Global Market Comments
August 28, 2025
Fiat Lux
Featured Trade:
(THE MAD HEDGE SEPTEMBER TRADERS & INVESTORS SUMMIT IS ON!)
(THE 13 NEW TRADING RULES FOR 2025)
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I’m sitting here at my Lake Tahoe lakefront mansion watching the markets flip-flop with great indecision. Make up your mind already!
It is one of those perfect, picture-postcard days, with a blue sky and cobalt lake. The fields outside are covered with snow crystals sparkling in the sunshine.
In these heart-stopping trading conditions, it is more important for me to teach you how to avoid doing the wrong thing than pursuing the right thing.
I am therefore going to introduce my 13 Rules for Trading in 2025. Tape them to the top of your computer monitor, commit them to memory, and maintain iron discipline.
They will save your wealth, if not your health. Here they are:
1) Dump all hubris, pretensions, and stubbornness. It will only cost you money.
2) The market is always right, even if all the prices appear wrong.
3) Only buy the puke outs and sell the euphoria. Do anything in the middle, and you will get whipsawed.
4) Outright calls and puts are offering a far better risk/reward right now than vertical bull and bear vertical call and put spreads, which have a built-in short volatility element. It is also better to buy stocks and ETFs outright with a tight stop loss. This won’t last forever.
5) If you do trade spreads, you can no longer run them into expiration. If you have a nice profit, take it, don’t hang on to the last 30 basis points, even if it means paying more commission. The world could end three times, and then recover three times, before the monthly expiration date rolls around.
6) Tighten up your stop loss limits. Not losing money is the key to winning in this market. There is nothing worse than having to dig yourself out of a hole. Don’t run hemorrhaging losses.
7) Buy every foreign crisis and sell every recovery. It really makes no difference to assets here in the US.
8) Several asset classes are becoming untradeable for long periods oil, ags). Stay away and stick to the asset classes that are working (stocks and gold).
9) Keep positions small enough to sleep well at night. The doubled volatility will make up for your reduced risk. This is not the time to get greedy and bet the ranch.
10) Turn off the TV and just look at your screens and data. Public entertainers have no idea what the market is going to do, especially if their last job was sports reporting. Their job is to get you to watch the ads for General Motors and Interactive Brokers.
11) As the bull market in stocks enters its fifth year, too many traders, analysts, and strategists have become complacent. You are going to have to work for your crust of bread this year. This is an earnings, technology, and cash flow-driven bull, not a QE-driven momentum one.
12) It is clear that more money was allocated to high-frequency traders this year. That is driving the new, breakneck volatility, increasing stop-outs. A sneeze now generates a 500-point intraday move.
13) It is no accident these tempestuous conditions are occurring in an election year. Some $10 billion will be spent on media convincing you how terrible these are. But over the long term, the stock market goes up 80% of the time.
Oh, and better change your password from 12345 to DKFGGIDKFOKBJGELXPEVJBKDLKFBBJFCJCKVLBKGTY69!, and hope that the 69 doesn’t give you away. AI Hackers are getting close.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Martin B26 Marauder
(MSFT), (AMZN), (GM), (META), (GOOG), (NVDA)
The AI world just had its equivalent of a weekend in Atlantic City, and when the smoke cleared, roughly $15 billion had changed hands.
Now, I’ve been around long enough to remember when venture capitalists thought $100 million was real money, so watching Elon Musk casually raise $10 billion for his xAI venture while everyone else scrambles for table scraps tells you something about where we are in this particular bubble.
So, what’s really happening here?
Musk’s xAI pulled in this astronomical funding round – $5 billion in debt, $5 billion in equity – bringing their total war chest north of $22 billion.
But here’s the part that makes me nervous: their flagship Grok 4 model launched with all the grace of the Hindenburg. Sure, it crushed some impressive technical benchmarks, but it also started spouting antisemitic garbage.
I lived through the dot-com boom when companies with no revenue were valued higher than General Motors (GM), and this feels awfully familiar. Technical superiority means absolutely nothing if your product becomes toxic to the corporate customers who actually pay the bills.
Microsoft (MSFT) learned this lesson the expensive way with their early AI mishaps, and xAI is apparently determined to repeat every mistake in the playbook.
Meanwhile, while everyone was rubbernecking at xAI’s train wreck, Amazon (AMZN) Web Services quietly rolled out something called Bedrock AgentCore at their New York summit.
Now, this isn’t the kind of thing that gets tech bloggers excited, but it’s exactly the sort of boring infrastructure that generates actual revenue.
AWS is building the plumbing that every Fortune 500 company will eventually need when they stop talking about AI implementation and actually start doing it.
They’re calling it things like “vibe coding” and “spec coding,” which sounds like Silicon Valley marketing nonsense, but underneath the jargon, they’re solving the real problem: most companies have absolutely no idea how to deploy AI agents that do anything useful beyond generating marketing copy.
Amazon’s stock has been sleepwalking while everyone chases the latest AI unicorn, but this methodical approach to enterprise infrastructure is exactly what will show up in quarterly earnings reports starting in 2026.
Speaking of smart moves that nobody noticed, Meta (META) quietly picked up PlayHT, an AI voice company, for what appears to be pocket change compared to the xAI circus.
The entire 35-person team is joining Meta, and according to internal memos, this technology fits perfectly with their AI characters and wearables strategy.
This is classic Meta execution – let everyone else make headlines while they systematically acquire the pieces they need for their next big push.
PlayHT had raised $21.5 million total, which for Meta is like you or me buying coffee, but it represents serious AI voice technology that could power everything from their Ray-Ban smart glasses to whatever Mark Zuckerberg dreams up next for the metaverse.
