Hello John!
Enclosed please find a bonus check for $10,000 on top of my regular Concierge fee. I have done so well this year, I feel I owe it to you.
I look forward to our next meeting. I’m hoping to finish up my paperwork so I can focus on full-time trading. My intention is to focus on the John Thomas Way and complete my MHFT education through your mentorship and travel experiences.
Good times, great trades, and much fun ahead.
Bill
Mill Valley, CA
At my last Global Strategy Luncheon, I had the pleasure of sitting next to an anesthesiologist who was a long-time reader of my research.
As much as he loved my service, he confided in me that his trading results were awful.
I told him I knew why.
Doctors, scientists, aircraft pilots, and even anesthesiologists all share the same problem.
As smart as they are to plow through 12 years of college studying subjects of mind-numbing difficulty, obtaining MDs, PhDs, and ATPL licenses, they are terrible when it comes to trading their own stock portfolios.
A doctor friend once confessed to me that as fast as he was taking money in at his seven-digit-a-year private practice, he was shoveling it out the door in trading and investment losses.
And if he got mad at it, or grew stubborn, the losses then compounded. He considered it a disease, like a gambling addiction.
I have to admit that I once suffered from the same malady, as I was originally trained as a scientist and mathematician. That is, until I identified my problem and dealt with it.
And here is the dilemma.
Science, medicine, and flying high-performance aircraft all require tremendous degrees of precision. The practitioners have to be exactly right about everything all the time.
If they aren’t, people die.
Let me give you some examples.
I happen to know that the daily dosage for the heart drug, Digitalis, is 0.25 mg per day. If you accidentally raise that to 0.50 mg, you die, especially if you have a small body weight.
I also happen to know that the stall speed of a Boeing 787 Dreamliner is 125 miles per hour. At 126 miles per hour, everything is fine.
But at 124 miles per hour, you risk stalling on approach, crashing, and killing everyone aboard, especially if it is hot and humid, wind shear is present, you are overweight, or at high altitude.
So, as far as doctors are concerned, the premium is on precision.
This absolutely does NOT work in the stock market, which is anything BUT precise.
Precision means buying stocks at their perfect absolute lows and selling them at the perfect top ticky highs. The problem is that this is impossible.
I have been trading stocks for almost 60 years and can think of only a handful of times when I nailed the perfect highs and lows. When I did, it was purely because of random chance, by accident.
By insisting on perfection in his stock execution, doctors miss every trade. They then get frustrated and chase the market, throwing all discipline out the window. This is where the losses ensue.
I can almost see the knowing nods of agreement out there.
It gets worse.
Doctors are used to working with a perfect set of facts, a lab report, a pulse rate, a temperature, or an MRI scan.
In the stock market, you have to deal with the fog of war. The facts you have at hand may or may not be true. New, contradictory information is getting dumped on you all day long. And the guy on TV is usually telling you the exact opposite of what you should be doing.
Most talking heads on the boob tube are in fact failed traders. If they really knew how to make money, they would be locked up in a dark, windowless room somewhere, grinding out the dollars by the millions.
There is another important factor. If only numbers determined stock market success, CPAs would be making the most money. They don’t. The stock market is a combination of numbers and emotions, and you have to succeed at both to prosper. And while they offer master’s degrees and PhDs on every kind of numerical pursuit, they don’t in emotions. Only 60 years of experience can do that, as I have.
After a couple of decades, you get used to operating in a world of uncertainty. In fact, you thrive on it. You learn which information sources to trust and which ones to ignore when the fur starts to fly. After much practice, you learn how to make the right decision when push comes to shove.
Unless doctors work in an emergency room or in combat with the military, they don’t get to learn how to make decisions in the fog of war. To them, markets all seem like a mass of confusing and conflicting information. For the perfectionist, it’s their worst nightmare.
No wonder they lose money.
So doctors have three choices when it comes to their investment portfolio.
They can index, balance stocks against bonds, and get used to subpar returns.
They can hand it over to a professional financial advisor, out of harm’s way.
Or they can learn the tricks of the trade that I have, which is the purpose of this newsletter. If you learned from my own half-century-plus accumulation of mistakes, you don’t have to repeat them yourself.
Your portfolio will love it!
Now that I have your attention, I have this pain in my back that keeps bothering me….
“Only losers average losers,” said my friend and former client, trading legend Paul Tudor Jones.
Mad Hedge Biotech and Healthcare Letter
July 8, 2025
Fiat Lux
Featured Trade:
(THIS BIOTECH ISN’T DEAD YET. IT’S JUST GETTING ITS SECOND WIND)
(MRK), (JNJ), (PFE)
Let me let you in on a little Wall Street secret: Merck & Co. (MRK) is having what my grandmother used to call “a spell,” and it’s not the kind that ends with Mai Tais on a cruise ship.
