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
November 6, 2024
Fiat Lux
Featured Trade:
(WHY TECHNICAL ANALYSIS DOESN’T WORK)
(SPY), (QQQ), (IWM), (VIX),
(TESTIMONIAL)
I recently heard an amazing piece of information from a subscriber.
Fidelity recently conducted a study to identify their best-performing clients.
They neatly fell into two groups: people who forgot they had an account at Fidelity and dead people.
It all underlines the futility of trading the markets without true professional guidance such as you get here at Mad Hedge Fund Trader, something many aspire to, but few actually accomplish.
Of the many thousands of online newsletters and trade mentoring services, I only know of three that actually make money for clients.
Those would be mine and two others, and I’m not taking about who the other two are.
It is an industry filled with professional marketers, charlatans, and conmen. I recently figured out that industries that employ a lot of specific jargon attract conmen because it is so easy to convince people of your expertise. Those are the health supplement and financial industries.
Let me point out a few harsh lessons learned from this most recent meltdown.
We are now transitioning from a “Sell in May” to a “Buy in November” posture.
The next six months are ones of historical seasonal market strength (click here for the misty origins of this trend at “If You Sell in May, What To Do in April?”).
The big lesson learned this summer was the utter uselessness of technical analyses. Usually, these guys are right only 50% of the time. This year, they missed the boat entirely.
When the S&P 500 (SPY) was meandering in a narrow nine-point range, and the Volatility Index (VIX) hugged the $12 neighborhood, they said this would continue for the rest of the year.
It didn’t.
This is why technical analysis is utterly useless as an investment strategy. How many hedge funds use a pure technical strategy on a stand-alone basis?
Absolutely none, as it doesn’t make any money.
At best, it is just one of 100 tools you need to trade the market effectively. The shorter the time frame, the more accurate it becomes.
On an intraday basis, technical analysis is actually quite useful. But I doubt few of you engage in this hopeless persuasion. Most senior investors would rather spend their time on a golf course than be glued to a screen.
Leave it for the kids.
This is why I advise portfolio managers and financial advisors to use technical analysis as a means of timing order executions, and nothing more.
Most professionals agree with me. That’s why so much volume bunches up at the opening and the close every day, to get a nice average.
Technical analysis derives from humans’ preference for looking at pictures instead of engaging in abstract mental processes. A picture is worth 1,000 words, and probably a lot more.
This is why technical analysis appeals to so many young people entering the market for the first time.
Buy a book for $5 on Amazon, and you can become a Master of the Universe.
Who can resist that?
The problem is that high frequency traders also bought that same book from Amazon a long time ago and have designed algorithms to frustrate every move of the technical analyst.
Sorry to be the buzz kill, but that is my take on technical analysis.
I have a much better solution than forgetting you have a trading account or dying.
Take Cunard’s round-the-world cruise (click here for the link).
I have been sailing with Cunard since the 1970’s when the original Queen Elizabeth was still afloat.
I’ve lost count of how many Transatlantic voyages I have taken across the pond.
For a mere $19,999 you can spend 122 days circumnavigating the globe with Cunard from Southampton, England in their cheapest inside cabin.
That includes all the food you can eat for four months.
On the way you can visit such exotic destinations as Bora Bora, The Seychelles, Reunion, and Moorea.
Not a bad deal.
By the time you get home, you will probably earn enough in your investment account to pay for the entire trip.
Hope you enjoyed your cruise.
Correction? What Correction?
Mad Hedge Biotech and Healthcare Letter
November 5, 2024
Fiat Lux
Featured Trade:
(DANCING WITH SHADOWS)
(RHHBY), (SGMO), (LLY), (BIIB), (ABBV)
In 1906, Dr. Alois Alzheimer first encountered what he called a “mysterious” mental illness, examining the brain of a 55-year-old woman who had died under strange neurological circumstances.
Over a century later, that mystery hasn’t let up. We’re still scratching our heads—and burning through money.
By 2050, Alzheimer’s is projected to cost the U.S. healthcare system $1.3 trillion, more than the entire GDP of Australia.
But something’s happening at Roche (RHHBY) that’s got my scientific spidey senses tingling.
Roche has been chasing Alzheimer’s solutions for over two decades, pouring resources into this elusive brain burglar that defies every rule in the book.
