Jacque's Post Archives - Mad Hedge Fund Trader

June 23, 2023

(GETTING WEALTHY IS ONE THING; STAYING WEALTHY IS ANOTHER)

Friday, June 23, 2023

Hello everyone,

I thought I would dive into some psychology around money today. In my personal opinion, I don’t think enough emphasis is placed on this area. Most people just focus on their spreadsheet and the numbers – and looking at whether they are in profit or loss. But there is so much more to making and keeping money than just counting the numbers. It really involves your behaviour around money.

Getting wealthy and staying wealthy involve different skills.

Getting wealthy involves taking risks, being optimistic, and putting yourself out there. For instance, you all took a risk subscribing to my product, and some of you are also subscribers to John’s product. But, if you don’t take some risks, you will stay in the same place.

Staying wealthy requires a certain amount of frugality and an element of paranoia. In other words, you need to be wise to the possibility that what you have made in the past ten years or past two years can be taken away from you just as quickly. Furthermore, it also requires acceptance that at least some of what you have made is attributed to luck. In other words, you placed that trade that John or I sent out at just the right time and got a great price and then you closed it at maximum profit. You were in the right place at the right time. What I am trying to highlight here is that you can’t be complacent. It becomes more about survival through all the financial storms that have happened in the past and are arguably ahead of us.

It must be the cornerstone of your strategy. A survival mentality is key with money.

We all must learn to survive the ups and downs we will inevitably experience over time.

So, how do we do this?

Who can we look to and learn from?

Let’s look at Warren Buffett for a moment. There are numerous books written about this man and his strategy on how to invest and become wealthy. But let’s investigate the things that he didn’t do.

He didn’t get carried away with debt.
He didn’t panic during the 14 recessions he lived though.
He didn’t attach himself to just one strategy.
He didn’t limit himself to one worldview.
He didn’t sully his business reputation on one passing trend.
His survival gave him longevity – he didn’t burn himself out and quit and retire.

Warren Buffett and Charlie Munger had another partner when they started Berkshire Hathaway.
His name was Rick Guerin. Unlike Buffett and Munger, Guerin was in a hurry to make money. During the 1973-1974 downturn, Rick was positioned with margin loans, so when the stock market went down almost 70% in two years, he got margin calls. Ultimately, Rick ended up selling his Berkshire stock to Warren at under $40 a piece. He was forced to sell – a position you never want to be in.

Most people would wonder, how could this have happened to him; a person that was so smart with money and was surrounded by great mentors.

It is important to remember that having an edge and surviving are two different things.

The first requires the second.

You must become unbreakable.

Compounding doesn’t rely on earning big returns, merely good returns, sustained, uninterrupted for the longest period of time, especially in times of chaos and havoc. This is the strategy that will always win.

Planning is important – but the most important plan is to plan on the plan, not going according to plan.

Sounds weird, right, but doing this gives you some breathing space.

Financial and investment planning are critical because they let you know whether your current actions are within the realm of reasonable.

But remember, few plans of any kind survive their first encounter with the real world. We’ve all been there, right?

If you are projecting your return, your income over the next 25 years, think about all the big stuff that has happened over the last 25 years, that no one could have foreseen. I’m talking about those “black swans.”

September 11.

A housing boom and bust that caused 10 million Americans to lose their homes.

A financial crisis that caused almost 9 million Americans to lose their jobs.

A record-breaking stock market rally that ensued.

And a Corona Virus that shook the world.

A plan is only useful if it can survive reality.

A future filled with unknowns is everyone’s reality.

So, there should be room for error in everyone’s plan.

And please, turn off the noise of the talking heads on TV. It will manipulate your thinking and psychology about when to invest. The best investment strategy is to buy small parcels often regardless of whether we are heading into recession, are in a recession or there has been some major crisis. The most successful strategy can seem quite boring.

In an annual general Berkshire Hathaway stockholder meeting in 2013, Warren Buffett said that he has owned abut 400-500 stocks over his lifetime but has made most of his money with only about 10 of those stocks which outperformed. Charlie Munger admits that if you removed just a few of Berkshire’s top investments, its long-term track record is pretty average. When we pay attention to role models’ successes, we can overlook that their gains came from a small percentage of their actions. In other words, maybe they are right just as often as you or me.

