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
(CONSUMERS ARE BEING SWINDLED IN THE BANKING WORLD)
July 24, 2024
Hello everyone,
Savings account traps: why billions are disappearing
Research shows that Australian adults are losing an average of $1500 per person every year through using the wrong savings accounts.
The research paper by financial services technology company Upworth says consumers collectively miss out on about $30 billion in interest annually, often because of confusing accounts, information overload, or overconfidence.
It says cash deposits currently pay between 0% and 5.75%, and almost three-quarters of bonus interest savings accounts do not pay the bonus rate because savers don’t meet the conditions required.
Upworth illustrates the fact that complex product design often makes it hard to compare products. The headline interest rate is a very different concept from the effective interest rate an individual earns. Base rates, bonus rates, and introductory rates all come in the mix.
Upworth co-founder Maxime Chaury said people with deposits were lending money to their banks, and banks were trying to minimize their borrowing costs.
Chaury points out one of the easiest ways to do this is to make their product offering confusing and have as many low-interest-rate savings accounts as possible and as few high-interest-rate savings accounts. And what that does is increase the chances you will end up with a low-interest rate account.
Chaury says that people had psychological biases that resulted in them earning less interest.
This included overconfidence, loss aversion, and preferring the status quo. Information overload also played a role. We all know that when we are faced with too many options and an overload of information, we are typically overwhelmed. And rather than engage with any complexity, we are likely to default to inaction. And the banks are counting on that behaviour.
Chaury said conditions attached to many accounts – such as minimum monthly deposits or limited withdrawals – could drastically reduce interest, while introductory interest rates were only temporary, typically three to six months.
Banks understand many people will never change their savings account, despite the rate dropping significantly after the introductory period.
Savings rates are littered with fine print (that many people never read), designed to limit the amount of interest a bank has to pay its customers, from balance-based rate tiers, age minimums and maximums, and monthly bonus rate conditions.
There are millions of big bank online saver customers who signed up for an introductory rate five or ten years ago, which gave them a higher interest rate for the first few months or so and have now been earning next to nothing for years because they haven’t been bothered to switch to a more competitive account.
Australians aren’t the only ones confused about their Savings Accounts.
The largest cybersecurity breach in Australian history
Cybersecurity experts say the highly sensitive data of 12.9 million Australians, stolen from eScripts provider Medi Secure, has already been sold on the dark web and is up for sale again.
MediSecure confirmed in May it was the victim of a ransomware attack in 2023 and last week revealed the scale of the breach, which puts it among the largest in Australian history.
Data stolen includes names, phone numbers, addresses, and Medicare numbers, as well as sensitive medical information such as which drugs people had been prescribed and why they were taking them. It was previously unclear if the data had been sold, but cyber threat intelligence analysts say there’s a strong indication that at least one sale has taken place.
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
Global Market Comments
July 24, 2024
Fiat Lux
Featured Trade:
(WHAT AI CAN AND CAN’T DO FOR YOU)
(AAPL), (GOOGL), (AMZN), (AMZN), (TSLA), (NVDA), (MU)
The future has arrived!
Over the last few weeks, I picked up some astonishing developments in artificial intelligence.
*Mainframes at Stanford University and the University of California at Berkeley were given a direct connection to speak freely with each other. Within 30 minutes they dumped English as a means of communication because it was too inefficient and developed their own language which no human could understand. They then began exchanging immense amounts of data. Fearful of what was going on, the schools unplugged the machines after only eight hours.
*All of the soccer videos ever recorded were downloaded into two robots, but they were not taught how to play the game or given any rules. Not only did it figure out how to play the game, it developed plays and maneuvers no one in the sport has ever thought of in its 150-year history.
*It normally takes a PhD candidate five years to 3D map a protein. An AI app 3D mapped all 200 million known proteins in seven weeks, shortcutting one billion years of PhD level research with existing technology. These new maps have already been used to design a malaria vaccine and enzymes that eat plastic. They will soon cure all human diseases.
*A developer asked an AI program a half dozen questions in Bengali, which is not an easy language. Within an hour it spoke the language fluently, without any instructions to do so.
By now, word has gotten out about the incredible opportunities AI presents. Our only limitation is our own imagination on how to use it. AI will instantly triple the value of any company that uses it.
What has changed is that we now have millions of computers powerful enough and an Internet fast enough to realize its full potential.
