Global Market Comments
November 22, 2024
Fiat Lux
Featured Trade:
(WEDNESDAY, JANUARY 22, 2025 ST AUGUSTINE FLORIDA STRATEGY LUNCHEON)
(NOVEMBER 20 BIWEEKLY STRATEGY WEBINAR Q&A),
(NVDA), (TSLA), (TLT), (OXY), (SLB), (MSTR), (USO), (PLTR), (SMCI), (KRE), (SMR), (UUP)
Below, please find subscribers’ Q&A for the November 20 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Lake Tahoe, Nevada.
Q: What are your stock recommendations for the end of the first quarter of 2025?
A: I say run with the winners. Dance with the girl who brought you to the dance. I think portfolio managers are going to be under tremendous pressure to buy winners and sell losers. And, of course, you all know the winners—they’re the stocks I have been recommending all year, like Nvidia (NVDA), Tesla (TSLA), and so on. And they're going to sell losers like energy to create the tax losses to offset their gains in the technology area. That could continue well into next year. Although, we’ve probably never entered a new administration with more uncertainty at any time in history, except maybe during the Civil War. I don’t think it will get as bad as that, but it could be bad.
Q: Is Putin bluffing about nuclear war?
A: Yes. First of all, Russia has 7,000 nuclear weapons, but only maybe 200 of those work. If he does use nuclear weapons, Ukraine will use its nuclear weapons in retaliation. During the Soviet Union, where did the Soviet Union make all their nuclear weapons? In Ukraine. That's where they had the scientists. They certainly have the Uranium—that's the hard part. You could literally put one together in days if you had the right expertise around. This will never go nuclear, and Putin has always been all about bluffing. There's a reason why the world's greatest chess masters are all Russian; it's all about the art of bluffing. So that doesn't worry me at all.
Q: Will Russia sacrifice a higher and higher percentage of its population in the war?
A: Yes, that is the military strategy: keep throwing bodies at your enemy until they run out of bullets.
Q: What is your prediction for 30-year US Treasury yields (TLT)?
A: They go higher. Higher for longer certainly includes the 30-year. The 30-year will be the most sensitive to long-term views of interest rates. If you get a return of inflation, which many people are predicting, the 30-year gets absolutely slaughtered. Adding a potential $10 trillion to the national debt, taking it to $45 trillion, is terrible for debt instruments everywhere.
Q: Should we be exiting the LEAPS that you put out on Occidental Petroleum (OXY) and Schlumberger (SLB)?
A: For Occidental, I would say maybe; it’s already at a low. The outlook for oil prices is poor, with massive new production coming on stream. Regarding Schlumberger, they make their money on the volume of oil production—that probably is going to be a big winner.
Q: What do you think interest rates will do as we go into the end of Powell's term in 18 months?
I have no idea. It just depends on how fast inflation returns. My guess is that we'll get an out-of-the-blue sharp uptick in inflation in the next couple of months, and when that happens, stocks will get slaughtered. People assume that inflation just keeps going up forever after that.
Q: Crude oil (USO) has been choppy at around $70 a barrel. Where do you see it going next year?
A: My immediate target is $60, and possibly lower than that. It just depends on how fast deregulation brings on new oil supplies, especially from the federal lands that have been promised to be opened up. As it turns out, the federal government owns most of the western United States—all the national forests and so on. If you open that up to drilling, it could bring huge supplies onto the market. That would be deflationary. It would be death for oil companies, but it would be a death for OPEC as well. Every cloud has a silver lining. OPEC has been a thorn in my side for the last 60 years.
Q: I'm tempted to buy stocks that are flying up, like Palantir (PLTR) and MicroStrategy (MSTR). What would be an experienced investor trade in these situations?