It's not whether you are right or wrong that’s important, but how much you make when you’re right and how much you lose when you’re wrong. (George Soros)

So, you can be wrong half the time and still make a fortune.

We underestimate how normal it is for a lot of things to fail which causes us to overreact when they do.

I’ll be writing more pieces about the psychology around money because I think it is important to gently nudge you into thinking about your behaviour in relation to investment/trade decisions.

A little bit of housekeeping now:

For those of you who have not filled out this survey about peer tutoring, could you please do so by clicking on the link below? Once I know who would like to participate, I can go ahead and begin grouping people together.

Here is the link to the Survey Page https://www.madhedgefundtrader.com/trader-survey/

Wishing you all a magical weekend.

Cheers,

Jacquie

June 21, 2023

Jacque's Post

(INTEREST RATES IN AUSTRALIA AND THE EUROZONE)

Wednesday, June 21, 2023

Hello everyone,

I hope you all had a wonderful long weekend.

Interest rates rose in the Eurozone and in Australia, but were put on pause in the U.S.

Let’s investigate.

The decision to hike another 25 basis points in Australia brings the cash rate to 4.1%, its highest level in 11 years. And there are more hikes to come to make sure inflation returns to target.

The Reserve Bank of Australia (RBA) currently forecasts headline inflation – which was running at 7% last quarter- to return to the top of its target range of 2-3% by mid-2025, a slower path than many other economies as Lowe wants to preserve strong gains in the labour market.

Mortgage owners have been hit with a 400-basis point hike in the space of a year in what has been hailed as the fastest tightening cycle on record, as inflation stays stubbornly high.

April 2023 has been the only exception, when the RBA briefly paused rates, giving mortgage holders a much-needed reprieve.

Aussies with an average loan size of $577,000 will be spending over $15,000 more per year on their mortgage compared to what they were in April last year.

Lowe has already acknowledged the risks of a more pronounced downturn in the economy, saying the path to “achieving a soft landing remains a narrow one”. The RBA is walking a tight policy rope.

It is thought that the RBA will hike again in July or August to bring rates up to 4.35%. Some of the major banks in Australia are estimating that there won’t be any rate cuts until November 2024. And the banks are also suggesting that mortgage rates could hit 7+% before they start to moderate in late 2024 and into 2025.

Many homeowners bought houses in Australia in the last few years before interest rates surged as there was a firm commitment expressed by the RBA not to raise rates until 2024. Now, many of these people are being forced to sell their homes because they can’t meet the increased costs.

Looking historically at rates from the 1970s onwards in Australia, high interest rates have not been uncommon. Rates exceeded 10% for the first time in 1974 and pretty much remained above 10% until 1995. In just 4 years, interest rates dropped from the high of 17% (January 1990) to the low of 8.75% (June 1994). After a peak of 10.5% in 1995, interest rates reached a low point of 6.5% in December 1998.

Average House prices in Australia increased to $896,000 (AUD) in the first quarter of 2023 from $887,500 in the fourth quarter of 2022.

Australian Fixed Housing Interest Rates

Average house prices in Australia from late 2020 to early 2023

So, what’s happening in Europe? Are they in a better position than Australia?

Last Thursday, the European Central Bank raised eurozone interest rates by a quarter-percentage point to the highest level since 2001 and they have indicated that another hike is likely as they strive to get inflation under control. The hike marks the eighth successive rate rise for the bank showing that they too are struggling to rein in price rises amid quavering economic growth.

The latest increase pushes the ECB’s deposit rate, which is paid on commercial bank deposits, to 3.5% - the highest since 2001. Inflation is expected to average 5.4% in 2023, before dropping to 3% in 2024, according to fresh projections from ECB staff.

The central bank’s rates cover the 19 member economies that make up the eurozone. The latest rate hike marks the sharp shift in economic forces when compared with last summer’s deposit rate of -0.5%.

Last week, revised data showed that the eurozone had slipped into recession as the rising cost of living dampened consumer spending. Economic output shrank by 0.1% in the final quarter of 2022 and the first quarter of 2023, according to official data from Eurostat. A technical recession is generally defined as two consecutive quarters of negative growth. The central bank is “very likely” to raise rates again in July as there is still ground to cover in taming inflation according to Christine Lagarde.

Eurozone inflation rises to 8.6%, the highest ever – The New York Times

Even though the US paused on raising rates last Wednesday, it seems that further rate rises are to come worldwide before peaking next year. When and by how much rates are cut will differ in each country, but the US market appears to be pricing in rate cuts as early as later this year. Let’s see if Mr. Market is correct.

Have a great week.

Cheers,

Jacquie

The president of the European Central Bank, Christine Lagarde, spoke in Frankfurt, Germany last Thursday.

June 16, 2023

Jacque's Post

(WELCOME TO THE WONDERFUL WORLD OF LEAPS)

June 16, 2023

Hello everyone,

LEAPS are going to be the flavour of the month for John this month, I believe. There are some wonderful setups out there in various sectors, so you must strike while the iron is hot.

For advanced personalised LEAPS coverage, you can sign up for Mad Hedge Concierge for $12,000. Everybody makes their money back on the first trade.

So, let’s dive into LEAPS and find out about them.

What are LEAPS?

Basically, LEAPS are longer-term options. The term stands for “Long Term Equity AnticiPation Securities.” Please note that the capital P in AnticiPation is not a typo. Just in case you are wondering.

Options with more than 9 months until expiration are considered LEAPS. They behave just like other options, so don’t let them confuse you. It simply means that they have a long “shelf-life”.

What’s the goal of LEAPS?

Traders reap benefits like those you’d see if you owned the stock while limiting the risks you’d face by having the stock in your portfolio. In effect, your LEAPS call acts as a “stock substitute.”

So, the first job is to pick a stock you would consider putting LEAPS on. Then you need to choose your strike price.

If you choose a LEAPS call that is deep in-the-money, it means that the strike price is below the current stock price. If you use this strategy, it is a good idea to look for a delta of .80 or more at the strike price you choose.

Just to clarify, a delta of .80 means that if the stock rises $1.00, then in theory, the price of the option will rise $0.80. If the delta is .90, then if the stock rises $1.00, in theory, your options will rise $0.90, and so on. The deeper in-the-money you go, the more expensive your option will be. That’s because it will have more intrinsic value. But the benefit is that it will also have a higher delta. And the higher your delta, the more your option will behave as a stock substitute.

It's good to know

A.70 or .80 delta is wise if you’re buying a LEAPS contract if you truly want to replicate the synthetic nature of the stock.

It’s a good idea to choose options with a strike price of at least 20% less than the current market price. The exception to this rule is when you know a stock is very volatile.

What is intrinsic value?

Intrinsic value is the profit you would realize by exercising the option immediately. For calls, intrinsic value is equal to the stock price minus the strike price. For puts, it is the strike price minus the stock price.

What is delta?

The most basic explanation of delta is that it is a measurement of how much an option’s price will change given a $1.00 move in the underlying security. In other words, delta is a number that dictates how much an options contract will change for every $1.00 the underlying asset moves in price. Call options have a positive delta that can range from 0.00 to 1.00. At-the-money options usually have a Delta near 0.50. The Delta will increase (and approach 1.00) as the option gets deeper ITM. The Delta of ITM call options will get closer to 1.00 as expiration approaches.

Why is delta important?

Traders need to understand how delta affects an options contract because it will determine how profitable the trade is and how likely the trade is to be profitable. In other words, it answers the question - will the options contract be likely to be in-the-money at expiration?

LEAPS have an end date unlike owning stocks. As expiration approaches, options lose their value at an accelerating rate. In other words, if you do a single LEAPS option – just buy LEAPS call without using a spread, time decay will work against you. So, pick your time frame carefully. Although, if you do a LEAPS option spread, the time decay works in your favour.

How many LEAPS should I buy?

So, now you have chosen the stock, your strike price, and the expiration month – at least one year out is a good choice or even two years out if your like. Now you must decide how many LEAPS calls to buy.

If you usually buy 100 shares when you purchase a stock, then it would be suitable to purchase 1 options contract. If you usually purchase 200 shares, then you would purchase 2 options contracts, and so on. It is totally up to you and is determined by the capital you have in your trading account and how much capital you wish to put to work in each trade. One piece of advice, if you can’t sleep at night, then you need to reduce the trade size. It’s that simple. The goal is to make money and improve your life – not increase your stress levels. There is no rush here, as once you have the skill and knowledge of how to trade options, you can trade forever – until your physical body signs out.

Why would I do out of the money call options?

Out-of-the-money (OTM) options are cheaper than other options since they need the stock to move much more to become profitable. The further out of the money an option is, the cheaper it is because it becomes less likely that the underlying will reach the distant strike prices. So, you would only buy (OTM) options when you are expecting a substantial increase in the price of the underlying stock. If this strategy works, the payout is great.

But the risk is also great. Many experienced options players often say that buying (OTM) options is a rookie mistake. Yes, they are cheap, but they have low delta, which means there is a high probability they will be unprofitable at expiration.

It’s always good to remind yourself that the goal of trading LEAPS options contracts is to make money.

So, you need to look at buying at the money or in the money options with quite a high delta. For example, you could look at an options contract with a delta of .70. Here you will find that the options contract will increase by .70 for every dollar that the underlying asset moves. Sounds like a good choice to me. They are not too expensive and have a high probability of being profitable.

Why would I do at the money call options?

At-the-money (ATM) options have a strike price that is equal to the underlying stock price. (ATM) options have no intrinsic value, but because they have time value (extrinsic value), they could potentially earn profits before they expire.

Can you sell LEAPS early?

LEAPS can be sold prior to expiration. So, for example, if the stock moves a lot in the first month after putting on the LEAPS and you are in profit, by a large margin, you can close the trade.

How are you taxed on selling LEAPS?

Any gains earned from LEAPS options held for over a year are taxed at the same long-term capital gains rate you’d pay if you’d held stock for over a year before selling.

Have a wonderful weekend.

Cheers,

Jacquie
Mad Hedge Jacquie’s Post

Trade Alert - (TLT) June 16, 2023 - EXPIRATION AT MAX PROFIT

Jacque's Post

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

Trade Alert - (FCX) June 16, 2023 - EXPIRATION AT MAX PROFIT

Jacque's Post

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

June 14, 2023

Jacque's Post

(COPPER AND THE GREEN ENERGY REVOLUTION)

June 14, 2023

Hello everyone,

Today I thought I would venture into the world of copper, look at a bit of history, and understand why it is so valuable today, what we use it for and why there may be an impending shortage in the future.

Copper has played a big role in the world economy for thousands of years.

In the Bronze Age, blacksmiths worked out how to forge copper and tin. The continual refinement of copper, both in its combination with other metals and the extraction process, transformed the world by improving tools, construction, and weaponry.

The Middle Ages and the Age of Discovery saw copper applied in new and exciting ways. Copper became a part of artistic expressions in Renaissance canvases and sculptures and later in styles such as daguerreotype photography. (For those who don’t know, daguerreotype was the first commercially successful photographic process (1839 – 1860) in the history of photography. The daguerreotype is a direct-positive process, creating a highly detailed image on a sheet of copper plated with a thin coat of silver without the use of a negative.) Copper has also played a large role in international relations and affairs. It lined the hulls of Christopher Columbus’s seafaring fleet to prevent the ships from sustaining damage from salt water and biological agents. Furthermore, the Statue of Liberty, France’s gift to the fledging United States, incorporates more than 200,000 pounds of copper (but her green tint comes from years of oxidation).

One of the most significant moments in copper history occurred in 1977, when technology giant IBM adopted oxidized copper interconnects, replacing the aluminum standard. The result was fast, smaller, and thinner computers and gadgetry due to copper’s malleability and ability to conduct electricity with 40% less resistance than aluminum.

So, we find that copper is used in electrical and heating equipment because its chemical properties make it such a useful conductor. Today it is used in car motors, household pipes, washing machines, all sorts of things we use every day. Furthermore, we can’t forget to mention all the different copper alloys that are mixed into other metals and items. Significantly, the metal is so easily recyclable that most of the copper on earth remains in the ground. In fact, only 12% of all copper on Earth has been mined throughout history and nearly all of it remains in circulation.

Some of the copper in circulation right now could once have been jewelry or armor in ancient Egypt. In fact, the International Copper Association estimates that an incredible 75% of the copper produced since 1900 is still in use.

In May 2021, analysts at Goldman Sachs called copper “the new oil.”

So, why are some people, including commodity analysts at Goldman Sachs warning about a copper shortage with dire consequences for the economy?

In short, it is about the mining and recycling infrastructure being unable to meet the potential demand from these industries.

In May 2021, leading on from “the new oil” comment, analysts at Goldman Sachs suggested that copper could rise in value in the next few years from $9,000/ton to $20,000/ton.

With this in mind, we need to position now for long-term demand in green technology. I’m not saying this rise is going to happen next year, but it will in the next 5-7 years.

People are just starting to realize the magnitude of copper’s presence throughout the economy.

Mind you, we call it Dr. Copper because we see it as having a Ph.D. in economics. When economic activity increases demand for copper increases and copper prices rise. In that sense, the copper market becomes a barometer for global economic growth – a leading indicator.

But Dr. Copper does not always provide a certain diagnosis. Sometimes, the connection between copper prices and economic growth breaks down.

Copper is important for a lot of local economies as well. You may be wondering where it comes from.

In the last 50 years, South America has become important. Peru and Chile really dominate. Arizona is the leading copper producer in the U.S. Zambia in Africa has a significant copper belt. There is also a large mine in Mongolia.

The copper industry is bracing for a boom in demand. Governments and companies around the world are preparing for a green energy revolution. We will witness entire new power grids using solar, wind and water to power turbines and feed electricity into copper wires. What’s more, EVs need much more copper than their gas-powered counterparts. Take a look at the graph here and compare the quantity of copper used in each vehicle.

There is basically three and a half times more copper in EVs than in gas-powered cars. You need to account for the motors in the batteries – more electronics.

Solar has a similar story. With conventional energy, we normally would use one metric ton of copper per megawatt of generating capacity. When you look at renewable energies, you are looking at four to six times that amount of copper.

Solar installation could be something like 9,000 lbs/megawatt.

Wind farms could be as much as 15 million lbs. of copper.

In individual wind turbines, there would be about 800 lbs. of copper.

So, as we move to a decarbonized economy, we are basically replacing C in the periodic table with CU.

Higher copper prices may have a silver lining. It will cause mining companies to break ground on more new projects since extracting copper will have a bigger payoff. There’s also new technology springing up to extract copper. For more information there, investigate Jetti Resources. This company is now able to extract copper from low-grade material – that is, material that was once dumped in the rubbish.

It's interesting to note that 65% of all unearthed copper is used by the electronics industry.

The global copper market reached USD 241780 million in 2021-2022. This market is expected to reach the value of USD 343900 million by the end of 2030.

Start positioning for the future growth of this market.

The life cycle of copper is infinite

Environmental benefits of secondary copper from primary copper

Wishing you all a great week.

Cheers,

Jacquie

Mad Hedge Jacquie’s Post

June 12, 2023

Jacque's Post

(SUMMARY OF JUNE 7, 2023, MAD HEDGE WEBINAR)

June 12, 2023

Hello everyone,

Hope you had a wonderful weekend.

Welcome to a new week.

Title: The Next Rotation is Here

The Mad Hedge Traders and Investors Summit. Don’t forget to register.

Lunches

July 6 New York
July 13 Seminar at Sea
July 19 London

Trade Alert Performance

June 0.01%
2023 year to date +61.74%
+658.93% since inception
40 out of 44 trade alerts profitable.

Trading opportunities very few.

Positions

TSLA 6/120-130 call spread 10%
FCX 6/32-35 call spread 10%

20% long
80% cash
VIX – at $13.

Method to My Madness – A Bipolar Market

Equity allocations are at a 15 year low with massive amounts of cash in 90-day T-bills.

Expect funds to pour into stocks in the second half of the year as per the Mad Hedge play book.

Big rotation out of cash into Industrials, commodities and energy is near.

Bonds weaken – looking for another 0.25% rise June 14th.