It all vindicates my own long-term vision, unique in the investing community, that in the coming decade, immense technology profits will more than replace the trillions of dollars worth of Fed liquidity we feasted on during the 2010s. Extended QE is proving just a bridge to a much more prosperous future.
The Internet has created about $10 trillion in value since its inception. AI will create triple that in half the time. That’s what will take the Dow from 33,000 to 240,000.
No surprise then that the top ten AI companies have delivered 120% of the stock market gains so far in 2023. The other 490 companies in the S&P 500 have either gone nowhere to down.
However, there are many things that AI can’t do. Here is the list.
1) AI Can’t Predict large anomalous events, otherwise known as Black Swans. AI takes past trends and extrapolates them into the future. It in no way could have seen 9/11, the 2008 crash or the pandemic coming, although I warned my hedge fund clients for years that we were overdue. All of the AI stock trading apps I have seen so far, including my own, max out at 90% accuracy. The other 10% is accounted for by black swans: earnings shocks, foreign crises, sudden FDA stage three denials, surprise legal judgments, foreign invasions, or the murder of a key man in a tech company, as recently happened in San Francisco.
2) AI Lies and Lies Often. AI was asked to write a scientific paper on a specific subject. It came back with an elegant and well-researched piece. The problem was that all of the books it referred to didn’t exist. AI learned early to tell humans what they want to hear.
3) AI Requires Exponential Computing Capacity. Only five companies have the muscle to pursue true AI. No surprise that these, including (AAPL), (GOOGL), (AMZN), (AMZN), and (TSLA), account for the bulk of stock market performance this year. This won’t always be the case. Some 30 years ago it required thousands of mainframes to contain all human knowledge. Today that task can be accomplished by a cheap $1,000 laptop.
4) Internet Capacity Will Be a Limiting Factor for AI for Years. To accommodate the traffic that is taking place right now, the Internet will have to grow 500% practically overnight, and that is with five main players. What happens when we have 5 million? That’s why NVIDIA (NVDA) has gone nuts.
5) AI Hallucinates, as anyone who drives a Tesla will tell you. If a car makes a left turn in Florida, the 4 million vehicles in the world’s largest neural network learn from it. The problem is that sometimes the data from that Florida car is placed directly in front of a California one, prompting it to brake abruptly, causing accidents. This is known as “ghost breaking.” I have explained to Elon Musk that his database has grown so large, eight video feeds per 4 million cars going back many years and billions of miles, that he may be going behind the limits of known physics.
6) While the Growth Opportunities for AI are Unlimited, the ability of humans and society to absorb it isn’t. All jobs will be affected by AI and millions destroyed, starting with low-level programmers and call centers, and millions more will be created. People are talking about regulating AI but have no idea where to start. Maybe with (AAPL), (GOOGL), (AMZN), (AMZN), and (TSLA)?
7) The Terminator Issue. Can AI be controlled? Or have we started an unstoppable chain reaction, as with an atomic bomb? AI researchers have noticed a disturbing issue where AI programs are learning skills on their own, without our instructions. This is referred to as “emergent properties.” If AI is using humans as its example, we can’t exactly count on it to be benign.
Needless to say, AI will be at the core of your investment approach, probably for the rest of your life.
2014 at Micron Technology
Mad Hedge Biotech and Healthcare Letter
July 23, 2024
Fiat Lux
Featured Trade:
(DON'T SLEEP ON THIS BIOTECH SLEEPER)
(ATHA), (BIIB), (LLY)
To date, 6.7 million Americans over 65 are already wrestling with Alzheimer's, a number set to double by 2050.
It's a demographic disaster, a slow-motion train wreck that Big Pharma's been slow to recognize.
Companies, including Biogen (BIIB) and Eli Lilly (LLY), working on this are still fiddling with amyloid plaques and tangled proteins, like a plumber trying to fix a leaky nuclear reactor with duct tape.
But one scrappy biotech outfit, Athira Pharma (ATHA), is taking a different tack. They're not chasing the same old tired targets.
Instead, they're looking at the brain's own repair mechanisms, trying to kickstart the engine instead of just patching up the exhaust. It's a high-risk, high-reward play, but isn't that what makes this game so damn exciting?
Athira targets the neurotrophic hepatocyte growth factor (HGF) and its sidekick, the MET receptor. Don't let the fancy names fool you - these little fellas are the unsung heroes of your noggin.
