the Keytruda patent cliff either. They're furiously throwing money at new drugs, acquisitions, cancer, heart disease, immune disorders - hoping to find the next Keytruda before the current one fades away. It's like an aging rockstar desperately trying to write another big hit.

But let's be real, finding billion-dollar breakthroughs is a gamble, even for giants like Merck. They've got potential in the pipeline for sure, but it's a long road from the lab to pharmacy shelves. Plenty of drugs flame out along the way.

Looking back, 2023 wasn't a victory parade for Merck. It was more like a mad dash to spend their way out of the looming Keytruda patent cliff. But hey, sometimes you've gotta break a few eggs to make an omelet, right?

Speaking of potential winners, let's talk about those newly approved lung drugs – sotatercept could be a major player.

Merck's vaccine department is looking strong too, with potential blockbusters targeting lung infections and RSV in the pipeline.

Of course, it hasn't all been smooth sailing. That new cough drug, gefapixant, getting rejected by the FDA again? Merck took a hit on that. Still, this biotech’s not giving up. This is a company buying time to build up a whole new arsenal, and the Keytruda cliff might hurt, but they'll come out swinging.

So, let’s forget about that 2023 earnings dip. Merck's forecasting a serious jump in 2024 profits as they dial back the crazy spending. Yes, their balance sheet took a hit, but look at what they're building. They're hunting big deals to bolster that pipeline, and that's a good thing in my book.

Speaking of big moves, Merck's been on a shopping spree. Wall Street might get nervous if they drop another bombshell, but I trust their judgment. These aren't just random buys; this is how they protect their future cash flows. Besides, any short-term drama from a big deal could be a sweet buying opportunity.

And while Merck’s still figuring out which one could be the next big thing, the true star of the show, until that patent cliff arrives, is still Keytruda.

That beast is still growing and could keep going strong for years, especially in early-stage treatments. Plus, that new subcutaneous version of this blockbuster treatment? Talk about extending the gravy train well past the generic competition.

Let's also check out the other horses in this race: sotatercept's early sales numbers, a potential FDA approval for that HER2 drug, the saga of gefapixant's third shot (or not), and the cash potential of V116 and Welireg. Not to mention, juicy updates on that Moderna (MRNA) partnership…Merck’s next months could be packed with surprises.

As for this company’s dividend? Decent track record, but don't expect fireworks after the recent hike. As for buybacks, Merck seems to have...other priorities right now. Those profits are pouring straight into the growth pipeline.

The bottom line: While some of Big Pharma looks pale lately, Merck is still bringing it, share price gains and all. Sure, that gefapixant rejection stings. But Keytruda keeps roaring, and Merck's pipeline is buzzing with potential. I'm not sweating earnings.

Merck's got contingencies lined up for the Keytruda patent apocalypse - new drugs, deals, maybe even extending Keytruda itself. They're playing for the long game here. I suggest you buy the dip.

April 25, 2024

Diary, Newsletter, Summary

Global Market Comments
April 25, 2024
Fiat Lux

Featured Trade:

(RISK CONTROL FOR DUMMIES) or (THE HEADS I WIN, TAILS YOU LOSE STRATEGY),
(SPY), (FCX), (NVDA), (TLT)

Risk Control for Dummies

Diary, Newsletter

Whenever I change my positions, the market makes a major move, suffers a “black swan” or reaches a key level, I stress test my portfolio by inflicting various scenarios upon it and analyzing the outcome.

This is common practice and second nature for most hedge fund managers.

In fact, the larger ones will use top-of-the-line mainframes powered by $100 million worth of in-house custom programs to produce a real-time snapshot of their positions in hundreds of imaginable scenarios at all times. This is the sort of thing Ray Dalio used to do.

If you want to invest with these guys feel free to do so.

They require a $10-$25 million initial slug of capital, a one-year lock-up, charge a fixed management fee of 2%, and a performance bonus of 20% or more.

You have to show minimum liquid assets of $2 million and sign 100 pages of disclosure documents.

If you have ever sued a previous manager, forget it.

And, oh yes, the best-performing funds have a ten-year waiting list to get in, as with my friend David Tepper. Unless you are a major pension fund like the State of California, they don’t want to hear from you.

Individual investors are not so sophisticated and it clearly shows in their performance, which usually mirrors the indexes with less of a large haircut.