Summer will present the best buying opportunity of the year. Precious metals and commodities should be at the top of your list.

Global Economy

Non-farm payroll soars by 339,000 in May for the 10th consecutive month of increases.

Unemployment jumped 0.3% to 3.7%.

The biggest rise in unemployment for three years.

Inflation continues to fall 0.4% in April.

China’s PMI dives – struggling out of the post-covid world.

Stocks

They are not reflecting the massive increase in earnings and the large multiple expansion.

Record $8.5 billion poured into tech stocks last week – “the Magnificent Seven”.

Don’t forget to take profits in tech if you are a short-term trader.

Tech could move sideways before the next move up.

Rotate into commodities, industrials, and energy.

If a Black Swan decides to land on us, it could take the S&P500 down 17-20%.

“The Magnificent Seven” has made new highs for the year. (Apple, Google, Meta, Amazon, Salesforce, Nvidia, and Tesla).

LEAPS candidates

CAT Caterpillar
FCX Freeport McMoran
X US Steel
GS Goldman Sachs
MS Morgan Stanley

Bonds

Bonds plunge on a red-hot May non-farm payroll, which suggests another quarter point interest rate rise from the Fed at the June or July meeting.

Fitch puts US debt on credit watch. First time since 2011 Moody’s downgrades from AAA to AA+.

Treasury to issue $1 trillion in Y-bills within weeks after debt ceiling deal, pushing short-term yields up.

Keep buying 90-day T-bills now pushing a 5.2% risk-free yield.

Looking for 2.5% yield by the end of 2023.

June bond ETFs (JNK) and (HYG) are a great high-yield play.

Foreign Currencies

US$ jumps on May nonfarm payroll suggesting another ¼ point interest rate hike from the Fed at the June13-14 meeting.

Any strength in the dollar will be temporary.

Rapidly worsening economic data sparking recession fears.

10 consecutive months of inflation is another indicator of a slowdown.

Looking for new dollar lows by the end of 2023.

Buy FXE, FXB, FXY, and FXA on dips.

Energy and Commodities

Saudi Arabia cuts again adding another 1 million barrels a day reduction to the existing 2 million one.

The goal is to prevent a price collapse in the face of a slowing global economy.

Oil collapse is signaling a recession as is weakness in other commodities, even lithium.

Tesla becomes world’s largest selling car.

Buy (USO) on dips as an economic recovery play.

China expects LNG price spike later this year due to coming supply shortages and a recovering economy.

Precious Metals

Fear of rising interest rates causing metals to drop and bounce around a lot.

JP Morgan recommends adding cash and Gold.

Gold headed to $3000 by 2025.

Soon-to-be falling interest rates is the main driver here, and the winter season in crypto.

Silver has a higher beta and is a better play.

Russia and China are also stockpiling gold to sidestep international sanctions.

LEAPS candidates

GOLD Barrick Gold
GDX VanEck Vectors Gold Miners ETF
SLV iShares Silver Trust ETF
WPM Wheaton Precious Metals

Real Estate

30-year fixed rate mortgage jumps back to 7.0%.

Worst case, home prices go sideways from here until lower interest rates launch a new bull market in housing.

Home builder sentiment up for the 10th straight month, as it will be for the next decade.

CCI – Crown Castle International – great income play, with 5.50% yield.

Next Webinar is on June 21, 2023.

Wishing you all a week filled with adventure and wonder.

Cheers,

Jacquie

June 9, 2023

Jacque's Post

(QUANTUM COMPUTING AND CYBERSECURITY)

June 9, 2023

Hello everybody.

Do you have security on your laptop? Do you ever worry about your information being stolen?
Encryption on our computers keeps our information safe for now. However, the impact of
quantum computing on cybersecurity is game-changing.

Quantum computing holds great promise in many areas, such as medical research, artificial intelligence, weather forecasting, etc. But it also poses a significant threat to cybersecurity, to the extent that it will require a change in how we encrypt our data. Even though quantum computers don’t technically have the power to break most of our current forms of encryption yet, we need to stay ahead of the threat and come up with quantum-proof solutions now. If we wait until those powerful quantum computers start breaking our encryption, it will be too late.

