Global Market Comments
December 5, 2024
Fiat Lux
Featured Trade:
(LAUNCHING “TRADING OPTIONS FOR BEGINNERS”)
Global Market Comments
December 5, 2024
Fiat Lux
Featured Trade:
(LAUNCHING “TRADING OPTIONS FOR BEGINNERS”)
Not a day goes by without an email coming in asking if beginners can make use of my money making service.
I always reply; “Absolutely.”
When I first started the Diary of a Mad Hedge Fund Trader a 17 years ago, layoffs were rampant, General Motors was going bankrupt, and the financial crisis was imminent.
Many newly unemployed were facing joblessness for years, if not forever. So they started trolling the Internet for new jobs.
Then they stumbled across my website.
I quickly learned that I had to write for the unemployed GM assembly line worker to get these new subscribers the education they urgently needed.
It worked.
Now, hundreds of ordinary people earn a full time living entirely from focusing on the Mad Hedge Fund Trader Alerts.
And you know what?
It turns out that financial advisors, institutional money mangers, and the $25 billion hedge fund manger also likes to read research that a blue collar worker can understand and profit from.
To make this task easier, I have distilled 55 years of market and options trading experience into a simple three-hour video course entitled “Trading Options for Beginners.”
The course covers the basics of options trading, as well as insights that even the most grizzled veterans can appreciate.
It is filmed at my personal trading station in San Francisco, as well as on location around the world. Think of it as a basic options educational course that meets “Europe on $10,000 a day.”
Each chapter instructs you on the basic strategy behind each position. I then take you through my personal online trading account to show you exactly how to execute orders in your own accounts.
It will certainly be the most entertaining, if not the most scenic options course you have ever taken.
“Trading Options for Beginners” is only available in my online store for $48, and is one of the best bargains you will ever find. Please find the table of contents below:
Trading Options for Beginners
1) Table of Contents
2) Welcome to New Customers
3) What is An Option?
4) How to Execute a Trade Alert
5) How to Execute a Vertical Bull Call Spread
6) How to Execute a Vertical Bear Put Spread
7) The Mad Hedge Trading Philosophy
8) The Mad Hedge Trading Rules
9) Meet the Greeks
10) How to Find a Great Options Trade
11) Introduction to Risk Management
To buy “Trading Options for Beginners,” please click here.
“If a cop follows you for 500 miles, you’re going to get a ticket,” said Oracle of Omaha Warren Buffet, in reference to Bank of America’s many legal problems.
(NVDA), (MSFT), (META), (PLTR), (AI)
Did you know that the average person spends about 7 hours looking for their lost keys each year?
Well, the Pacific island nation of Tuvalu is facing a slightly bigger lost-and-found crisis: they're about to lose their entire country to rising seas.
But instead of calling the planetary equivalent of AAA, they've come up with a solution that would make Philip K. Dick drop his jaw: they're backing up their entire nation to the cloud.
And no, I don't mean they're storing their family photos on Google Drive.
In what might be the most ambitious "control+C, control+V" operation in human history, Tuvalu is creating a digital twin of itself in the metaverse.
When I first heard this, I spent three fascinating hours down the digital rabbit hole to better understand the project, and let me tell you, it's a far cry from your nephew's Minecraft server.
The artificial intelligence they're using is incredibly sophisticated. Just think about this: the computing power required to render just one square mile of Tuvalu's virtual landscape could run approximately 10,000 Nintendo 64s simultaneously – though I'm not sure why you'd want to.
But raw computing power is just the beginning.
This AI isn't just playing SimCity here. It's analyzing everything from the way palm trees sway in the breeze (did you know a coconut palm can survive winds up to 145 mph?) to the subtle nuances of Tuvaluan dance movements.
Though I have to wonder if it can capture the precise sensation of stepping on a sea urchin – some experiences might be better left un-digitized.
Speaking of digital preservation challenges, let's look at the players making this virtual island possible.
First up is NVIDIA (NVDA), the company whose graphics cards probably cost you a month's rent.
Their Omniverse platform is like Minecraft meets NASA, except instead of building blocky castles, they're preserving entire civilizations.
Working alongside NVIDIA, Microsoft's (MSFT) Azure cloud services are providing what amounts to digital real estate in the sky.
Remember when cloud storage meant having enough space for your vacation photos? These folks are storing an entire country.