And yet, here they are—undaunted, driven by a noble (and, yes, profitable) goal to relieve the massive toll AD takes on patients, families, and entire healthcare systems.
It hasn’t been smooth sailing; setbacks and “whoops, not this time” moments have kept things bumpy. Recently, though, I’ve been seeing hints of a breakthrough that just might bring this long, shadowy dance with Alzheimer’s closer to the light.
For those who've been reading my letter since 2008, you know I rarely get excited about big pharma unless there's real meat on the bone. Well, this time there is, and it's called Brainshuttle technology.
If you’ve never heard of it, think of it as a kind of souped-up delivery service for the brain—no, not that kind. This tech helps Roche’s meds cross the blood-brain barrier, that stubborn security guard that only lets a select few molecules into the brain.
It’s great at keeping out random junk but also frustratingly good at blocking drugs we actually want to get in there.
Brainshuttle could change that, allowing antibodies to cross over more easily and making lower doses (and hopefully fewer nasty side effects) possible.
Enter trontinemab, a drug that’s caught a lot of eyes recently. Armed with Brainshuttle, this amyloid-beta antibody is like the brain’s personal pest control.
Early trials are promising: Roche reported that trontinemab is sweeping out amyloid plaque faster than a Roomba on espresso, and all at lower doses.
Less dose, more punch, and fewer side effects? Sounds like the AD holy grail. They’re even eyeing an accelerated approval path with the FDA.
Now, the FDA isn’t exactly known for sprinting to approval—especially with Alzheimer’s drugs—but trontinemab’s early results make it a strong contender.
But Roche isn’t putting all its eggs in one beta basket. AD research has been dominated by amyloid-beta, but there’s another protein that scientists are pretty excited about: tau.
If amyloid-beta is the ringleader, tau is the muscle, the heavy that clogs up brain cells and wreaks havoc.
To tackle tau, Roche has teamed up with Sangamo Therapeutics (SGMO), a company with tech that sounds like it’s straight out of a sci-fi novel—zinc finger molecules.
These little DNA-grabbers are designed to silence the tau gene, essentially telling it to cool it and stop producing the stuff that clogs up the brain.
The partnership also gives Roche access to something else in Sangamo’s arsenal: an adeno-associated virus capsid. (Translation: a delivery mechanism that gets things across the blood-brain barrier.)
If these tools work as planned, Roche may have a real chance to give AD a one-two punch with both amyloid-beta and tau treatments.
But let's be real here. This is still the Wild West of biotech, and Roche has had its share of setbacks.
They recently walked away from a partnership with UCB, returning the rights to an anti-tau antibody called bepranemab.
Even though UCB called the Phase 2a data "encouraging," it apparently didn't meet Roche's internal bar. That's the thing about Alzheimer's drug development - it's about as predictable as my teenager's mood swings.
The competition isn't sleeping either. Eli Lilly (LLY), Biogen (BIIB), and AbbVie (ABBV) are all throwing everything but the kitchen sink at this disease. But Roche's Brainshuttle technology might just be their secret weapon in this fight.
Here's what keeps me optimistic: Roche’s multi-pronged strategy, combining amyloid-beta and tau, might just give them an edge. It’s not guaranteed—far from it—but having multiple avenues does give them a better shot at success.
This is what I call a "chess not checkers" opportunity. The potential payoff is massive - we're talking about a market that could make crypto's best days look like pocket change. But timing is everything.
So, I'll be watching trontinemab's development like a hawk. The Sangamo collaboration is also on my radar - any breakthrough in tau-targeted therapies could be a game-changer.
As always, don’t bet the farm, folks—not even on a biotech darling like this. But if you’re itching to add a little intellectual flair to your portfolio, Roche’s Alzheimer’s gambit is worth a look. Buy the dip, but set those stop losses. After all, even the best-laid plans of mice and biochemists often go awry.
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
November 5, 2024
Fiat Lux
Featured Trade:
(THE IRS LETTER YOU SHOULD DREAD),
(TESTIMONIAL)
Deepfakes, synthetic media where a person in an existing image or video is replaced with someone else's likeness, have evolved from a technological curiosity to a serious threat. Their potential for misuse in spreading misinformation, manipulating public opinion, and enabling fraud is alarming. Thankfully, the same technology powering the creation of deepfakes – Artificial intelligence (AI) – is also being harnessed to detect and prevent their spread. This article delves into the ongoing arms race between deepfake creators and those combating them, highlighting the AI-driven techniques at the forefront of this struggle.