Down 18% year-to-date, Merck’s been standing quietly in the corner like the designated driver at an afterparty: sober, responsible, and completely ignored while everyone else chases the latest sugar high.
But if you’ve been around the block a few times, you know that markets eventually come home to fundamentals. And Merck? It’s sitting on some pretty solid ones.
First, let’s talk about Keytruda. This is Merck’s golden goose, crown jewel, and cash printer rolled into one.
It’s hauling in nearly $30 billion a year – close to half the company’s revenue. But like all good things in pharma, it’s got a ticking clock.
The patent falls off a cliff in 2028, and that’s got analysts sweating like it’s earnings season during a rate hike.
The market, in its usual overreacting wisdom, assumes Merck’s executive team is just going to wait out the clock, knitting scarves and sipping herbal tea until the end.
But the reality? They’re spending like they actually plan to stick around.
A full 28% of revenue goes straight into R&D. Definitely no penny pinching here.
For comparison, Johnson & Johnson (JNJ) clocks in at 19.4%. And Pfizer (PFE)? A modest 17%. Merck is playing chess while the others are refreshing their résumés.
Then there’s the China wrinkle.
Gardasil, Merck’s blockbuster HPV vaccine, was doing brisk business overseas until Beijing suddenly pulled the plug in February.
Official story? “Weak demand.” Anyone who’s done business in China knows that phrase is about as transparent as a foggy window.
Let’s just say there are likely more levers being pulled behind the curtain.
Add to that the looming pressure of the Inflation Reduction Act, and you’ve got a cocktail of investor anxiety that’s priced Merck like it’s already halfway to hospice.
But here’s the thing: by my math (and I’ve been modeling these things since traders used fax machines) Merck is trading roughly 23% below intrinsic value.
That’s with a conservative beta bump and enough doomsday scenarios baked in to make a prepper proud.
The fundamentals remain impressive.
Operating margins at 31.5%? That’s not just healthy, it’s downright athletic. Return on assets sits at 14.6%, while most of the sector struggles to crack 4%.
The balance sheet is firm, with a debt-to-equity ratio of 0.80 and interest coverage that won’t keep anyone up at night.
These numbers don’t tell the story of a troubled company. Instead, these tell me about a misunderstood heavyweight taking a breather between rounds.
On top of these, the pipeline is no slouch.
MK-0616, a cholesterol pill with blockbuster potential, is deep in Phase 3 and expected to land right as Keytruda starts to fade.
Meanwhile, Winrevair, a newly approved cardiovascular drug, is already on pace to top $1.5 billion this year. That’s not luck. That’s planning.
Their $20 billion capital spending spree through 2028 isn’t about vanity projects either. It’s manufacturing capacity, digital infrastructure. Not really exciting updates, but most definitely smart moves.
So, what’s the play? Merck isn’t a moonshot. It’s not the stock you tell your buddies about over golf because it’s going to triple in a week.
But it is a stable buy for anyone who’s seen enough cycles to know that quality tends to come back in style especially when the market is pricing in Armageddon.
Besides, sometimes the best opportunities are hiding in plain sight: sturdy, unloved, and momentarily out of favor.
Merck may not be the prom queen anymore, but give it a few quarters… and you might just find it leading the dance.
Global Market Comments
July 8, 2025
Fiat Lux
Featured Trade:
(ORDER A PERSONAL ANIME DIGITAL PORTRAIT)
(HOW MY MAD HEDGE AI MARKET TIMING ALGORITHM WORKS)
You can download it, send it to friends, sign personal emails, give one as a gift, or just have a laugh. All you have to do is take a selfie and attach it to the order form, and it will be emailed to you shortly. The portraits are created by a starving college student who happens to be my daughter. Starving because I firmly believe that kids need to earn their own way. The cost is only $30 each. To order, please click here and click on “Cartoon Headshots.”
Since we have just taken in a large number of new subscribers from around the world, I will go through the basics of my Mad Hedge AI Market Timing Index one more time.
I have tried to make this as easy to use as possible, even devoid of the thought process.
When the index is reading 20 or below, you only consider “BUY” ideas. When it reads over 80, it’s time to “SELL.” Everything in between is a varying shade of grey. Most of the time, the index fluctuates between 20-80, which means that there is absolutely nothing to do.
To identify a coming market reversal it’s good to see the index chop around for at least a few weeks at an extreme reading. Look at the three-year chart of the Mad Hedge Market Timing Index.