To put that in perspective, the amount of data required to recreate Tuvalu virtually is roughly equivalent to streaming "The Lord of the Rings" trilogy 47,000 times in 4K – extended editions included.
Not to be outdone in this digital nation-building exercise, there's Meta (META), throwing money at their Reality Labs division for months now.
But creating a digital nation isn't just about pretty graphics and virtual spaces.
Behind the scenes, Palantir Technologies (PLRT) is handling the heavy lifting in the data department, processing environmental data so complex that one scientist described it as "trying to drink from a fire hose while solving a Rubik's cube blindfolded."
Their AI systems are essentially keeping tabs on an entire nation's slow-motion disappearing act – talk about job pressure.
Rounding out this tech dream team is C3.ai (AI), which is essentially creating the virtual world's utility companies.
They're making sure all these digital nations run on clean, efficient energy – though I'm still waiting for someone to explain how a virtual country can have a carbon footprint.
With all these tech giants building digital lifeboats, the investment opportunities in this digital Noah's Ark scenario are about as diverse as a tech conference buffet. But unlike that suspicious-looking sushi that's been sitting out too long, these opportunities might actually be worth your attention.
The sheer scale of this undertaking is mind-boggling.
During my research, I came across a fascinating statistic: the processing power needed to run a full-scale digital nation is roughly equivalent to playing 500,000 games of chess simultaneously while also streaming every episode of "Friends" ever made. In 8K. With director's commentary.
And while that might sound like overkill, consider this: Tuvalu might be the first nation to create a digital twin, but they're unlikely to be the last.
Climate change isn't exactly known for its patience, and other vulnerable nations are watching this experiment with intense interest.
The urgency of this digital preservation project becomes clearer with each passing moment. Here's a sobering thought: by the time you finish reading this article, Tuvalu's physical shoreline will have eroded by about the same amount as a grain of sand.
But in their virtual world, that shoreline will remain pristine, unchanged, and permanently preserved in digital amber. It's a bit like having a backup drive for an entire culture, except with better graphics and fewer annoying update notifications.
As Tuvalu's physical shores slowly slip beneath the waves, the message is becoming crystal clear: the future might be virtual, but the opportunities are very real.
Whether you're betting on the hardware giants, the cloud providers, or the data wizards, you're essentially investing in humanity's first attempt at digital immortality.
Just remember: like any good backup system, it's probably wise to diversify.
In the meantime, if you need me, I'll be practicing my virtual handshake. I'm told it's going to be an essential skill in the metaverse, though I'm still not quite sure how that works without haptic feedback.
But that's another story for another time, preferably after I figure out how to stop my avatar from accidentally walking through walls.
Mad Hedge Technology Letter
December 4, 2024
Fiat Lux
Featured Trade:
(MANAGEMENT TURNOVER IN TECH SPURRING CHANGES)
(INTC), (CRWD), (PANW)
CEO’s are toast as the CEO turnover tally starts to explode at the end of 2024.
There appears to be a strong trend that will grow in 2025, and that is corporate tech companies looking to the bullpen to substitute out the CEO.
They aren’t doing enough for their respective companies, and that needs to change.
This speaks volumes to the tough times in which debt has become too expensive to fund growth.
Tech companies have always played by the idea of the “winner takes all” mentality, and 2024 underscored this trend by seeing the likes of the Magnificent 7 grow in size and stature.
Through October, more than 1,800 CEOs have announced their departures this year. The outperformance of big tech stocks means that shareholders are putting massive pressure on management to juice up their own stock prices.
The number of exits is up 19% from the more than 1,500 departures during the same period last year, which was the previous year-to-date record.
Boards of directors are becoming impatient and ambitious, holding their CEOs accountable for underperformance — both in terms of profits and stock price.
The expected length of tenure as a CEO, on average, is declining as a result of these performance pressures.
The massive stock market gains of the past two years — the S&P gained roughly 20% in 2023 and is set to gain more than that by the end of 2024 — also pose challenges to US companies.
The outperformance of big tech is forcing shareholders to lean into their own management and demand answers to why they are falling behind.
The answer is complicated, and I acknowledge that many CEOs aren’t in the position to throw around capital like the CEO of Apple, Tim Cook, or CEO of Meta Zuckerberg.
These leaders can chase the next big thing and can strike out many times and not even bat an eyelid.