So, I am going to let you in on my own, vastly simplified, dumbed down, the seat of the pants, down-and-dirty style of scenario analysis and stress testing that replicates 95% of the results of my vastly more expensive competitors.

There is no management fee, performance bonus, disclosure document, lock up, or upfront cash requirement. There’s just my token $3,500 a year subscription and that’s it.

To make this even easier for you, you can perform your own analysis in the Excel spreadsheet I post every day in the paid-up members section of Global Trading Dispatch.

You can just download it and play around with it whenever you want, constructing your own best-case and worst-case scenarios. To make this easy, please log into your Mad Hedge Fund Trader, click on “MY ACCOUNT”, then click on Global Trading Dispatch, then Current Positions, and download the Excel spreadsheet for April 25, 2024.

There you will find my current trading portfolio showing:

Current Capital at Risk

Risk On

(NVDA) 5/$710-$720 call spread 10.00%

(TLT) 5/$82-$85 call spread 10.00%

(FCX) 5/$42-$45 call spread 10.00%

Risk Off

(NVDA) 5/$960-$970 put spread -10%

Total Net Position 30.00%

Total Aggregate Position 40.00%

Since this is a “for dummies” explanation, I’ll keep this as simple as possible.

No offense, we all started out as dummies, even me.

I’ll the returns in three possible scenarios: (1) The (SPY) is unchanged at $505 by the May 17 expiration of my front month option positions, which is 15 trading days away, (2) The S&P 500 rises 5.0% to $530 by then, and (3) The S&P 500 falls 5.0% to $480.

Scenario 1 – No Change

The value of the portfolio rises from a 5.07% profit to a 13.00% Profit. My existing longs in (FCX), (TLT), and (NVDA) expire at their maximum profits. So does my one short in (NVDA).

Scenario 2 – S&P 500 rises to $530

You can easily forget about the long positions in (FCX), (TLT), and (NVDA) as they will expire well in the money. If they go up fast enough, I might even take an early profit and roll into a June or July position. Our short in (NVDA) might take some heat. But in the current environment of going into the summer doldrums, there is no way (NVDA) shoots up to a new all-time high, right where our strike prices were set at on purpose. The net of all this is that our portfolio should expire at a maximum profit for the year at up 13.00%.

Scenario 3 – S&P 500 falls to $480

All three of my stocks fall, but not enough for my three call spreads to go out of the money. (FCX) will stay above my stop-out level at $45, (TLT) at $85, and (NVDA) at $720. Obviously, the short in (NVDA) becomes a chipshot. Again, we expire at a maximum profit for the year at up 13.00%.

Up we make money, down we make money, sideways we make money, I like it! This is why I run long/short baskets of options spreads whenever the market allows me. It’s a “Heads I win, tails you lose strategy”.

If the market goes up, I’m looking for stocks to sell. If the market goes down, I'm looking for securities to buy. Boy low, sell high, I’m thinking of patenting the idea.

This is the type of extremely asymmetric risk/reward ratio hedge funds are always attempting to engineer to achieve outsized returns. It is also the one you want after the stock market has risen by 25% a year since the 2020 pandemic.

All that’s really happened is that the world has gone from slightly good to better this year. I can rejigger this balance anytime I want. If I think that a change in the economy or the Fed’s interest rate policy is in the works.

Keep in mind that these are only estimates, not guarantees, nor are they set in stone. Future levels of securities, like index ETF’s are easy to estimate. For other positions, it is more of an educated guess. This analysis is only as good as its assumptions. As we used to do in the computer world, garbage in equals garbage out.

Professionals who may want to take this out a few iterations can make further assumptions about market volatility, options implied volatility or the future course of interest rates. Keep the number of positions small to keep your workload under control. I never have more than ten. Imagine being at Goldman Sachs and doing this for several thousand positions a day across all asset classes.

Once you get the hang of this, you can start projecting the effect on your portfolio of all kinds of outlying events. What if a major world leader is assassinated? Piece of cake. How about another 9/11? No problem. Oil at $150 a barrel? That’s a gimme. What if there is an Israeli attack on Iranian nuclear facilities? That might take you all of two minutes to figure out. The Federal Reserve launches a surprise interest rate rise? I think you already know the answer.

The bottom line here is that the harder I work, the luckier I get.