After three years of battle testing, the algorithm has earned its stripes. I started posting it at the top of every newsletter and Trade Alert two years ago and will continue to do so in the future.
Once I implemented my proprietary Mad Hedge Market Timing Index in October 2016, the average annualized performance of my Trade Alert service soared to an eye-popping 44.54%.
As a result, new subscribers have been beating down the doors trying to get in.
Let me list the high points of having a friendly algorithm looking over your shoulder on every trade.
*Algorithms have become so dominant in the market, accounting for up to 90% of total trading volume, that you should never trade without one
*It does the work of a seasoned 100-man research department in seconds
*It runs in real-time and optimizes returns with the addition of every new data point far faster than any human can. Image a trading strategy that upgrades itself 30 times a day!
*It is artificial intelligence-driven and self-learning.
*Don’t go to a gunfight with a knife. If you are trading against algos alone, you WILL lose!
*Algorithms provide you with a defined systematic trading discipline that will enhance your profits.
And here’s the amazing thing. My Mad Hedge Market Timing Index correctly predicted the outcome of the presidential election, while I got it dead wrong.
You saw this in stocks like US Steel, which took off like a scalded chimp the week before the election.
When my view and the Market Timing Index’s views sharply diverge, I go into cash rather than bet against it.
Since then, my Trade Alert performance has been on an absolute tear. In 2017, we earned an eye-popping 57.39%. In 2018, I clocked 23.67% while the Dow Average was down 8%, a beat of 31%. So far in 2022, we are up 28%.
Here are just a handful of some of the elements that the Mad Hedge Market Timing Index analysis in real-time, 24/7.
50 and 200-day moving averages across all markets and industries
The Volatility Index (VIX)
The junk bond (JNK)/US Treasury bond spread (TLT)
Stocks hitting 52-day highs versus 52-day lows
McClellan Volume Summation Index
20-day stock bond performance spread
5-day put/call ratio
Stocks with rising versus falling volume
Relative Strength Indicator
12-month US GDP Trend
Case Shiller S&P 500 National Home Price Index
Of course, the Trade Alert service is not entirely algorithm-driven. It is just one tool to use among many others.
Yes, 50 years of experience trading the markets is still worth quite a lot.
I plan to constantly revise and upgrade the algorithm that drives the Mad Hedge Market Timing Index continuously, as new data sets become available.
“The rule book on how things are done and how they will play out you can just throw away right now,” said Scott Minerd of Guggenheim Partners.
The seismic shift to hybrid work, once a reactive response to global upheaval, has solidified into a fundamental pillar of the modern professional landscape. No longer a passing trend, this blend of in-office and remote presence offers unparalleled flexibility and cost efficiencies. Yet, as organizations grapple with the complexities of managing dispersed teams, a new, even more disruptive force is emerging: Artificial Intelligence (AI). Far from being a mere tool, AI is rapidly becoming the algorithmic architect of the hybrid workplace, promising to optimize productivity, revolutionize collaboration, and redefine the very nature of work itself.
The initial transition to hybrid models presented a unique set of challenges. Bridging communication gaps, fostering a cohesive culture across physical and digital divides, ensuring equitable opportunities for all employees, and maintaining robust security in a decentralized environment became paramount concerns. Traditional tools often fell short, struggling to create truly inclusive virtual meetings, manage complex schedules, or prevent information silos. Enter AI, a catalyst poised to address these pain points and unlock unprecedented levels of efficiency and innovation.
One of the most immediate and impactful ways AI is disrupting hybrid work is through its ability to supercharge productivity and efficiency. Repetitive, time-consuming administrative tasks are ripe for automation, freeing up human capital for more strategic, creative, and empathetic endeavors.
AI-powered scheduling tools, for instance, are revolutionizing meeting coordination. No longer do teams need to navigate a labyrinth of calendars and time zones to find a mutually agreeable slot. AI can analyze team availability, consider personal preferences, and even account for peak productivity times, suggesting optimal meeting schedules that ensure seamless coordination between in-office and remote employees. This intelligent automation extends to task management, where AI streamlines workflows by suggesting efficient approaches and flagging potential bottlenecks, allowing hybrid teams to collaborate effortlessly.
Beyond scheduling, AI excels at automating mundane activities like data entry, email filtering, and document management. AI chatbots provide instant answers to common queries, technical issues, or HR-related questions, offering round-the-clock assistance and reducing the burden on support staff. Virtual assistants manage task lists, set reminders, and help employees stay organized, irrespective of their physical location.