High turnover shows growing risk appetites and "a desire for leaders who can navigate increasing complexity in the macro business environment, including tech transformation, sustainability, geopolitical crises, and social issues."
If a company’s figurative boat is sinking while most others are enjoying a rising tide, corrective action must be taken by the CEO and or the Board.
If the CEO doesn’t have a clear plan for a turnaround, the Board finds someone who has a plan and the strength to execute that plan. It doesn’t matter if the CEO is actually at fault. Blame is assigned, and heads roll. It isn’t always fair.
Many of these tech CEOs cannot just issue dividends or execute stock buybacks to manipulate the share prices higher.
I believe these shareholder returns will be a key tool for big tech to jump over the low bar after a bevy of lower-than-expected guidance.
Next year, we could experience the haves and have nots in tech separate from each other even further.
Many of these hot chip names are right in the middle of their growth curves.
Software stocks still look good on the dips.
Lately, there were selloffs in cyber security stocks like Palo Alto Networks (PANW) and CrowdStrike (CRWD).
Traders bought the dip after weak guidance, and this is an example of where there is an opportunity as a trader to get in at optimal entry points.
“AI and the robots will provide any goods and services that you want.” – Said Elon Musk
(AN UPDATE ON CORE SCIENTIFIC (CORZ)
December 4, 2024
Hello everyone
December 4, 2024, stock price: $16.42
August 7, 2024, purchase price: $9.71
Percentage gain from 08/07/24 to 11/29/24 = 84.14%
Core Scientific (CORZ) daily chart
Core Scientific is a sort of rags to riches story. This year it went from bankruptcy to an investor’s favourite by betting on two big technology trends: AI data centres and bitcoin mining. Shares are up around 400% this year.
Core Scientific has been earning steady profits by hosting servers owned by companies that sell cloud services to AI providers.
Data centres are in high demand because tech companies need them to power their AI applications.
Core Scientific operates nine grid-connected warehouses in six states with access to so much electricity they could serve several hundred thousand homes.
The company started the year focused entirely on crypto mining, but it quickly pivoted as it saw demand surge for electricity for AI data centres.
In June, the company signed a deal with a company called Coreweave to lease data centre space for AI cloud services. Coreweave has since agreed to lease 500 megawatts worth of space. Core Scientific says it will get paid $8.7 billion over 12 years under the deal.
Privately held Coreweave is one of the fastest-growing companies behind the AI revolution. It was once a cryptocurrency miner, but has since transitioned to offering cloud services, with a particular focus on artificial intelligence. It’s closely connected to Nvidia, which has invested money in Coreweave and given the company access to its top-end chips. Coreweave expects to be one of the first customers for Nvidia’s upcoming Blackwell GPUs.
Analysts see EPS in the company jumping tenfold by 2027. Shares trade at about 13 times those 2027 estimates.
The data center opportunity should only grow from here, as tech companies build more powerful AI systems. Of the 1,200 megawatts worth of gross power capacity Core Scientific has contracted, about 800 megawatts are going to data center computing deals and 400 megawatts toward Bitcoin mining.
QI CORNER
Recording of October Zoom monthly Meeting (apologies for the late arrival of this recording)
https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-october-2024/
Cheers
Jacquie
Global Market Comments
December 4, 2024
Fiat Lux
Featured Trade:
(AMERICA’S DEMOGRAPHIC TIME BOMB)
You can never underestimate the importance of demographics in shaping long-term investment trends, so I thought I’d pass on these two highly instructive maps.
The first shows a map of the world drawn in terms of the population of children, while the second illustrates the globe in terms of its 100-year-olds.
Notice that China and India dominate the children’s map. Kids turn into consumers in 20 years, stay healthy for a long time, and power economic growth.
The US, Japan, and Europe shrink to a fraction of their actual size on the children’s map, so economic growth is in a long-term secular downtrend there.
There is more bad news for the developed world on the centenarian’s map, which shows these countries ballooning in size to grotesque, unnatural proportions.
This means higher social security and medical costs, plunging productivity, and falling GDP growth.
The bottom line is that you want to own equities and local currencies of emerging market countries and avoid developed countries like the plague.
This is why we saw tenfold returns from SOME emerging markets (EEM) over the past ten and why there is an irresistible force pushing their currencies upward (CYB) over the long term.
Use any major meltdowns this year to increase your exposure to emerging markets, as I will.
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.