Think of HGF and MET as the brain's maintenance crew. They're not just sitting around twiddling their thumbs. They're constantly on the job, patching up neurons and keeping the lights on upstairs.
Athira's betting the farm that if they can juice up this dynamic duo, they might just be able to slow down the Alzheimer's wrecking ball, or heck, maybe even throw it in reverse.
It's a bold move, I'll give 'em that. While everyone else is trying to sweep up the mess Alzheimer's leaves behind, Athira's aiming to stop the party before it even starts.
If they're right, it could be like discovering fire all over again in the world of neuroscience.
Speaking of which, Athira's lead drug, fosgonimeton (try saying that three times fast), just hit a milestone that's got Wall Street perking up its ears. They've wrapped up dosing in their Phase 2/3 LIFT-AD trial for mild-to-moderate Alzheimer's.
We're talking about 315 patients who've been getting daily shots of this stuff (or a placebo) for 26 weeks. It's like a six-month-long neuroscience party, and we're all waiting to see who's left standing when the lights come on.
Interestingly, Athira's playing it smart with their ongoing Phase 2/3 LIFT-AD trial. They're using something called the Global Statistical Test (GST) as their primary endpoint. It's like they're giving themselves better odds at the casino.
This GST is designed to catch even the slightest whiff of a clinically meaningful treatment effect. It's like using a finely-tuned bloodhound instead of a myopic poodle to find your car keys.
And here's another thing that caught my attention: 85% of the folks from their trials signed up for the after-party - the open-label extension study. That's like people sticking around to help clean up after a rager.
When was the last time you saw that kind of enthusiasm for anything, let alone a clinical trial?
But Athira isn't content with just one target. They've also got fosgonimeton in the ring against Parkinson's with their SHAPE trial.
This Phase 2 slugfest has already shown some positive jabs on cognitive measures for patients with Parkinson's disease dementia and Dementia with Lewy bodies.
And because apparently two fights aren't enough, Athira's also thrown fosgonimeton into the ALS arena. This early-stage trial is like watching a fighter warming up in the gym - we don't know how it'll play out, but the potential is intriguing.
So, what’s next? Well, we’re now staring down the barrel of what could be the biggest shakeup in Alzheimer's research since... well, since we started researching Alzheimer's.
Athira's betting big on their HGF/MET approach, and if it pays off, we might be looking at the medical equivalent of striking oil in your backyard.
Mark your calendars for the end of Q3 2024. That's when we'll find out if fosgonimeton is the real McCoy or just another pie-in-the-sky biotech dream. And don't forget the fireworks show in Madrid this October - Athira's set to strut their stuff at the Alzheimer's conference, and you can bet your bottom dollar I'll be watching.
Global Market Comments
July 23, 2024
Fiat Lux
Featured Trade:
(SOME SAGE ADVICE ON ASSET ALLOCATION)
Asset allocation is the one question that I get every day, which I absolutely cannot answer.
The reason is simple: no two investors are alike.
The answer varies whether you are young or old, have $1,000 in the bank or $1 billion, are a sophisticated investor or an average Joe, are in the top or the bottom tax bracket, and so on.
This is something you should ask your financial advisor if you haven’t fired him already, which you probably should.
Having said all that, there is one old hard and fast rule, which you should probably follow.
It is prudent to own your age in bonds. So, if you were 70, you should have had 70% of your assets in fixed-income instruments and 30% in equities.
That’s a lot easier to do today because 90-day T-bills yield an astonishing 5.4% while ten-year bonds bring in 3.6%.
You can also add high dividend-paying stocks for bonds. You can get 5% a year or more in yields these days, and get a great inflation hedge, to boot. Crown Castle International (CCI) is now paying a 5.5% dividend and last time I checked they are still building 5G cell phone towers, (CCI)’s specialty.
You will also own what everyone else in the world is trying to buy right now, high growth US stocks, the big FANG’s.
You will get this higher return at the expense of higher volatility. So just turn the TV off on the down days so you won’t get panicked out at the bottom.
That is until we hit the next recession. Then all bets are off.
I hope this helps.
John Thomas
The Diary of a Mad Hedge Fund Trader
It's Time for the Wakeup Call
“The bubble is in the bond market, not the stock market,” said Leon Cooperman, CEO of Omega Advisors, an original investor in my 1990s hedge fund.