Understanding the Deepfake Threat
Before we dive into the solutions, it's crucial to understand the magnitude of the problem. Deepfakes are becoming increasingly sophisticated, making them harder to discern from real media. This has far-reaching implications:
AI-Powered Deepfake Detection
Researchers and tech companies are actively developing AI algorithms to detect deepfakes. Here are some of the key approaches:
AI-Driven Deepfake Prevention
Beyond detection, AI is also being used to proactively prevent the creation and spread of deepfakes:
Challenges and Future Directions
Despite the progress made in deepfake detection and prevention, several challenges remain:
Looking ahead, the fight against deepfakes will likely involve a multi-faceted approach:
Conclusion
The battle against deepfakes is an ongoing arms race, with AI playing a pivotal role on both sides. While the threat posed by deepfakes is significant, the development of AI-powered detection and prevention techniques offers hope. By harnessing the power of AI and fostering collaboration between researchers, tech companies, and policymakers, we can mitigate the risks posed by deepfakes and protect the integrity of our information ecosystem.
Mad Hedge Technology Letter
November 4, 2024
Fiat Lux
Featured Trade:
(A SIDEWAY CORRECTION BEFORE THE MOVE UP)
(AAPL), (BRK-B)
Warren Buffett shedding millions of Apple (AAPL) stock, and the stock to subsequently avoid a meaningful dip is an inherent victory for Apple and big tech.
In almost any other stock, the price action would be sharp and damaging to the underlying stock, and Apple had a wave of buyers to pick up all the shares Buffett unloaded.
Buffett and his flagship investment company, Berkshire Hathaway (BRK-B), did really well in their Apple investment, where they loaded the boat with Apple stock.
Taking profits is never a bad thing, but I do believe Buffett had a feeling that Apple started getting too ahead of itself.
The company still has not done enough since creating the iPhone, and Buffett certainly was not impressed by the latest “upgrade” to the flagship device.
Apple shares are flat over the past 4 months after a sharp 22% rise in the summer starting from May.
I believe that the sideways price corrections will start to drag out even longer for many big tech companies as their growth engines start to fizzle out.
AI is also due another sideways correction after gangbuster returns.
It is becoming quite evident that “corrections” in big tech aren’t that damaging, and as long as investors can ride out the sideways move, the next move after that is usually to the upper right-hand corner.
Buffett has sent over 515 million shares of Apple to the chopping block since October 2023
Amid Warren Buffett's selling spree, top-holding Apple has been meaningfully reduced. In a three-quarter period from Oct. 1, 2023 through June 30, 2024, Berkshire's stake in Apple declined by more than 515 million shares, or 56%, to precisely 400 million shares.
During Berkshire Hathaway's annual shareholder meeting in early May, he opined that the corporate tax rate would likely climb in the future. With his company sitting on a mammoth unrealized gain in Apple, he suggested that locking in some gains now at a lower tax rate would, eventually, be viewed favorably by Berkshire Hathaway's shareholders.
Apple has done well to engineer the stock higher with its heavy involvement in shareholder returns, particularly buybacks.
Since initiating share repurchases in 2013, Apple has bought back $700.6 billion worth of its common stock and reduced its outstanding share count by 42.2%. This has had a decisively positive impact on the company's earnings per share (EPS).
Sales of its physical devices, including iPhone, iPad, and Mac, have been weak for much of the last two years. If a growth company's sales stall, it can expose its valuation premium.
The Oracle of Omaha's broad-based selling also alludes to the lack of value on Wall Street. This is one of the priciest stock markets in history, and Berkshire's record cash pile of $276.9 billion plainly suggests that Buffett and his team are struggling to find attractive deals.
Big tech is increasingly finding it hard to move the needle.
Anti-trust has also been a thorn in their sides lately as the Fed close it on them from a litigious angle.
In the short term, even without its next growth engine, I do believe Apple and certain big tech companies have the opportunity to experience a winter rally into yearend.
First, we need to get through the election, but the US economy is still running hot at 3%, and tech will do like it usually does, harvest the majority of the gains from the overall economic expansion in the United States.
