Tuesday morning

January 10, 2023

Hello everyone,

Bed Bath and Beyond – a popular pitstop for those who are looking for a luxury look in sheets and towels and special decorative pieces – is now struggling to stay afloat. As of February 26, 2022, Bed Bath & Beyond had about 32,000 employees. In August, last year it cut about 20% of its corporate and supply chain workforce and closed about 150 of its stores. This week it is in the process of cutting costs by an additional $80 to $100 million, with some of those savings coming from a reduced workforce. A town hall meeting will be held on Wednesday to discuss its future. Unfortunately, the outlook is looking very grim for this company.

These are challenging times for many of us. And the Fed does not escape facing barriers of its own to stabilize the economy. Powell has stressed that he may have to make politically unpopular decisions to get the job done. Both sides of politics have been critical of Fed actions, but the Fed is outside political control and hence can act independently to stabilize prices. Just sit with the fact that we may have inflation for longer than most expect.

Have you heard of Chat GPT?
It’s an artificial intelligence interface, which was developed by San Francisco-based Open AI and is backed by Microsoft and LinkedIn co-founder Reid Hoffman. The chatbot can generate detailed responses, hold a conversation, and answer questions just like a human. Is it a challenge for Google? Maybe, in the future.
Microsoft plans to invest $10 billion in Open AI.

It seems like all customer service will become robotic in the future. That may make business more efficient and cost-effective, but it also makes the relationship between the customer and the business very depersonalised.

Those businesses that keep some element of human interaction with their clients will be seen as dinosaurs, but celebrated and lauded for challenging the trend.

Happy mid-week.

Don’t forget to sign up for the Hawaii strategy luncheon. Looking forward to seeing you all there.

Cheers,
Jacque

 

“Motivation is what gets you started…”

 

 

 

Hello everyone,

Happy New Year to you all.

Another year is upon us and I’m sure we have all made plans to save money, eat healthy, exercise more, learn something new, spend time with friends and family, etc.

I didn’t.

I don’t make New Year's resolutions anymore.

I got wise.

There are people out there making a fortune on your willingness to achieve each resolution but all too often, the desire fades after the first month or two.

So, instead, I just plan on being a better version of myself each year. That takes all the pressure off. Phew!!

So, what’s ahead this year?

Hawaii strategy luncheon on February 17, 2023

Queen Mary II strategy update on July 13 while you enjoy a transatlantic crossing.

Go to Luncheons on John’s site to book.

Sounds good to me.

At the beginning of the year, it is natural to reassess what is in your portfolio and what is not.

So, I always ask this question. What does everyone need the most outside food, water, and shelter?

Security.

In other words, protection against the myriad of ways criminals invade the privacy of your life.

Here, I’m particularly talking about cyber security. The thought of my computer being hacked, or my identity being stolen is enough to keep me wide-eyed all night.

Therefore, I’m going to list the top cybersecurity stocks that you should be watching. Please make sure at least a couple are in your portfolio.

These cybersecurity companies provide critical support and services to businesses that operate online and through electronic communication networks.

1. Zscaler (ZSUS)
2. Fortinet (FTNT)
3. Palo Alto Networks (PANW)
4. CrowdStrike (CRWD)

All these security companies specialise in a different area of security. Basically, they all focus on safeguarding data and systems from unauthorised users.

As more and more companies move online, there is an increasing threat from cybercriminals. Let’s take a closer look at the four listed above.

1. Zscaler (ZSUS)

Zscaler was founded in 2007 and became a publicly traded cybersecurity company in 2018. It’s now listed on the Nasdaq and in 2022 had a market cap of more than $25 billion with more than 100 data centres around the world, serving customers in 185 countries.

ZSUS is an authorised partner for Microsoft Office 365 and more than 450 companies on the Forbes 2,000 list use Zscaler.

In the last four quarters, