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Mad Hedge Fund Trader

October 1, 2020

Diary, Newsletter, Summary

Global Market Comments
October 1, 2020
Fiat Lux

Featured Trade:

(HOW TO RELIABLY PICK A WINNING OPTIONS TRADE)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-10-01 09:04:192020-10-01 09:47:16October 1, 2020
Mad Hedge Fund Trader

September 30, 2020

Diary, Newsletter, Summary

Global Market Comments
September 30, 2020
Fiat Lux

Featured Trade:

(INDUSTRIES YOU WILL NEVER HEAR FROM ME ABOUT

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-30 09:04:222020-09-30 09:44:06September 30, 2020
DougD

Industries You Will Never Hear From Me About

Diary, Newsletter

Industries You Will Never Hear from Me About.

The focus of this letter is to show people how to make money through investing in fast-growing, highly profitable companies which have stiff, long-term macroeconomic and demographic winds at their backs.

That means I ignore a large part of the US economy, possibly as much as 80%, whose time has passed and are headed for the dustbin of history.

According to the Department of Labor's Bureau of Labor Statistics, the seven industries listed below are least likely to generate positive job growth over the next decade.

As most of these stocks are already bombed out, it is way too late to short them. As an investor, you should consider this a “no go” list no matter how low they go. I have added my comments, not all of which should be taken seriously.

1) Realtors - The number of realtors is only down 10% from its 1.3 million peak in 2006. I have always been amazed at how realtors who add so little in value take home so much in fees, still around 6% of the gross sales price. Someone is going to figure out how to break this monopoly. The Internet is begging to destroy this business model.

2) Newspapers - these probably won't exist in five years, as five decades of hurtling technological advances have already shrunk the labor force by 90%. Go online or go away. Good thing I got out in time….40 years ago.

3) Airline employees - This is your worst nightmare of an industry, as management has no idea what interest rates, fuel costs, or the economy will do, which are the largest inputs into their business. Pilots will eventually work for minimum wage, or for free, just to keep their flight hours up.

4) Big telecom - Can you hear me now? Nobody uses landlines anymore, leaving these companies with giant rusting networks that are very costly to maintain. Since cell phone market penetration is 90%, survivors are slugging it out through price competition, cost cutting, and all that annoying advertising. How many Millennials even have land lines? About 30%.

5) State and Local Government - With employment still at levels private industry hasn't seen since the seventies, firing state and municipal workers will be the principal method of balancing ailing budgets. Expect class sizes to soar to 80 or go entirely online, to put out your own damn fires, and keep the 9 mm loaded and the back-door booby trapped for home protection. Anyone who sells to local governments is toast.

6) Installation, Maintenance, and Repair - I have explained to my mechanic that the motor in my new electric car has only eleven moving parts, compared to 1,500 in my old clunker, and this won't be good for business. But he just doesn't get it. Electric cars will soon price internal combustion ones out of the market.

The winding down of our wars in the Middle East is about to dump a million more applicants into this sector. The last refuge of the trained blue-collar worker is about to get cleaned out.

7) Bank Tellers - Since the ATM made its debut in 1968, this profession has been on a long downhill slide. Banks have lost so much money in the financial crisis, they can't afford to hire humans anymore. Thanks to the pandemic half of the big national branch networks have been closed.

It hasn't helped that hundreds of banks have closed during the recession, with many survivors merging to cut costs (read fire more people). Your next bank teller may be a Terminator.

 

Out With the Old

 

And in With the New

https://www.madhedgefundtrader.com/wp-content/uploads/2012/02/industry2-1.jpg 320 223 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2020-09-30 09:02:102020-09-30 09:53:39Industries You Will Never Hear From Me About
Mad Hedge Fund Trader

September 29, 2020

Diary, Newsletter, Summary

Global Market Comments
September 29, 2020
Fiat Lux

Featured Trade:

I HAVE AN OPENING FOR THE MAD HEDGE FUND TRADER CONCIERGE SERVICE),
(SOME SAGE ADVICE ON ASSET ALLOCATION)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-29 09:06:342020-09-29 08:59:20September 29, 2020
Mad Hedge Fund Trader

September 28, 2020

Diary, Newsletter, Summary

Global Market Comments
September 28, 2020
Fiat Lux

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or DID THE ELECTION OR COVID JUST HIT THE STOCK MARKET?),
(SPY), (TLT), (GLD), (TSLA), (UUP)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-28 10:04:092020-09-28 10:14:34September 28, 2020
Mad Hedge Fund Trader

The Market Outlook for the Week Ahead, or Did the Election or Covid Just Hit the Stock Market?

Diary, Newsletter, Summary

Did the election finally hit the stock market? It could have been both or neither.

Certainly, the passing of Supreme Court Justice Ruth Bader Ginsberg was worth 1,000 points, and maybe more. It may open the door to a period in politics that is uncertain at best or become violent at worst.

But the Coronavirus is making a comeback too. The US topped 7 million cases and 200,000 deaths, more than any other country in the world. The president’s new pandemic advisor, Scott Atlas, seems to be advocating a “herd immunity” approach. If so, 53% of the population will get the disease causing a total of 3 million deaths. The pandemic will continue for years.

New cases are spiking in Europe. The UK, which was on the verge of ordering workers back to their offices is now going back to a total shutdown. That augers for a second big wave in the US as kids go back to school and universities reopen.

With the S&P 500 now down 1% on the year, 2020 basically never happened. We saw a whole lot of volatility with no net movement. It makes my own 34.50% profit this year look stellar by comparison.

With the twin challenges of Covid-19 and the election lower lows for the market beckon. The one-year charts show that a “head and shoulders” top is in place for the (SPY), so my downside target at the 200-day moving average stands. That would be 3,074 for the (SPX) and $84 for Apple (AAPL).

There is a chance that the Fed could intervene in the stock market one more time right before the election if the markets resume the cascading falls of the spring. If that happens, buyers will return in hoards. My view is that this is but another dip in a long-term bull market that started in 2009 and may run all the way to 2030. You especially want to load the boat with Apple again.

However, the mystery of why technology stocks are so expensive remains. Let me take another shot at this.

From a technology point of view, we have just completely skipped the 2020s and are already in 2030. A year ago, would you have ever imagined that all of the country’s children would now be going to school online or that you’d be sending your business suits to the Good Will?

Stock markets have yet to price in the 2030 level of technology and profit, so the stocks will keep going up. Maybe we are already at 2023 or 2025 prices. I’ll let you know when I find out.

Volatility rocketed last week, and stocks collapsed. Any chance of further Covid-19 economic stimulus this year has just been demolished. If you were worried about the presidential election eroding confidence in the market before, now you have to be positively suicidal.

Any doubts about traders going into cash before the election have been vaporized. A 4-4 Supreme Court now makes an election outcome uncertain, no matter what the actual vote. Price that into your dividend discount model!

US Corona Deaths topped 200,000, weighing heavily on the economy and the election. There is no sign that the death rate is slowing, possibly reaching 400,000 by yearend. I went out to dinner last weekend and one-third of all businesses were boarded up, with no sign of reopening, ever.

Twelve IPOs to hit last week. This is in the wake of the Snowflake (SNOW) deal last week that tripled off its initial price talk. Apparently, there is an extreme shortage of high-growth large cap technology stocks and Silicon Valley is more than happy to meet that demand. Flooding the market like this ends up killing the goose that laid the golden eggs and is a common signal of market tops. Existing stock holdings have to be sold to buy new ones, taking markets south.

The economy slows as stimulus hopes fade as confirmed by last week’s economic data. US Consumer Sentiment dove in August, while Weekly Jobless Claims hover just below a Great Recessionary one million. The pandemic remains the dominant economic issue unless you live online.

The NASDAQ whale continues to sell, as Softbank (SFTBY) continues to unwind its massive technology long options positions. Last week, it was Adobe (ADBE), Salesforce (CRM), and Facebook (FB) that got hit. We won’t know if they made money on these for months, but they certainly put the final spike top in for the technology bubble.