Security of our information is paramount. The only way to ensure the security of information, particularly information that needs to remain secure well into the future, is to safeguard it now with quantum-safe key delivery.
The potential of quantum computing is far beyond the average person’s imagination. Quantum computers will be able to solve problems that are far too complex for classical computers to figure out. I mean, can the average person figure out the computers we have now?
Quantum computers (QC) will be able to solve the algorithms behind encryption keys that protect our data and the internet’s infrastructure. That really sounds scary and very futuristic. So, will anything be safe online?

Today’s encryption is based on mathematical formulas that would take today’s computers an impractically long time to decode. To simply do this, think of two large numbers, for example, and multiply them together, it’s easy to come up with the product, but much harder to start with the large number and factor it into its two prime numbers. A quantum computer, however, can easily factor those numbers and break the code.

Today’s RSA encryption, a widely used form of encryption, particularly for sending sensitive data over the internet, is based on 2048-bit numbers. Experts estimate that a quantum computer would need to be as large as 70 million qubits to break that encryption. Considering the largest quantum computer today is IBM’s 53-qubit quantum computer, it could be a long time before we’re breaking that encryption.

As the pace of quantum research continues to accelerate, though, the development of such a computer within the next 3-5 years cannot be discounted. For instance, earlier this year, Google and KTH Royal Institute of Technology in Sweden reportedly found “a more efficient way for quantum computers to perform the code-breaking calculations, reducing the resources they require by orders of magnitude.” Their work, highlighted in the MIT Technology Review, showed that a 20 million-qubit computer could break a 2048-bit number – in a mere 8 hours. What that shows, is that continued breakthroughs like this will keep pushing the timeline up.

The greatest risk is the vulnerability of information that needs to retain its secrecy well into the future, such as national security-level data, banking data, privacy act data, etc. Those are the kind of secrets that really need to be protected with quantum-proof encryption now, particularly in the face of corrupt individuals/groups, who are stealing it while they wait for a quantum computer that can break the encryption.

Researchers have been working hard in the last several years to develop “quantum-safe” encryption. One thing is for certain, however, when it comes to the impact of quantum computing on cybersecurity, it will pose a threat to cybersecurity and our current forms of encryption. To mitigate the threat, we need to change how we keep our data secure and start doing it now. We need to approach the quantum threat as we do other security vulnerabilities: by using defence-in-depth approach, one characterised by multiple layers of quantum-safe protection. Security organisations focused on the future understand this need for crypto agility and are seeking crypto-diverse solutions like those offered by QantumXchange to make their encryption quantum-safe now, and quantum-ready for tomorrow’s threats.

We can’t afford to let our guard down in this critical area. The good actors need to outpace the bad actors in this space and make sure our security measures are impenetrable.

Wishing you all a great weekend.

Cheers,
Jacquie

Quantum computing and cybersecurity

White House launches plan to safeguard US infrastructure against quantum computing.

Hacking activity – we need to outsmart the bad actors first.

Difference between Classical computing and Quantum Computing

The mystery of quantum computers.

Jacquie's Post Trade Alert - (FCX) June 9, 2023 - BUY

Jacque's Post

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

June 7, 2023

Jacque's Post

(IS WATER THE NEW GOLD?)

June 7, 2023

Hello everybody.

We all know how important water is. To begin with, we as human beings, consist of 55-60% water. We are always told to drink more water to maintain better health.

What we might not fully realize is the significance of water, not only for ourselves, but also for our ecosystem, our economy, and our planet.

We can benefit physically and financially by investing in it.

But how do we invest in water?

Water is already traded on the financial markets, but does it make sense for you to invest in this resource?

Let’s see…

Water is a commodity, like gold, oil, wheat, or sugar.

So, it can be traded and like other commodities, the price can fluctuate depending on supply and demand. Research shows that the supply of water could begin to decrease in the next decade, which means demand will increase exponentially.

And what will that mean?

You guessed it.

The price of water goes up.

And the water crisis keeps getting worse.

So, what can you do?

You can invest in companies that deal with recycling water and water efficiency.

One managed fund is the Pictet Clean Water Fund – where you can profit from water as an investment opportunity.

