Come late August and going into September, the market typically experiences seasonal weakness.And it looks as though this year will be no different.
Even though “pattern-wise” bull market structure has not been broken, we could experience some sideways movement or weakness for several weeks or even a month or two.Many indicators are flashing overbought, but it’s important to understand that the market can continue in this state for longer than most people realize.
As I have said before, nobody knows what Jay Powell will do in September.However, when Powell speaks at Jackson Hole on Friday, it might give us some clues, even if they are very subtle.The market should then behave accordingly. There is some consensus that Powell will cut rates by a quarter percentage point in September, but let’s not put that in the bag until we see it.Others are quite sure that Powell will keep things as they are, with their main argument citing inflation and its sticky presence.
A no-move-in rates might irritate the markets and give it a case of the blues for a short time, but I don’t think it will descend into a deep decline about not receiving a “sugar hit.”
It will be interesting to note Powell’s take on the labour market and his views on the inflation pass-through from Trump’s tariffs.There also could be a subtle swipe at the Trump administration regarding the Federal Reserve’s independence.If Powell does choose to remark here, the comments will be cleverly cloaked.
How Tom Lee of Fundstrat sees the market closing out 2025
Lee has a bull case for this market.Something that many people don’t agree with.
He is predicting that the market could hit 7,000 by year-end, if a couple of metrics fall into place.
Firstly, he thinks the Fed needs to start cutting interest rates.
Second, Lee believes U.S. manufacturing activity needs to pick up again.We can track this activity by looking at the ISM Manufacturing Index.A 50+ reading signals healthy growth.Lee notes it has been stuck below 50 for over two years.
There is risk.If tariffs result in more inflationary pressures or the ISM stays weak, Lee says a target of 6,600 might be as good as it gets.
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
https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Alert-e1457452190575.jpg135150april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-08-22 11:12:172025-08-22 11:13:49Trade Alert – (UBER) August 22, 2025 – STOP LOSS – SELL
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
The Diary of a Mad Hedge Fund Trader is now celebrating its 18th year of publication.
I religiously write or edit 25 newsletters a week of original, independent-minded, hard-hitting, and often wickedly funny research.
I spent my life as a war correspondent, Marine Corps combat pilot, Wall Street trader, and hedge fund manager, and if you can’t laugh after that, something is wrong with you.
I’ve been covering stocks, bonds, commodities, foreign exchange, energy, precious metals, real estate, and even agricultural products for 55 years.
You’ve been kept up on my travels around the world and listened in on my conversations with those who drive the financial markets.
The site now contains over 50 million words, or 100 times the length of Tolstoy’s epic War and Peace. That works out to a mind-bending 150 gigabytes of content.
Unfortunately, it feels like I have written on every possible topic at least 100 times over. If you sometimes think you’re getting repeats, you are; it’s just updated.
So, I am reaching out to you, the reader, to suggest new areas of research that I may have missed until now, which you believe justify further investigation.
Please send any and all ideas directly to me at support@madhedgefundtrader.com, and put “RESEARCH IDEA” in the subject line.
The great thing about running an online business is that I can evolve it to meet your needs on a daily basis.
Many of the new products and services that I have introduced since 2007 have come at your suggestion. That has enabled me to improve the product’s quality, to your benefit. Notice how rapidly my trade alert performance is going up, now annualizing at +51.31%a year.
This originally started out as a daily email to my hedge fund investors in 2008, giving them an update on fast-moving market events. That was at a time when the financial markets were in free fall, and the end of the world seemed near.
Here’s a good trading rule of thumb: Usually, the world doesn’t end. History doesn’t repeat itself, but it certainly rhymes.
The daily emails gave me the scalability that I so desperately needed. Today’s global mega enterprise grew from there. Today, the Diary of a Mad Hedge Fund Trader and its Global Trading Dispatch are read in over 140 countries by 30,000 followers. The Mad Hedge Technology Letter, the Mad Hedge Biotech & Health Care Letter, Jacquie’s Post, and Mad Hedge AI also have their own substantial followings. And Mad Hedge Hot Tips is one of the most widely read publications in the financial industry.
If any of you feel the urge to add another Mad Hedge newsletter to your existing subscription, please click here to visit our store. And while you’re at it, please click here to take a look at our schedule of upcoming Strategy Luncheons.
I’m weak in distribution in North Korea and Mali, in both cases due to the lack of electricity. But you never know, that may change.
One can only hope.
If you want to read my first pitiful attempt at a post, please click here for my February 1, 2008, post.
It urged readers to buy gold at $950 (it soared to $3,500), and buy the Euro at $1.50 (it went to $1.65).
Now you know why this letter has become so outrageously popular.
I always get asked how long will I keep doing this?