The biggest debt increase in history occurred, with Federal government borrowing up an eye-popping 59% YOY. Sell every rally in the (TLT). It’s just a matter of time before a flood of new issuance destroys this market. We are sowing the seeds for the next financial crisis. The government was running record deficits BEFORE the pandemic even started.

Existing Home Sales soared in August, up 2.4% MOM to 6 million units, the hottest since 2006. Prices are up a huge 11.4% YOY. Homes over $1 million increased by 44% YOY as both work and school move home. Properties sit only 22 days on the market to sell, a record low.

Elon Musk promised a $25,000 car in three years, fully autonomous with long range and no maintenance for the life of the vehicle. The lifetime cost would be half of conventional gasoline-powered cars. That was the outcome of Battery Day in Fremont, CA, attended by hundreds of devotees safely enclosed in Teslas who honked instead of clap. It is all the result of dozens of revolutionary design and manufacturing improvements currently in the works, like moving from lithium to raw silicon for batteries. If so, General Motors (GM) and Ford (F) have had it.

A US dollar crash is imminent, says my old Morgan Stanley colleague Steven Roach. The double dip recession is here inviting even lower interest rates. The current account deficit soared to record highs in Q2. Buy the Aussie (FXA), Euro (FXE), and yen (FXY) on this dip.

Investors pull $25 billion from Equity funds last week as a new wave of nervousness hit the market. It’s the third largest weekly outflow in history. Everyone and his brother is trying to get out before the election. Pick your conspiracy theory as to what could go wrong.

When we come out the other side of this, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 400% or more in the coming decade. The American coming out the other side of the pandemic will be far more efficient and profitable than the old.
 
My Global Trading Dispatch stayed level at just short of an all-time high this week. I dumped my last two positions at the Monday morning opening as I could see the 1,000-point drop coming from a mile off, going to a rare 100% cash position.

The risk/reward in the market now is terrible. I believe we have to test the 200-day moving averages before it is safe to go back in with the indexes and single stocks.

That takes our 2020 year-to-date back up to a blistering 34.50%, versus a loss of 7.00% for the Dow Average. September stands at a nosebleed 7.95%. That takes my eleven-year average annualized performance back to 36.06%. My 11-year total return returned to another new all-time high at 390.41%. My trailing one-year return popped back up to 54.09%.

The coming week is a big one for jobs data. The only numbers that really count for the market are the number of US Coronavirus cases and deaths, now at 203,000, which you can find here.

On Monday, September 28 at 10:30 AM EST, the Dallas Fed Manufacturing Index is released.

On Tuesday, September 29 at 9:00 AM EST, the S&P Case Shiller National Home Price Index for July is announced.

On Wednesday, September 30, at 8:15 AM EST, the ADP Private Employment Report is printed. At 8:30 AM EST, the final figure for US Q2 GDP is disclosed. At 10:30 AM EST, the EIA Cushing Crude Oil Stocks are out.
change.

On Thursday, October 1 at 8:30 AM EST, the Weekly Jobless Claims are announced.

On Friday, October 2 at 8:30 AM EST, the all-important September Nonfarm Payroll Report is out. At 2:00 PM The Bakers Hughes Rig Count is released.

As for me, we have another superheating of the climate in store this weekend, with San Francisco Bay Area temperatures expected to top 100 degrees. The fires are out now, but high winds are coming so PG&E is expected to cut off electric power once again.

I’ll be fine with my solar and battery back-up. The Tesla power management software knows in advance when this is going to happen and automatically goes into maximum storage mode. But just to be safe and to keep the trade alerts coming, I am charging up the car and every battery I own.

Stay healthy.

