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 on 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
August 8, 2024
Fiat Lux
Featured Trade:
(THE IDIOT’S GUIDE TO INVESTING),
(TSLA), (BYND), (JPM)
(TESTIMONIAL)
Until July 1, everyone seemed to have pretty much the same investment strategy.
What would you do if I recommended an investment strategy that would cause your accountant to disown you, your inheritance anticipating children to sue you, and your wife to file for divorce?
Chances are you would designate all my future mailings as SPAM, unfriend me from Facebook, and tear my card out of your Rolodex.
Well, here is anyway. I’ll call it my “Ignore All Risk” portfolio. It’s really quite simple. This is all you have to do:
1) Buy stocks that have already gone up the most, boast the highest year-to-date performance, and have momentum overwhelmingly on their side. Only do what every else is doing. Go for the easy trade.
2) Buy stocks with the highest price earnings multiples. I’m talking mid to high hundreds.
3) Lean towards stocks with the highest short interest. GameStop (GME) was a perfect example of this.
4) Put every free penny you have into cryptocurrency bets, like Bitcoin
5) Ignore all valuations and fundamentals. Don’t waste a minute reading a single page of research, especially from an old-line legacy broker. Seeking Alpha, where none of the information is independently verified, is a far better source of information than JP Morgan (JPM).
6) Big institutions should allocate all of their assets only to their youngest traders and portfolio managers. Old farts, or anyone with any memory or experience whatsoever, should be completely ignored. A person who’s never seen a stock go down is now your best friend.
7) Oh, and there is one more thing. Go hugely overweight bonds over equities in the face of unprecedented and massive government borrowing at all-time low interest rates.
Any professional manager pursuing an approach like this would surely get fired, lose all of their securities registrations and licenses, and get banned from the industry for life.
But there is one big offset to these career-ending consequences. They would also be the top-performing money manager of the year, beating the pants off of all competitors. Every investment they made this year worked.
They would be regarded as trading genius on par with my friends Paul Tudor Jones and Appaloosa’s David Tepper. If they invested their own money using this strategy, they would be so filthy rich they wouldn’t care what happened to themselves.
We are now in an environment where EVERY trade is crowded, be they in equities, fixed income, or foreign exchange. There is no value anywhere. The metaphors coming to mind are legion. There are too many passengers on one side of the canoe. The lemmings are mindlessly stampeding towards a giant cliff. I could go on.
Of course, incredible excess liquidity is to blame. That is the only time both stocks AND bonds go up at the same time. The world’s central banks have been flooding the globe with cash for decades now, and the pandemic has given them license to increase these efforts vastly.
The end result has been to overvalue all assets classes, be they paper or hard. Cash is trash, especially in Japan and Europe where until recently you had to PAY banks to take your money.
The fact is that shares with the fastest price appreciation over the past 12 months are trading at valuations that are almost 50% higher than normal.
I have traded and invested through all of this before; the Nifty Fifty of the early 1970’s, the Great Japan Bubble of the 1980’s, the Dotcom Bubble of the 1990’s, and of course the 2007 bubble top. And there is one thing all of these market apexes have in common. They inflated a lot longer than anyone expected, sometimes FOR YEARS!
You could be conservative, go into 100% cash, and just stay on the sidelines until mass groupthink, hysteria, and insanity leave the market. But that could be a very long time.
And after more than a half-century in this business, there is one thing I know for sure. Traders who don’t trade, investors who don’t invest, and newsletters that don’t recommend all have one thing in common. THEY GET FIRED. Just because investing gets hard is no reason to quit the market.
The Japanese have a great expression for this: “When the fool is dancing, the greater fool is watching.” So, I’m going to start dancing away. What will it be? The cha cha, the limbo, or the Watusi?
Hmmmm. Let me see. Let me Google what everyone else is doing.
I would like to say a big Thank You for presenting such an amazing event, the Mad Hedge Traders & Investment Summit.
I really enjoyed it and learned a lot of amazing insights that I never knew were possible.
I do not know if you guys have sent out the recorded copies or if these are still in the works so let me know.
Can you please send me a copy or let me know how the process of this is going as I would really like to hear some of these speakers again.