A: Don't touch them with a 10-foot pole. You buy stocks before they fly up, not afterwards. By the way, if anyone knows of an attorney who is an expert at recovering stolen Crypto, please contact me. I have several clients who've had their crypto accounts cleaned out. Oh, and by the way, the heads of every major crypto exchange have been put in jail in the last three years. Imagine if the heads of Goldman Sachs, Morgan Stanley Fidelity, and Vanguard were all put in jail for fraud and theft? How many stocks would you want to buy after that? Not a lot.
Q: Your recommendations for AI and chips?
A: I think you get a slowdown. In order to buy the new plays in banks, brokers, and money managers, you need to sell the old plays. Those are going to be technology stocks and AI stocks—AI itself will keep winning. They will keep advancing, but the stocks have become extremely expensive. And everyone is waiting to see how anti-technology the new administration will be. Some of the early appointments have been extremely anti-technology, promising to rein in big tech companies. If you rein in big tech companies, you rein in their stock prices, too. I am being very cautious here. The next spike up in Nvidia (NVDA) might be the one you want to sell.
Q: Do you think the uranium play will continue under the new administration?
A: Absolutely, yes. Restrain the Nuclear Regulatory Commission, and costs for the new nuclear starts up like (SMR) go way down.
Q: What do you think of NuScale Power Corp (SMR)?
A: I love it. Again, deregulation is the name of the game—and if you lose a city by accident, tough luck. Let's just hope it happens somewhere else. It's only happened three times before… Three Mile Island, Chernobyl, and Fukushima.
Q: Super Micro Computer (SMCI), what do you think?
A: Don't touch it. There's never just one cockroach. Hiring a new auditor to find out how much money they misrepresented is not a great buy argument to buy the stock. I'm sorry. Very high risk if you get involved.
Q: If Nvidia (NVDA) announces great earnings but sells off anyway, what should I do?
A: Get rid of it and get rid of all your other technology stocks because this is the bellwether for all technology. Tech always comes back over the long term, but short term, they may continue going nowhere as they have done for the last six months, which correctly anticipated a Trump win. Trump is not a technology guy— he hates California. Any California-based company can't expect any favors except for Tesla.
Q: Is there any reason why you prefer in-the-money bull call spreads?
A: Well, there are lots of reasons. Number 1, it's a short volatility play. Number 2 it's a time decay play, which is why I only do front months because that's when the time decay is accelerated. Thirdly, it allows you to increase your exposure to the stock by tenfold, which brings in a much bigger profit when you're right. If you look at our trade alerts, we make 15% to 20% on every trade, and 200 trades a year adds up to a lot of money. You can see that with our 75% return for this year. And it's a great risk management tool; the day-to-day volatility of call spreads is low because you're long one call option short the other. So, the usual day-to-day implied volatility on the combination is only about 8% or 9%. The biggest problem with retail investors is the volatility scares them out of the market at market lows and scares them back in at market highs. So, call spread reduces the volatility and keeps people from doing that. The risk-reward is overwhelmingly in your favor if you have somebody like me with an 80% or 90% success rate making the calls on the stocks. And, of course, having done this for almost 60 years, nothing new ever happens in the stock market—you're just getting repetitions of old stuff. All I have to do is figure out is this the 1970s story, the 1980s story, the 1990s, the 2000s, 2010s story? I have to figure out which pattern is being repeated. People who have been in the market for one year, or even 10 years, don't have that luxury.
Q: I’m having trouble getting filled on your orders.
A: You put out a spread of orders. So if I put in an order to buy at $9.00, split your order up into five pieces: at $9.00, $9.10, $9.20, $9.30, $9.40; and one or all of those orders will get filled. Another hint is that algorithms often take my trade alerts to the maximum price. Don't pay more than that price immediately, but they have to be out by the end of the day, so if you just enter good-till-cancel orders, you have an excellent chance of getting filled by the end of the day or at the opening tomorrow.
Q: Should I purchase SPDR S&P Regional Banking ETF (KRE)?
A: I'd say yes. That probably is a good buy with deregulation, making all of these small banks takeover targets.
Q: What should we be looking for in the fear and greed index?