Furthermore, AI-driven analytics are providing unprecedented insights into productivity patterns. By analyzing work output and identifying trends, AI can help both employees and managers understand when individuals are most productive, allowing for optimized scheduling of demanding tasks. This data-driven approach empowers managers to make informed decisions that streamline operations and enhance overall team efficiency. Companies like Microsoft, for example, have reported significant gains in productivity and work quality among users of their AI-powered tools, with many expressing a strong reluctance to work without them once adopted.
The hybrid model, by its very nature, can introduce communication friction and the risk of siloed teams. AI is proving instrumental in bridging these gaps, fostering more seamless and inclusive collaboration.
Video conferencing, a cornerstone of hybrid work, is being transformed by AI. Real-time transcription, translation, and captioning features are becoming standard, breaking down language barriers for global teams and ensuring all participants, including those with hearing impairments, can fully engage. AI-powered meeting assistants go a step further, automatically taking notes, highlighting key discussion points, and assigning action items, ensuring clarity and accountability even for those unable to attend live. This intelligent note-taking frees up employees to give their full attention to the conversation, fostering more meaningful interactions.
Beyond meetings, AI is enhancing overall communication flows. Intelligent platforms can analyze conversation patterns to gauge employee sentiment, proactively identify potential issues, and route information effectively across various channels. This proactive approach helps prevent miscommunication and misunderstandings, strengthening team dynamics.
The promise of real-time language translation is particularly transformative for international businesses. Imagine a virtual meeting where participants can speak in their native languages, with AI algorithms providing instantaneous translations for everyone. This capability not only fosters inclusivity but also unlocks innovation by enabling diverse perspectives and insights to be shared and understood effortlessly, regardless of geographical or linguistic boundaries.
AI’s disruptive power in hybrid work extends to creating a more personalized and human-centered employee experience. By analyzing individual work habits and preferences, AI can tailor digital workspaces, optimize workflows, and even recommend personalized learning and development paths.
AI-driven platforms can identify skill gaps and suggest customized training programs, enabling employees to continuously grow and align their development with organizational goals. This personalized approach to learning ensures that distributed teams have access to relevant training regardless of their location, allowing them to progress at their own pace.
Moreover, AI can help combat the feeling of isolation that some remote workers may experience. By analyzing communication patterns and productivity metrics, AI algorithms can proactively identify employees at risk of burnout or disengagement, prompting managers to offer timely support and intervention. This empathetic application of AI can significantly boost morale and job satisfaction.
Case studies, such as those from HR Future, a global HR consultancy, demonstrate the positive impact of such personalized approaches. By blending structured communication with informal virtual meetups and leveraging feedback loops, they observed a significant increase in engagement scores and a reduction in voluntary turnover, highlighting that hybrid success is as much about human connection as it is about digital tools.
While the opportunities presented by AI in hybrid work are immense, it’s crucial to acknowledge and address the associated challenges. Concerns around privacy, data security, and algorithmic bias are paramount. Organizations must establish clear guidelines and ethical frameworks for AI implementation, ensuring transparency in data collection and usage, and prioritizing the protection of sensitive employee information.
The potential for AI to enhance productivity tracking also raises questions about surveillance and trust. While AI can provide nuanced insights into work patterns, it’s essential that these tools are used to empower and support employees, rather than to micromanage or foster a culture of suspicion. The focus should remain on optimizing workflows and identifying areas for improvement, with a strong emphasis on employee well-being and autonomy.
Furthermore, the “human in the loop” remains critical. While AI can automate many tasks, human oversight is essential, particularly for creative tasks, complex problem-solving, and client interactions. Experts emphasize that AI won’t replace humans, but rather, humans with AI will replace humans without AI. This underscores the need for continuous learning and skill development, with a growing emphasis on uniquely human capabilities such as critical thinking, creativity, emotional intelligence, and adaptability.
The effective integration of AI also requires a robust IT infrastructure capable of supporting high computing demands. Organizations need to invest in the right technologies and ensure their networks are ready for AI-driven transformations.
The disruption brought by AI to hybrid work is not a fleeting phenomenon but a fundamental transformation. As AI becomes more sophisticated, its role in shaping the “where” and “when” of work will become even more pronounced. From intelligently optimizing space utilization in physical offices to creating hyper-personalized learning experiences for remote teams, AI will continue to refine and elevate the hybrid model.
Ultimately, the successful integration of AI into hybrid work environments will hinge on a balanced approach. Organizations that prioritize ethical AI implementation, invest in upskilling their workforce, and foster a culture of continuous learning and adaptation will be best positioned to harness the full potential of this transformative technology. The future of hybrid work is not just about technology; it’s about leveraging AI to create a more efficient, collaborative, and human-centered workplace where employees feel empowered, engaged, and supported, regardless of their location. The algorithmic architect is here, and its blueprint is shaping a new era of work.