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
June 6, 2024
Fiat Lux
Featured Trade:
(JULY 2 VANCOUVER CANADA STRATEGY LUNCHEON),
(TAKE A LEAP INTO LEAPS)
(MSFT), (AMZN), (GOOGL), (BIDU), (NVDA), (IBM)
I've been around the block a few times, and I've seen my fair share of tech revolutions - from the rise of the personal computer to the dawn of the internet. But nothing, and I mean nothing, has gotten me as fired up as the AI boom.
It all started back in the early 2010s. I was at a conference in Silicon Valley, rubbing elbows with some of the biggest brains in tech.
That's when I first heard rumblings about this thing called "machine learning." At first, I brushed it off as just another buzzword - something for the eggheads to geek out over.
But then I met this young hotshot named Andrew Ng. He was talking about how machines could learn to recognize patterns, how they could make predictions, and how they could even teach themselves to play complex games like chess and Go.
And it hit me like a ton of bricks - this wasn't just some passing fad. This was the future.
Fast forward to today, and that future is here. AI is no longer a niche academic pursuit - it's a trillion-dollar industry that's reshaping every facet of our lives.
Now, I know what you're thinking. "John, isn't this just another tech bubble waiting to burst?" And sure, I get it. We've all been burned before. But let me tell you something - AI is different.
This isn't just about some fancy new gadget or app. This is about a fundamental shift in the way we live, work, and do business.
Just look at the numbers. Global AI funding hit a staggering $93.5 billion in 2021, up from just $36 billion in 2020. That's a 160% increase in just one year.
And it's not just the Silicon Valley giants getting in on the action. Countries like China and France are pouring billions into AI research and development, racing to gain an edge in this new digital frontier.
Let’s focus on France for now. They've got homegrown heroes like Mistral AI and H turning heads and attracting big-name investors faster than you can say "bonjour."
Mistral AI, backed by Microsoft (MSFT), is already flirting with a $6 billion valuation just a year after setting up shop.
And H? They've raised a staggering $220 million from the likes of luxury kingpin Bernard Arnault (aka the richest man in the world).
Even President Macron is getting in on the action, vowing to make France the undisputed king of the AI hill. He's throwing cash at research centers and promising to open "AI cafes" nationwide.
Can you imagine discussing the finer points of machine learning over a croissant? Sacrebleu!
But it's not just the French République making waves. US giants like Google (GOOGL), Amazon (AMZN), and China's Baidu (BIDU) are all in on the AI game.
And don't even get me started on NVIDIA (NVDA) and IBM (IBM). These companies are building the picks and shovels of the AI gold rush, and they're poised to make a killing.
So, what does this mean for us? It means we've got a once-in-a-generation opportunity on our hands.
The AI market is set to hit $1.8 trillion by 2030, growing at a mind-boggling 38.1% annually.
To put that in perspective, that's like the entire GDP of Canada, but just for AI. And it's not just one industry - AI is seeping into every nook and cranny of the economy, from healthcare to finance to transportation.
A recent survey by McKinsey found that 56% of companies are already using AI in at least one function, and that number is only going to grow.
And get this - by 2025, AI could be driving a whopping $15.7 trillion in global economic growth. That's more than the current output of China and India combined.
On top of all these, though, here's something else to consider: as the AI race heats up, governments are scrambling to figure out how to regulate this brave new world.
Some want to slam on the brakes, while others, like ex-Google boss Eric Schmidt, are urging Europe to step on the gas and invest like crazy.
In fact, the EU has already pledged to invest $21.758 billion per year in AI over the next decade.
So, here's my advice to you. Don't sit on the sidelines and watch this opportunity pass you by. Add those companies I talked about to your watchlist.
As for me? I may be an old dog, but I've still got a few new tricks up my sleeve. And you can bet your bottom dollar that I'll be right there in the thick of things, riding this AI wave all the way to the top.
See you on the other side.
Mad Hedge Technology Letter
June 5, 2024
Fiat Lux
Featured Trade:
(A HIGH RISK STRATEGY)
(NVDA), (AAPL)
“Heavy losses” is something that any investor would not want to hear but over time, it has become synonymous with short sellers.
Tech stocks are unusually volatile so it has been fashionable in the past to start a fund proclaiming that great performance can be secured by finding the most likely tech stocks to drop.
It’s like shooting fish in a barrel? Right?
Not even close.
In reality, it is hard to predict a big drop and identify the perfect timing in which tech stocks will blow up.
Even if a short seller guesses right, the timing could be off by years and to hold a position forever eats at the profitability.
If anyone knows a successful trader that has made a nice living shorting Nvidia (NVDA) in the last year then I would like to meet that person.
Likewise goes for Apple over their massive bull run.