A: When we get to the high end, like in the 70s, start taking profits. When we get to the low end, like the 20s, start buying and adding LEAPS and more long-term leverage option plays.
Q: What are we looking for to go short?
A: Much higher highs and a bunch of other monetary and technical indicators flashing warning signals, which are too many to go into here. Suffice to say, we did make good money on the short side this year, a couple of times on Tesla (TSLA), including a pre-election short that we covered in Tesla, and we were short a whole bunch of technology stocks going into the July meltdown. So, you know, we do both the long side and the short side, but it's been a long play—11 months this year and a short play for a month.
Q: Is the euro going back up eventually, or does the dollar (UUP) rule?
A: Sorry, but as long as the US dollar has the highest interest rates in the developing world and the prospect of even higher rates in the future, it's going to be a dollar game for the next couple of years.
Q: Will a ceasefire in the Middle East affect the markets?
A: No. The U.S. interest in geopolitical data ends at the shores—all three of them. So if the war of the last couple of years doesn't change the market—and it's been an absolutely horrific war with enormous civilian casualties—why should the end of it affect markets?
Q: What stock market returns do you see for the next four years?
A: About half of what they were for the last four years, which will be about 90% by the time Biden leaves office. You're going to have much higher interest rates and much higher inflation, and while the new administration is very friendly for some industries, it is very hostile for others, and the net could be zero. So, enjoy the euphoria rally while it lasts.
Q: What about crypto?
A: Well, I did buy some crypto for myself at $6,000, and I'm now thinking of selling it at $96,000. Would I recommend it to a customer? Not on pain of death—not at this level. You missed the move. Wait for the next 95% decline, which is a certainty in the future. And, by the way, absolutely nobody in the industry can tell you when that is.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory
Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
"There are many companies in the US that are running out of time because of leverage. There is still $1 trillion in distressed or defaulted debt. Any company that could refinance has already done so. For all those companies that couldn't refinance, they're going to be hitting a wall this year or next year," said Marc Lasry, chairman of Avenue Capital Management, a top-performing fixed-income hedge fund.
Mad Hedge Biotech and Healthcare Letter
November 21, 2024
Fiat Lux
Featured Trade:
(TRACE ELEMENTS)
(SNY), (MTZPY), (BIIB), (IONS), (AMLX)
In a corner office somewhere in Cambridge, Massachusetts, a team of scientists is attempting something that sounds like it belongs in a sci-fi novel: they're trying to reprogram the genetic instructions that tell our neurons how to behave.
If they succeed, they might help 97% of people with ALS keep their neurons from self-destructing.
Welcome to Trace Neuroscience, where $101 million in venture capital is betting on what amounts to a molecular spell-check for your nervous system.
You might be wondering, as I did, how one starts a company with the audacious goal of tackling one of medicine's most notorious puzzle boxes.
The answer, it turns out, involves three scientists, working in three different labs, who all stumbled upon the same cellular culprit – a protein called UNC13A - the sort of name that makes you wonder if scientists moonlight as license plate generators.
But to understand why UNC13A has everyone buzzing, we need to talk about ALS itself.
ALS, if you're not familiar with it, is the kind of disease that keeps neurologists up at night. Every year, it claims about 5,000 new victims in the US alone, and we still don't know what causes 90% of cases.
Here's a simple way to envision it – think of your nervous system as a complex metropolitan subway system.
ALS is like having someone systematically shut down every station, one by one, until the entire network grinds to a halt. Despite decades of research and millions in funding, we're still mostly watching helplessly as stations go dark.
Sure, the global market for ALS treatments reached $667.3 million in 2023, but that impressive-sounding number masks an uncomfortable truth: we're still barely keeping the lights on, let alone fixing the underlying problem.
The current FDA-approved medications, Sanofi’s (SNY) Riluzole and Mitsubishi Tanabe Pharma’s (MTZPY) Edaravone (marketed as Radicava), are like trying to stop a flood with a handful of sandbags. They might slow things down a bit, but they're not exactly what you'd call a solution.
So how do you tackle a troublemaker like UNC13A? Enter Trace Neuroscience's bold approach: antisense oligonucleotides, or ASOs for those who don't enjoy tongue twisters.
Think of ASOs as tiny molecular scissors that can edit the body's protein-making instructions with surprising precision - in this case, they're specifically designed to fix how UNC13A behaves when it goes rogue.
The science behind this approach comes from a rather serendipitous confluence of research.
Aaron Gitler at Stanford, Pietro Fratta at University College London, and Michael Ward at the NIH – three scientists who probably should have just gotten a group chat going – independently discovered how certain RNA-processing molecules go haywire in ALS patients.
It's like they each found a different piece of the same puzzle, and when they put them together, the picture suddenly made sense.
And where there's breakthrough science in biotech, money usually follows.
In November 2024, Trace managed to convince some of the biggest names in venture capital – Third Rock Ventures, Atlas Venture, GV (formerly Google Ventures), and RA Capital Management – to part with $101 million.
That's quite a vote of confidence for a company whose main product is still theoretical.
The timing couldn't be more interesting. The ALS treatment market is expected to grow at a rather specific 5.8% per year until 2030, reaching about $1.1 billion.
But in this field, even the success stories come with asterisks.
Take Biogen's (BIIB) Qalsody, which got FDA-approved in May 2024 despite not actually meeting its main trial goals.
It's a rare win in a field where the scoreboard has been mostly zeros, as the rest of the ALS treatment landscape makes painfully clear.
Ionis Pharmaceuticals (IONS) had to shut down their ALS program with Biogen in May 2024, and Amylyx Pharmaceuticals (AMLX) faced the bitter task of pulling their drug Relyvrio from the market in April 2024, laying off 70% of their staff in the process.
These setbacks illuminate an uncomfortable truth about ALS drug development: the path from lab bench to pharmacy shelf is paved with perfectly logical theories that simply didn't work in real bodies.
The math is brutal - only 6.2% of neurological drugs survive the journey from Phase I to approval. Trace's response to these odds? Assemble a team that's seen enough clinical trial failures to know how to (hopefully) avoid them.
Their CEO, Eric Green, M.D., Ph.D., leads a squad that includes Chief Medical Officer Irina Antonijevic and Chief Operating Officer Megan Baierlein.
They're aiming to start clinical trials by early 2026, which in drug development terms is practically tomorrow.
For investors, timing like this transforms Trace from a scientific curiosity into a near-term catalyst.
Their approach - anchored in genetic evidence and measurable biomarkers - stands out in a field where most companies are still shooting in the dark with better bullets.
The story of Trace Neuroscience reads like molecular medicine's version of going from medieval star-gazing to GPS navigation.
While traditional ALS treatments chase symptoms, Trace is tracking proteins with the precision of an atomic clock.
They've transformed one of medicine's most frustrating puzzles into something remarkably concrete: either their molecular markers will move, or they won't.
In the biotech world, that kind of clarity is worth watching.
Global Market Comments
November 21, 2024
Fiat Lux
Featured Trade:
(THURSDAY, JANUARY 16, 2025 SARASOTA FLORIDA STRATEGY LUNCHEON)
(TEN REASONS WHY I ONLY EXECUTE VERTICAL CALL DEBIT SPREADS)
(AAPL), ($VIX), (SPY)
Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in Sarasota, Florida on Thursday, January 16, 2025. The cost of the luncheon will be $277.
An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at an exclusive Sarasota hotel. The precise location will be emailed with your purchase confirmation. Mad Hedge guests will be assigned their own dedicated table in a ballroom with 200 other participants.
I look forward to meeting you, and thank you for supporting my research.
To purchase tickets for this luncheon, please click here.
At today’s Mad Hedge Biweekly Strategy Webinar, I received an excellent question: Why is the Vertical Call Debit Spread my favorite trading vehicle?
So let me ask you this: How would you like to play blackjack now that the dealer would bust 90% of the time? What if you played roulette with the assurance that the ball would land on black 90% of the time?
I bet you would be interested….very interested.
I only trade with Vertical Call Debit Spreads in my own personal account. While your broker may be recommend outright options trades to you because that’s where the volume and the commissions are, if he is smart enough, he is almost certainly executing Vertical Call Debit Spreads for his own account.
And let me tell you why.
1) A Vertical Call Debit Spread offers the most favorable risk/reward ratio of any financial instrument among the plethora out there.
2) A Vertical Call Debit Spread allows you to precisely define your risk. You can’t lose any more money that you put up. With naked short puts, for example, which most other newsletters often recommend all day long, your potential losses are unlimited
3) Vertical Call Debit Spreads allow a vast increase in profits compared to outright stocks, potentially 10X-100X. You can get a claim on $1 million worth of stock for literally only $10,000, not bad when you know the direction. Customers of mine who are nailing 1,000%-2,000% returns in a year, and I get a few every year, are executing very deep out-of-the-money Vertical Call Debit Spread LEAPS.
4) The liquidity for Vertical Call Debit Spreads is enormous for the most popular stocks, like Nvidia (NVDA) and Tesla (TSLA), with exercise values of the options more than the underlying stocks.
5) Vertical Call Debit Spreads allow you to specifically target a share price trading range (very deep in-the-money) that has the highest probability of taking place.
6) The day-to-day volatility of Vertical Call Debit Spread is very low, usually 8% or 9%. That’s because you are long on one option and short on another. This prevents traders from selling bottoms and buying tops, always fatal mistakes. When people ask me what I do for a living, I tell them I stop people from selling market bottoms and buying market tops.
7) When you have a seasoned war horse like me with 55 years of trading experience making your stock picks, Vertical Call Debit Spreads become a total no-brainer. This is why my Trade Alert service is up 68% this year, almost triple the S&P 500 (SPY).
8) Vertical Call Debit Spreads hit their maximum profit whether markets go up, sideways, or down small. It’s only the surprise out of the blue, down moves are large, triggered by black swans, that lose us money and those we stop out of immediately.
9) A Vertical Call Debit Spread benefits enormously from time decay. That is how they hit maximum profits when the underlying stock is unchanged. It gives you a cushion against mistakes and bad stock calls. That’s why I focus on the front-month expirations where time decay is accelerated.
10) Vertical Call Debit Spreads have a built-in short volatility element. If you buy a Vertical Call Debit Spread with a Volatility Index at $24, and it then drops to $14, you make a lot of money. Over the years, I have found that it is almost impossible to lose money with Vertical Call Debit Spreads when the Volatility Index is over $30.
11) OK, I thought of one more reason. Vertical Call Debit Spreads are much cheaper than outright options. That’s because you are buying one option and then receive the proceeds from selling short another option, which cuts the price by two-thirds. That lets you triple your size compared to an outright option. Triple the size, and you triple the profits.
Given all this, I think it’s time for all of you to undergo a refresher course on how to most efficiently play the market with Vertical Call Debit Spreads.
Most investors make the mistake of investing in positions that have only a 50/50 chance of success or less. They’d do better with a coin toss.
The most experienced hedge fund traders find positions that have a 90% chance of success and then leverage up on those trades. Stop out of the losers quickly, and you have an approach that will make you well into double digits, year in and year out, whether markets go up, down, or sideways.
For those readers looking to improve their trading results and create the unfair advantage they deserve, I have posted a training video on How to Execute a Vertical Bull Call Spread.
This is a matched pair of positions in the options market that will be profitable when the underlying security goes up, sideways, or down small in price over a limited period of time.
It is the perfect position to have on board during markets that have declining or low volatility, much like we have experienced in for most of the last several years and will almost certainly see again.
I have strapped on quite a few of these babies across many asset classes, and they are a major reason why I am up so much this year.
To understand this trade, I will use the example of Apple trade, which most people own and know well.