Absolute Appreciation and Wishing You All Prospering Success!
Best Regards,
Troy
Note: the link to the Summit replay is found here.
"Everything is expensive now. Worries about the future can cause safe assets to become highly priced ... I call it the 'Titanic Effect.' When the Titanic was going down, people would pay a fortune for anything that floats. We may be in a Titanic situation now," said my buddy, Nobel Prize winner Robert Shiller.
(EADSY), (BA), (AAL), (DAL), (UAL), (ACHR), (EVEX), (JOBY), (LILM), (EVTL), (GOOG), (TSLA), (AI), (LAZR), (CPTN), (INVZ), (MBLY), (NRNC), (STLA), (DAL), (NVDA)
It looks like the Jetsons' future is finally landing in our backyard. Minnesota just became the second U.S. state to roll out the welcome mat for flying cars, following New Hampshire's lead back in 2020.
They're calling it the "Jetsons Law," and it's got me more excited than a kid with a new remote-control airplane.
Now, before you start plotting your airborne commute to beat the morning traffic, let's pump the brakes (or should I say, adjust the flaps?). We're still a few years away from skyways replacing highways, but the regulatory runway is being paved as we speak.
This new law in Minnesota is letting folks register their "roadable aircraft" as motor vehicles, using tail numbers instead of license plates. It's like your car and your private jet had a baby, and the government is finally acknowledging its existence.
But don't get any ideas about taking off from your driveway – these flying cars still need to use designated airfields for takeoffs and landings. The FAA isn't ready to see Ford Focuses sprouting wings just yet.
Now, you might be asking, "Who's actually building these things?"
Well, we've got the old guard of aviation, Airbus (EADSY) and Boeing (BA), throwing their considerable weight behind flying taxis and eVTOL (that's "electric vertical takeoff and landing" for those of you who don't speak aerospace) prototypes.
Not to be outdone, the airlines are getting in on the action too. American Airlines (AAL), Delta (DAL), and United (UAL) are all pouring millions into this pie-in-the-sky idea.
But the real action is with the new kids on the block.
We're talking companies like Archer Aviation (ACHR), Eve Air Mobility (EVEX), Joby Aviation (JOBY), Lilium (LILM), and Vertical Aerospace (EVTL).
These upstarts are betting the farm on urban air mobility, and let me tell you, the numbers they're throwing around are enough to make your head spin faster than a helicopter rotor.
Take Archer Aviation, for example. These folks are so confident in the future of urban air mobility that they're projecting a market worth $1 trillion by 2030.
To put that in perspective, that's about the same as the entire economy of Mexico. I'm not saying we should all sell our cars and invest in personal helicopters just yet, but those are some eye-popping figures.
Interestingly, most car manufacturers are sitting this one out. They're more focused on self-driving cars and electric vehicles. It's like they're saying, "Let's master the road before we conquer the skies."
Smart move or missed opportunity? Only time will tell.
Now, here's where it gets really interesting. AI is set to play a bigger role in these flying cars than a backseat driver on a family road trip. We're talking autonomous flight, predictive maintenance, and traffic management systems that would make air traffic controllers obsolete.
Companies like Alphabet (GOOG) (through its Waymo subsidiary) and Tesla (TSLA) are already knee-deep in self-driving tech. It's not a huge leap to imagine that same tech guiding your flying car safely through the skies.
And when it comes to keeping these sky-high jalopies in tip-top shape, AI companies like C3.ai (AI) and Uptake Technologies are chomping at the bit to apply their predictive maintenance magic.
But let's not forget about the elephant in the room – or should I say, the jetpack in the garage? Safety.
We're talking about vehicles that need to be roadworthy and airworthy. It's like asking your SUV to also be a submarine. That's where companies like Luminar Technologies (LAZR), Cepton (CPTN), and Innoviz Technologies (INVZ) come in.
These folks are working on lidar sensors that could help your flying car avoid collisions, whether you're cruising down Main Street or soaring over it.
And let's not overlook the brains of the operation. Mobileye (MBLY) and Cerence Inc. (CRNC) are cooking up AI systems that could make piloting a flying car as easy as asking Siri for directions.