I am already collecting Social Security, so that deadline came and went. My old friend and early Mad Hedge subscriber, Warren Buffett, is still working at 95, so that seems like a realistic goal.
Hiking ten miles a day with a 50-pound pack, my doctor tells me I should live forever. He says he spends all day trying to convince his other patients to be like me, and the only one who actually does it is me.
The harsh truth is that I don’t know how to NOT work. Never tried it, never will.
Two years ago, I received a new reminder of my indestructibility. While observing a Ukrainian HIMARS missile attack on Crimea, a Russian missile landed 100 feet away from me. It was a dud and didn’t go off. If it had exploded, it would have killed us all. Later that day, a Russian bullet fired across the Dnieper River hit me in my right hip, embedded in my body armor. It missed the edge by an inch.
If that isn’t a message from above, I don’t know what is.
You never feel more alive than when you’re at war.
The fact is that thousands of subscribers love me for what I do, pay for me to travel around the world first class to the most exotic destinations, eat in the best restaurants, fly the rarest historical aircraft, and then say thank you. I even get presents (keep those pounds of fudge and bottles of bourbon coming at Christmas!).
Given the absolute blast I have doing this job, I would be Mad to actually retire.
Take a look at the testimonials I get only an almost daily basis and you’ll see why this business is so hard to walk away from (click here for those).
In the end, you are going to have to pry my cold, dead fingers off of this keyboard to get me to give up.
Fiat Lux (Let there be light).
John Thomas
CEO & Publisher The Diary of a Mad Hedge Fund Trader
https://www.madhedgefundtrader.com/wp-content/uploads/2023/10/john-with-firearm.png904778april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-08-22 09:02:302025-08-22 13:19:27The Mad Hedge Fund Trader Origin Story
“Believe nothing that you hear, and half of what you see,” said the legendary investor, Ron Baron.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2025-08-22 09:00:192025-08-22 13:19:17August 22, 2025 – Quote of the Day
A few years back, a Merck (MRK) executive was giving a presentation to Wall Street analysts when someone’s phone started ringing with the old Nokia tune.
Without missing a beat, the executive quipped, “Well, at least that’s one technology that had a longer patent life than most of our drugs.”
The room erupted in laughter, but it highlighted a fundamental truth about Big Pharma. They’re constantly racing against the clock, knowing their biggest moneymakers have expiration dates stamped right on them.
Speaking of racing against time, let’s circle back to Merck and why it deserves your attention right now, even as it wrestles with some serious headwinds that would make most companies reach for the antacids.
Last week, while everyone was talking about Eli Lilly’s (LLY) weight-loss drug drama and Warren Buffett’s surprise romance with UnitedHealth Group (UNH), Merck quietly put together a respectable rally that caught most folks napping.
The stock’s up about 9% since April, dividends included, and trading around $84 with all the excitement of watching grass grow.
Merck also just delivered second-quarter results that perfectly embodied the phrase “good enough.”
They beat earnings expectations with $2.13 per share versus the $2.03 consensus, which sounds impressive until you realize their revenue of $15.8 billion missed estimates by a modest $60 million.
The real story hiding in these numbers is more complex than assembling furniture without instructions.
The company’s facing a pharmaceutical soap opera right now.
On one side, you’ve got Gardasil sales plummeting 54% faster than your enthusiasm for New Year’s resolutions, which explains why investors initially yawned at the earnings beat.
On the flip side, their oncology and cardiovascular portfolios are performing like seasoned professionals, with Keytruda revenue growing 9% annually despite everyone wringing their hands about its 2028 patent expiration.
But here’s where it gets interesting for those of us who actually read beyond the headlines. Management is planning a $3 billion cost-cutting initiative tied to that Keytruda patent cliff, though they’re diplomatically calling it more of a “hill” than a “cliff.”
I’ve heard politicians use less creative spin, but the underlying message is clear: they’re not planning to go quietly into pharmaceutical retirement when their blockbuster drug loses patent protection.
New products like Winrevair are showing promising early performance, and executives are touting pipeline growth across 80 trials.
Meanwhile, the company is projecting revenue near $65 billion this year, which isn’t exactly pocket change even in today’s inflated economy.
From a valuation standpoint, Merck’s trading at a discount. The stock’s sporting a forward price-to-earnings ratio sitting around 12 times expected earnings, which is conservative enough to make your accountant smile.
Add in a solid 4% dividend yield that’s above the long-term average, and you’ve got an income play that actually pays you to wait around.
The technical picture tells a story of patient accumulation rather than explosive momentum.
Shares found solid support in the low $80s earlier this year and recently broke above their 50-day moving average.
The 200-day average still looms overhead like storm clouds, but the overall trend is pointing in the right direction for those willing to exercise some patience.