On October 8, 2018, I sent out a Trade Alert by text messages and email that said the following:
BUY the Apple (AAPL) November 2018 $180-$190 in-the-money vertical BULL CALL debit spread at $8.80 or best
At the time, Apple shares were trading at $216.17. To accomplish this, they had to execute the following trades:
Buy 11 November 2018 (AAPL) $180 calls at….…….…$38.00
Sell short 11 November 2018 (AAPL) $190 calls at…..$29.20
Net Cost:…………………….……….....……...........…….….....$8.80
A screenshot of my own trading platform is below:
This gets traders into the position at $8.80, which costs them $9,680 ($8.80 per option X 100 shares per option X 11 contracts).
The vertical part of the description of this trade refers to the fact that both options have the same underlying security (AAPL), the same expiration date (November 16, 2018), and only different strike prices ($180 and $190, or a “spread”).
“Bull” (as opposed to “Bear”) means you receive the maximum profit in a rising market as opposed to a falling one.
“Debit” refers to the fact that you have to pay money to obtain this position rather than receive a credit.
The maximum potential profit can be calculated as follows:
+$190.00 Upper strike price
-$180.00 Lower strike price
+$10.00 Maximum Potential Profit at expiration
Another way of explaining this is that the call spread you bought for $8.80 is worth $10.00 at expiration on November 16, giving you a total return of 13.63% in 27 trading days. Not bad!
The great thing about these positions is that your risk is defined. You can’t lose any more than the $9,680 you put up.
If Apple goes bankrupt, we get a flash crash, or suffer another 9/11 type event, you will never get a margin call from your broker in the middle of the night asking for more money. This is why hedge funds like vertical bull call spreads so much.
As long as Apple traded at or above $190 on the November 16 expiration date, you will make a profit on this trade.
As it turns out, my take on Apple shares proved dead on, and the shares rose to $222.22, or a healthy $32 above my upper strike.
The total profit on the trade came to:
($10.00 expiration - $8.80 cost) = $1.20
($1.20 profit X 100 shares per contract X 11 contracts) = $1,320.
To summarize all of this, you buy low and sell high. Everyone talks about it, but very few actually do it.
Occasionally, Vertical Bull Call debit Spreads don’t work, and the wheels fall off. As hard as it may be to believe, I am not infallible.
So if I’m wrong and I tell you to buy a vertical bull call spread, and the shares fall not a little, but a LOT, you will lose money. On those rare cases when that happens (about 10% of the time), I’ll shoot out a Trade Alert to you with STOP-LOSS instructions before the damage gets out of control.
I start looking at a stop loss when the deficit hit 10% of the size of the position or 1% of the total capital in my trading account. It’s easier to dig yourself out of a small hole than a big one.
And why do I execute Vertical Call Debit Spreads rather than Vertical Call Debit Spreads like most professionals do? Because Vertical Call Debit Spreads are easier for beginners to understand.
To watch the video edition of How to Execute a Vertical Bull Call Spread, complete with more detailed instructions on how to execute the position with your own online platform, please click here.
Good luck and good trading.
Vertical Bull Call Spreads Are the Way to Go in a flat to Rising Market
(IBM), (MSFT), (GOOG), (HON), (QBTS), (IONQ)
There's something oddly domestic about the scene at ETH Zürich's quantum lab, where a cluster of physicists are hovering over what looks like an elaborate microwave dinner plate.
Except this particular plate costs roughly the same as a small yacht and might just revolutionize artificial intelligence as we know it.
These physicists just managed to create something called a “mechanical qubit” – the quantum computing equivalent of finally teaching a cat to fetch.
And while most of us were busy arguing about whether our chatbots have feelings, these scientists might have just altered the future of AI.
Naturally, this required a pilgrimage to the holy grail of quantum computing: IBM's facility, where the air is colder than a penguin's lunch box and the machinery hums with the sort of expectant energy usually reserved for rocket launches.