The market hasn’t figured out Meta’s AI hardware ambitions yet, but these tactical acquisitions are building toward something much bigger than better Instagram filters. I’ve watched this company execute these kinds of strategic buildups before, and they usually end up surprising everyone when the pieces finally click together.
Another thing that’s getting lost in all the funding announcements is the fact that the regulatory landscape is shifting underneath everyone’s feet, and it’s not moving in a direction that helps the big players.
The Senate just stripped the proposed 10-year moratorium on state-level AI regulation from the federal budget, which means instead of dealing with one set of federal rules, AI companies are about to face a patchwork of state regulations that will make compliance an expensive nightmare.
California courts just ruled in favor of Anthropic and Meta on fair use for training data, but that’s just one small victory in a much larger war that’s going to drag on for years.
Companies with armies of lawyers and compliance departments – Microsoft, Google (GOOG), Amazon – can handle this kind of regulatory complexity.
Startups burning through billions while racing to beat each other to market? They’re about to get a very expensive education in how government bureaucracy works.
And while American companies chase headlines and burn through venture capital, Chinese AI developers are quietly securing massive funding rounds and making strategic moves that should worry anyone paying attention.
ZhipuAI just raised $140 million at a $5.6 billion valuation, and MiniMax pulled in $230 million. These numbers represent serious competition developing AI technology without the regulatory handcuffs that are strangling American innovation.
Baidu (BIDU) went even further, open-sourcing their entire ERNIE 4.5 model family under Apache 2.0 licensing, essentially giving away what American companies are desperately trying to monetize.
Now that’s a strategy designed to accelerate adoption worldwide and create dependency on Chinese AI infrastructure. I’ve seen this playbook before in manufacturing and telecommunications, and it doesn’t end well for the companies that think they can compete while fighting with one hand tied behind their backs.
The July funding frenzy looks impressive in the headlines until you step back and realize most of that money went to companies solving problems that don’t actually generate revenue yet.
Real investment returns flow to the companies building the infrastructure that makes AI useful for actual businesses, not the ones creating viral demos that crash and burn when they encounter the real world.
AWS, Microsoft’s enterprise AI suite, and NVIDIA’s (NVDA) continued stranglehold on AI chips represent the safer bets while this market figures out which direction it’s actually heading.
As for the flashy startups burning through billions on impressive technology demos? Most of them will be footnotes in business school case studies by 2027, right next to Pets.com and Webvan.
While I was explaining all this to my kids over dinner, they posted it on X: “Dad says watching $15B disappear into AI startups while NVIDIA prints money selling them chips proves some lessons never get old.”
My daughter says it’s “fire.” Apparently, that’s good.
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
Mad Hedge Technology Letter
August 27, 2025
Fiat Lux
Featured Trade:
(TRAVEL TECH COOLS OFF)
(ABNB)
Personally, I am not a fan of the company Airbnb (ABNB).
It’s one of those platforms that doesn’t have a product, but lists other people’s homes and gets a pay cut from it.
That’s the issue.
There is no real proprietary code that is going to get them to the winner’s circle.
No AI force multiplier will make them into a $5 trillion company.
A differently branded platform like Facebook could easily steal their business, and nobody would bat an eye.
The lack of a competitive moat really kills them long term, so the only trick up their sleeve is increasing commission and other little tricks and gimmicks.
A few years back, ABNB only charged in the single digits for their service, but now their cut is 14.3% of gross bookings.
This is alienating owners who perceive this as overkill.
ABNB customer service is also historically terrible and in free-fall after they used the 2020 pandemic to lay off most of their San Francisco office.
Many Silicon Valley overlords never waste a crisis to get more for themselves.
Now they rely on a hodgepodge approach that basically gets customers with no solution and protects profits.
A “customer last” company often fails in technology.
These are just some of the reasons why the stock is down 11.5% in the past 5 years.
The bad news for ABNB is that the 11.5% drop was in mostly good times, except 2020, and in the medium term, prospects are darkening.
Simply put, the company is dealing with recent financial signals decelerating growth amid macroeconomic headwinds.
It doesn’t deserve any sort of premium valuation, which leaves little margin for error.
More critically, gross travel bookings—a core metric reflecting total payments processed on the platform—are showing signs of moderation and regional softness, driven by economic uncertainty, regulatory pressures, and shifting consumer behaviors.
In a high-interest-rate environment, where the Fed’s rates remain elevated into late 2025, growth stocks like ABNB face compression.
Airbnb’s business model, reliant on decentralized short-term rentals, is increasingly vulnerable to regulatory crackdowns. Cities like New York, Barcelona, and parts of California have imposed strict limits on listings, reducing supply by up to 80% in some areas.
These restrictions erode host confidence, prompting a wave of properties shifting to long-term rentals.
Globally, oversaturation has flooded markets: U.S. short-term rental supply rose 8.9% year-over-year to January 2025, outpacing demand growth in 31 of the top 50 markets.
Airbnb’s dominance (44% share) is eroding as rivals invest in user experience and localized marketing.
Tariffs under the federal administration and the general high cost of living are squeezing household budgets, along with killing spending sentiment.
North America (46.77% of revenue) saw “softness” in urban areas, boding negatively for the rest of 2025.
When ABNB’s best market coughs, the rest of the world catches a cold.
There has been a lot of bad rhetoric in the way ABNB does business in the United States.
The company has deserted its “live like a local” theme and morphed into a more ruthless commission extraction machine.
I haven’t even mentioned the $250 cleaning fees, which should not even be allowed.
As customers and hosts continue to suffer from poor experiences, and regulatory and inflation concerns spiral out of control, it is hard to see a hockey stick-like growth trajectory in this company with no competitive moat.
ABNB shares are too expensive for what it is, and investors should balk at paying for shares unless they drop deep into the 2 digits – something like $80 per share would probably be a fair price for these shares.
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work.” – Said Steve Jobs
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 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