Shorting the best tech stocks in the world usually meant financial underperformance.
Just in recent memory, the whole Gamestop spike up when a bunch of hedge funds had massive short positions.
Short sellers were the ones run over by the GameStop phenomenon.
Retail traders have flexed their muscles again in the past two months, with shares of several meme-stock favorites including GameStop surging anew.
Meme-stock dramas demonstrate a “gamification” of the market that has undermined the whole short-selling industry.
And remember that GME is a garbage company with paltry revenue that surges for alternative reasoning.
Practitioners say it’s getting increasingly difficult to attract new cash for a risky bearish approach (the downside of short selling is theoretically limitless), whether for an activist firm or simply a short-biased fund.
Assets in his RC Global Fund, which wagered against tech companies both in China and the US, had dropped to $200 million from about $1.7 billion six years earlier. The Asia positions had paid off, but going against mighty American megacaps hammered performance.
The longer the cycles go, the more short selling seems to be simply a bad investment strategy and out of favor.
The idea is that a relentlessly rising market not only creates the kind of overvalued companies short sellers will ultimately feast on, it also masks badly run and sometimes fraudulent businesses.
That may be especially true when short selling is at such a low ebb since bearish activity has been shown to act as a brake on bad corporate behavior and keep the prices of companies with questionable financial statements in check.
Yet even as central bankers around the world have lifted interest rates back to levels not seen in decades — usually a handbrake on equity markets — stocks have generally churned higher, making it difficult to sustain bearish bets for any length of time.
In an era of 5% interest rates, it is not viable to borrow that capital to bet against skyrocketing AI stocks like Nvidia.
Why not ride the elevator up with Nvidia?
The absence of short sellers has meant “all systems go” for tech stocks and they have been off to the races with almost no pushback.
The bullishness has been so intense that the faster rate hike cycle in the modern financial history has done little to dissuade investors from pouring into tech stocks.
As interest rates lower from 5% to 2 or 3, tech stocks are likely preparing to lift off into another stratosphere.
If lowering rates catalyzes tech stocks to the upside, imagine how demoralizing for the few if any short sellers left shorting tech.
I am bullish on tech stocks in the short-term with the Central Bank telegraphing a drop in Fed Funds rates.
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
(AUSTRALIAN RED TAPE IS A REAL SPOILER FOR FOREIGN DATA CENTRE OPERATORS)
June 5, 2024
Hello everyone,
Established data centre operators in Australia have an economic moat. Red tape appears to be preventing foreign data centre owners from operating in Australia.
There is a growing appetite for more data storage and management, which is being pushed along by the AI technology revolution. Morgan Stanley points to the fact that Australian companies such as Goodman Group and NextDC have a special home advantage. They are potentially better positioned because they have significant, well-established land banks that hold large value.
Analysts at Morgan Stanley point to the challenging issues global competitors are encountering. Difficulties with working with local councils and utilities are stalling progress, and then there is the cost of development approvals and so on.
That advantage for existing Australian companies will provide attractive opportunities. Morgan Stanley expects data centre operators – the sector as a whole – to grow at a compound annual growth rate of 13% out to 2030.
It’s all good news for Goodman. Analysts at Morgan Stanley see the market pricing in a data centre pipeline of $9 billion, but it puts that figure at more like $20 billion.
Goodman also has significant flexibility with the land bank, where it can sell with approvals or develop the land to client specifications. Land that is developed into data centres is valued at a significant premium to that of typical industrial use, providing an attractive return-on-investment option should the company not want to hold the land long-term.
NextDC has a similar narrative to Goodman, with recent contracts confirmed and international expansion in the pipeline.
This sector has growth written all over it.
(This is an article of interest, not a recommendation to purchase Goodman Group or Next DC).
Natural disasters are a real threat to a large percentage of Australian properties.
Consider this scenario. You have finally purchased your home. And for a while, all is well in your world. Then a natural disaster strikes. Suddenly, everything is not so rosy anymore. Are you insured? If you are insured, will the insurance company cover all costs?
In Australia, many properties are at risk of being severely damaged or lost to a natural disaster. And what makes the situation even worse is the fact that premiums are so high that many have chosen not to insure. On top of that, in some areas that have a high flood risk, insurers may be unlikely to insure your property anyway.
Research shows that half of all Australian homes are at risk of natural disasters. 5.6 million properties are at risk of bushfires, almost 1 million are at risk of floods and thousands more are threatened by coastal erosion.
The NSW suburb of Ballina has the highest flood risk in the country. Victoria’s Upper Yarra Valley has the highest bushfire risk and Queensland’s Surfers Paradise has the biggest coastal erosion threat.
From my research, it seems many Australians are unaware of the dangers and have become very complacent.
QI CORNER
Cheers,
Jacquie
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