OK, we all know how supply and demand works, - Economics 101.

For example, if there is a drought and there is a low wheat harvest due to drought or extreme weather events, the supply goes down. In the economy, in general, there will be more demand, than supply which makes the price go up. As water is a commodity, we can see the same thing. There are supply and demand issues here as well.

Let’s ask a critical question?

How much water do we have on Earth?

And can we meet the demand without major problems?

We must wrap our heads around the fact that only 3% of the water on the planet is freshwater – which humans can consume. The rest of it, 97% is too salty to drink or to use for agriculture.
Glaciers hold around 2.5% of freshwater, which is inaccessible to humans.

So, when you think about it, there is not that much water available.

And, like it or not, climate change, is threatening our supply.

How?

Extreme weather events – which are increasing – are threatening the availability of cleanliness of water.

Rising sea levels impact the supply of fresh water. As ocean levels rise, freshwater becomes salty water.

The impact…

Water prices will rise in the future as less supply = higher prices.

As the world population grows to almost 10 billion in 2050 and the increased wealth of that population demands far more luxury foods, such as meat, the value of water will be highlighted.

Consider that it takes 15,415 litres/1 kg = a single T-bone steak.

So, you are looking at two Olympic swimming pools to produce the meat from just one cow.

Or think about your cup of coffee. For 1kg of coffee beans, you need 18,900 litres of water.

As more and more people become part of the middle class in countries such as China and India, you can begin to imagine the demands on water, as a resource.

Agriculture and food take up 69% of the world’s water resources now.

Scarcity will make water more valuable.

England has announced that by 2050 domestic demand could exceed supply by up to 3.1 billion litres/day.

NASA has discovered that 21 out of 37 of the world’s aquifers are currently being depleted.
Other freshwater sources are being polluted.

The Chinese government admits that 80% of the country’s surface groundwater is not fit for drinking, while 90% of groundwater in urban areas is contaminated and 40% of its rivers are too polluted to use for either agricultural or industrial use.

By 2025, it’s estimated that 66% of the world will live in water-stressed areas according to the World Resources Institute.

A 40% gap between supply and demand will emerge over the next 15 years.

Water has always been important. Even Dwight Eisenhower remarked that “among these treasures of our land is water, fast becoming our most valuable, most prized, most critical resource.”

Opportunities and Solutions

Exploration - helps uncover new aquifers and sources of water.

Efficient wastewater management.

The Middle East is choosing new purification technologies, such as graphene desalination, a process that turns deserts into irrigated farmland.

Aeroponic indoor farming uses 90% less water.

Smart metres to know how much water we are using.

Upgrade existing infrastructure networks – ease water loss and improve delivery.

Invest in water-rich farmland (which is Michael Burry’s (of “The Big Short”) way of investing in water. He says that it became “clear to me that food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas.”

Research by Trucost suggests that more than half of the profits of the world’s biggest companies would be at risk if water was priced to reflect its true value.

Microsoft is one company that is aware of this issue. It is experimenting with putting its data centres beneath the ocean (to cool naturally).

The WHO has estimated that the economic returns of every $1.00 invested in water and sanitation is $4.50.

Individual shares, ETFs, and mutual funds are ways you can invest in this resource.

Have a look at (PHO), Invesco Water Resources ETF. On the weekly chart, it presents an inverted head and shoulders pattern, which should soon break to the upside.
Both John Thomas and I are expecting the commodities sector to be strong in the second half of the year and into next year.

Top 9 Holdings of (PHO)

Name:
American Water Works (AWK) 4.25%
A.O Smith Corp (AOS) 4.19%
Pentair PLC (PNR) 4.18%
Evoqua Water Technologies Corp (AQUA) 4.10%
Roper Technologies Inc (ROP) 8.52%
Ecolab Inc (ECL) 8.48%
Xylem Inc (XYL) 8.15%
Waters Corp (WAT) 3.89%
Danaher Corp (DHR) 7.71%

Investing in water is something to be seriously considered, with a long-term view to the future in mind.

Have a great week.

Cheers,

Jacquie

World Water Crisis – the World needs to wake up.

Friday, March 22^nd, 2024.