Risk-wise, you’re looking at the usual pharmaceutical suspects.
There’s uncertainty around how effectively they’ll execute that $3 billion reinvestment plan, plus the ever-present question mark around post-Keytruda performance.
Gardasil faces potential tariff headwinds, though we’re still waiting for the current administration to clarify its pharmaceutical trade policies.
The options market is pricing in about a 5.2% earnings-related move for the October release, which suggests traders aren’t expecting any earth-shattering surprises.
That’s probably appropriate given Merck’s tendency toward steady, predictable performance as opposed to roller coaster updates.
Merck represents that increasingly rare breed of large-cap pharmaceutical companies that combines reasonable valuation, consistent dividend income, and enough pipeline diversity to weather the inevitable patent cliff challenges.
It’s not going to make you rich overnight, but it might just keep paying dividends while you sleep, which strikes me as a pretty decent deal in today’s market environment.
Sometimes the tortoise really does beat the hare, especially when the tortoise pays you 4% annually for the privilege of watching the race.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2025-08-21 12:00:332025-08-21 12:32:19Slow And Steady Wins
It’s a bold man who makes long-term forecasts these days with so much of the global economy turned upside down this year.But nobody ever accused me of being cautious, retiring, or risk-averse. So here is my best shot at providing you with my best long-term investment ideas at the current time.
For new subscribers, the Mad Hedge Long Term Portfolio is a “buy and forget” portfolio of stocks and ETFs. If trading is not your thing and you don’t want to remain glued to a screen all day, these are the investments you can make. Then don’t touch them until you start drawing down your retirement funds at age 72.
For some of you, that is not for another 50 years. For others, it was yesterday.
There is only one thing you need to do now, and that is to rebalance. Buy or sell what you need to reweight every position to its appropriate 5% or 10% weighting. Rebalancing is one of the only free lunches out there and always adds performance over time. You should follow the rules assiduously.
Sector Choices
Technology
It’s a bold move to underweight technology these days. But after a run for the ages, it is time for an underweight, and I am cutting them back from a 40% market weighting to only 20%.Take profits now, and you will have the cash to buy them back after their ritual 50% selloff. There is no doubt that the industry will continue to grow for the rest of this decade. However, the stocks have run ahead of themselves, as they often do.
Banks
I am keeping my heavy weighting in banks at 20%. Interest rates are eventually going to fall, with a Fed cut just over the horizon, setting up a perfect storm in favor of bank earnings. Loan default rates are falling. Banks are overcapitalized, thanks to Dodd-Frank. So, keep heavy weightings in banks that will profit from a modestly growing economy. They are also a key part of my “barbell” trading portfolio.
Homebuilders
New homebuilders are among the best falling interest rates out there, which are among the best falling interest rate plays out there.They will receive a tailwind from a structural shortage of 10 million homes.
International
Emerging markets do great when the US dollar falls. They are also among the cheapest stocks in the world. Some diversification away from the United States is warranted these days, and emerging markets are the highest beta way to accomplish this.
Bonds
With the government raising its debt ceiling by $5 trillion this year, a permanent pall is going to hang over the long-term bond markets, which have become the pariahs of the international investment community. Even if the Fed cuts interest rates, long bonds won’t catch a bid. Therefore, I am not allocating any resources to the bond market for the foreseeable future.
Foreign Exchange
Falling interest rates are death for any currency as they cut its yield advantage relative to other currencies.I am keeping my foreign currency exposure unchanged, maintaining a long in the Euro (FXE). Eventually, the US dollar will become toast, and foreign currencies could be your next decade-long trade.
Precious Metals
As for precious metals, I’m keeping my 10% holding. Central banks have been accumulating gold for a decade and show no signs of slowing down. And gold production is falling and getting more expensive, driving prices up.
Energy
Energy is a bombed-out sector that is starting to attract some long-term investors. At some point, the OPEC price war will end, and the global economy will reaccelerate. Among the cheaper sectors out there, this is one of the better ones.
Commodities
The American grid has to triple in size to accommodate the current growth of Artificial intelligence. EV sales will recover at some point, sending demand for copper soaring.
Health Care
There is nothing like buying a bombed-out sector at a discount, and nothing meets that description better than UnitedHealthcare (UNH). The company has been targeted for fraud by the US government, and a senior executive was assassinated last year. Still, both Warren Buffett and I see the long-term potential to recover its dominant share in the market, and you certainly can’t argue with “cheap.”
To download the entire new portfolio in an Excel spreadsheet, please go to www.madhedgefundtrader.com, log in, go to “My Account”, then “Global Trading Dispatch”, click on the “Long Term Portfolio” button, then “Download.”
Stay healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
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.