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

 

 

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2020/09/john-at-tesla.png 476 408 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-28 10:02:342020-09-28 10:41:14The Market Outlook for the Week Ahead, or Did the Election or Covid Just Hit the Stock Market?
Mad Hedge Fund Trader

September 28, 2020 - Quote of the Day

Diary, Newsletter, Quote of the Day

“It’s not always the troops that storm the beaches who are the right ones to set up the government,” said Steve Vassallo from Foundation Capital about the resignation of founder Travis Kalanick from Uber.

https://www.madhedgefundtrader.com/wp-content/uploads/2020/09/war.png 336 538 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-28 10:00:222020-09-28 09:27:08September 28, 2020 - Quote of the Day
Mad Hedge Fund Trader

September 25, 2020

Diary, Newsletter, Summary

Global Market Comments
September 25, 2020
Fiat Lux

Featured Trade:

(HERE’S MY NEXT CHIP TEN BAGGER),
(AMD), (INTC), (NVDA), (MU)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-25 11:04:182020-09-25 14:42:11September 25, 2020
Mad Hedge Fund Trader

Here is My Next Chip Ten-Bagger

Diary, Newsletter, Summary

I am often asked which semiconductor company to buy. After all, this is not just the high beta play for the stock market as a whole, but the entire economy as well.

When times are good, consumers can’t get enough chips to stockpile. When they are bad, they are used as landfill. Semiconductors are the economy on a bungee cord.

For the past five years, the answer was always the same: top-end graphics card maker Nvidia (NVDA).

It was a great call. Since my initial recommendation in 2015, the stock has soared by tenfold, one of several ten-baggers I have been able to rake in during recent years.

Now it’s time to call the next ten-bagger.

That’s easy enough: Advanced Micro Devices (AMD).

(AMD) is an American multinational semiconductor company based in Santa Clara, California that develops computer processors and related technologies for business and consumer markets.

While it initially manufactured its own processors, the company later outsourced all its manufacturing, a practice known as going fabless, after GlobalFoundries was spun off in 2009. Chip foundry Taiwan Semiconductor Manufacturing (TSM) currently produces (AMD)'s chips.

AMD's main products include microprocessors, motherboard chipsets, embedded processors, and graphics processors for servers, workstations, personal computers, and embedded system applications.

In 2019, (AMD) brought in $6.48 billion in revenues, $631 million in operating revenue, and $341 million in net profits. It pays no dividend. For the current quarter, (AMD) expects revenue to rise an eye-popping 42% year over year to $2.55 billion.

The company was considered a lagging “also ran” for years, the poor cousin of Intel (INTC), Micron Technology (MU), and powerhouse Nvidia (NVDA).

Then Lisa Hsu took over in 2014. It has been straight up ever since. She immediately launched into a new generation of faster and more efficient chips, such as the Ryzen PC processors and Epyc server chips in 2017.

(AMD) now expects to ship its first revolutionary 7-nanometer processors in late 2022 or early 2023. Next to follow will be once unimaginable 3-nanometer processors. Now we are trying to get single electrons to go through gates.

AMD is also working with Hewlett Packard Enterprise (HPE) and nearby Lawrence Livermore National Laboratory on the El Capitan supercomputer for the U.S. Department of Energy. That gives the company another big advantage in developing new chip technologies.

As a result of (AMD)’s Herculean efforts, Intel was left behind in the dust, as its share price amply demonstrates.

Despite its recent ballistic growth (AMD) is still the smaller of the major chip companies. Its market capitalization stands at only $90 billion, compared to $209 billion for fading (INTC) and a monster $308 billion for (NVDA). Yet (AMD) boasts a higher growth rate.

If a global economic recovery ensues in 2021, (AMD) will be your play. As the move online vastly accelerates thanks to the pandemic, a global chip shortage is in the cards. Earnings, multiples, and share prices should all go up. The recent economic data from China shows that we are certainly headed in that direction.

Use this major selloff to stick your toe into (AMD).

To learn more about Advanced Micro Devices, please visit their website by clicking here.

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2020/09/amd-logo.png 236 236 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-25 11:02:252020-09-25 14:42:34Here is My Next Chip Ten-Bagger
Mad Hedge Fund Trader

September 24, 2020

Diary, Newsletter, Summary

Global Market Comments
September 24, 2020
Fiat Lux

Featured Trade:

(ELON’S BATTERY DAY BLOWOUT),
(TSLA), (GM), (F)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-09-24 09:04:302020-09-24 09:00:37September 24, 2020
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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.

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