A researcher – let's call him Dave, because that's his name – is trying to explain to me why this new mechanical qubit is such a big deal.
"Traditional qubits are like temperamental opera singers," he says, adjusting his safety goggles. "They need perfect conditions, or everything falls apart. But these mechanical ones? They're more like street musicians – they can perform in less than ideal conditions."
The technical term for what makes these new qubits special is "piezoelectric material," which I've now attempted to pronounce correctly 17 times. The key idea here is that they're more stable than their predecessors.
And here's where things get interesting for anyone with a stock portfolio and a passion for technological gambling (I mean, investing).
The global quantum computing market, currently lounging at a modest $1.3 billion in 2024, is expected to bulk up to $5.3 billion by 2029.
That's a 32.7% compound annual growth rate – the kind of numbers that make venture capitalists wake up in the middle of the night in a cold sweat of excitement.
Speaking of venture capitalists, they've been throwing money at quantum technology startups like sailors on shore leave – $2.35 billion in 2022 alone.
In fact, global public investment has reached $42 billion, which is roughly the GDP of Brunei. And as expected, the usual tech suspects are all over this like ants at a picnic.
IBM (IBM), which has more quantum computers than most people have coffee mugs, has developed something called Qiskit, which sounds like a Scandinavian breakfast cereal but is actually a quantum software development kit.
Microsoft's (MSFT) Azure Quantum platform is bringing quantum computing to the clouds (not those clouds – the digital ones).
Meanwhile, Google's (GOOG) been strutting around since 2019 claiming "quantum supremacy," which sounds like a rejected Marvel movie title but actually means they did something really impressive with quantum computers that I'm told changed everything.
Then there's Honeywell (HON), which spun off its quantum division into something called Quantinuum, presumably because all the good quantum company names were taken.
They're sharing the quantum playground with pure-play companies like IonQ (IONQ) and D-Wave Quantum Inc. (QBTS), the latter of which specializes in quantum annealing, which, contrary to what it sounds like, has nothing to do with heat therapy.
And here's where the quantum story gets interesting for anyone clutching their investment portfolio: these companies aren't just pushing scientific boundaries – they're pushing market valuations into what Dave calls “the twilight zone of growth.”
We're talking about a jump from $239.4 million in 2023 to $3.9 billion by 2033. To put that in perspective, that's like turning a nice Honda Civic into a fleet of Lamborghinis in 10 years.
But before you sell your house to invest in quantum computing stocks, there's a catch. (Isn't there always?)
The technology is still unpredictable. Technical barriers persist, commercialization timelines are fuzzy, and the ethical implications of super-powered AI remain debatable.
Still, the academic paper mill churns on with impressive determination.
In 2022 alone, there were 1,589 quantum technology-related patents granted and 44,155 publications, which is either a sign of incredible progress or proof that a lot of physicists need to justify their research grants.
But while academics race to publish, investors face a more practical question: where to put their money? The safest bet might be the tech giants – your IBMs, Microsofts, and Alphabets.
They're like the aircraft carriers of the tech world: slow to turn, but hard to sink.
The more adventurous might consider pure-play quantum companies like IonQ and D-Wave, though investing in these is a bit like betting on which butterfly's wingbeat will cause the next tornado.
The potential payoff by 2040? A cool $850 billion. But remember, that's the same year we're supposed to have flying cars and robot butlers, so maybe keep some money in your savings account.
As I leave IBM's quantum facility, Dave tells me something that sticks: “Quantum computing isn't just about making computers faster – it's about solving problems we didn't even know we could solve.”
I nod sagely, pretending I completely understand, while mentally calculating whether I should move my retirement fund into quantum computing stocks.
The mechanical qubit might be microscopic, but like Max Planck discovering that the smallest units of energy could reshape physics, it's showing us that the tiniest technological advances might just revolutionize our financial futures.
Just remember: even Einstein called quantum mechanics “spooky” – and that goes double for quantum investing.
Mad Hedge Technology Letter
November 20, 2024
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(NO CODE)