Imagine telling your car, "Take me to work," and then sitting back to enjoy your coffee while it handles the rest. That's the kind of future we're looking at.
Now, I know what you're thinking. "John, this all sounds great, but how do I get a piece of this airborne action?" Well, here's where it gets tricky.
The flying car industry is still in its infancy. It's like trying to invest in smartphones back when the Motorola brick was cutting-edge technology.
But if you're looking to dip your toes in these high-flying waters, companies like Archer Aviation and Joby Aviation are good places to start. They're making real progress in eVTOL technology and have partnerships with big names like Stellantis (STLA) and Delta Air Lines (DAL), respectively.
For those of you who prefer a more grounded approach (pun absolutely intended), keep an eye on companies developing the underlying technologies.
Nvidia (NVDA), for instance, isn't building flying cars, but their AI chips could very well be the brains behind them.
Remember, though, this is a long-term play. We're talking years, maybe even decades, before flying cars become as common as Ubers.
But for those with patience and a high tolerance for risk, the potential rewards could be sky-high.
In the meantime, I'll be keeping my feet firmly on the ground and my eyes on the horizon. After all, in the world of investing, sometimes the biggest gains come from spotting the next big thing before it takes off.
And in this case, that takeoff might just be literal.
So, while I'm excited about the potential, I'm not rushing to sell my car just yet. I'll be watching this space closely, ready to jump in when the time is right.
Because in investing, as in aviation, timing is everything.
Mad Hedge Technology Letter
August 7, 2024
Fiat Lux
Featured Trade:
(TECH OUTAGE BITES)
(DAL), (MSFT), (CRWD)
Microsoft (MSFT) dishing out blame to Delta Airlines (DAL) is yet another sign that we need a pullback in tech shares or at least some flat lining.
Arrogance comes in many forms, but evading accountability is definitely one of them.
It almost appears in the past few quarters that tech companies feel they can get away with almost anything, because they think they are the greatest thing since slice bread.
Throw in the generative A.I. narrative that has juiced up tech stocks even more and one can imagine that these companies must own a pretty high opinion about themselves and the work that they do.
But once sushi hits the fan then suddenly it is everyone else’s fault and they wash their hands of all their sins.
I am surprised that MSFT did not take a more humble stance from the global cyber outage and instead came out swinging hoping to defend their reputation as one of the leading tech companies.
Personally, I do believe that protecting ones reputation at all costs isn’t free especially when partial blame should be incurred.
Microsoft directly blamed Delta Air Lines for its multi-day struggle to recover from a global cyber outage that led it to cancel more than 6,000 flights.
A software update last month by global cybersecurity firm CrowdStrike triggered system blackouts for Microsoft customers, including many airlines. But disruptions subsided the next day at other major U.S. carriers while persisting at Delta.
Microsoft said its preliminary review suggested that Delta, unlike its competitors, apparently had not modernized its IT infrastructure.
Delta, however, said it has invested billions of dollars in IT capital expenditures since 2016, in addition to the billions it spends every year in IT operating costs.
The flight disruptions stranded hundreds of thousands of travelers and are estimated to cost the Atlanta-based airline $500 million. Delta is also facing an investigation from the U.S. Transportation Department for the disruptions.
It has hired prominent litigator David Boies of Boies Schiller Flexner, known for high-stakes business cases, to seek damages from both CrowdStrike (CRWD) and Microsoft.
Cheffo said Microsoft's software had not caused the CrowdStrike incident, but the tech giant immediately offered to assist Delta at no charge. Its CEO Satya Nadella emailed Bastian, but never got a reply, he added.
The Nasdaq index hanging around at all-time highs is definitely part of it, but it is hard to believe in a global cyber outage that covered large swaths of the western globe that CrowdStrike and Microsoft weren’t part of the problem.
I get it – stakes are high these days.
Tech shares are even higher and a few percentage point slide could shave half a billion or more from the valuation.
At a time when every tech company is bringing out all tricks of the trade to squeeze share prices higher, owning up to at least partial blame will go a long way to maintaining healthy long term relationships with above average customers.
As it stands, we are still in full-on buy the dip mode in tech as high volatility subsides.
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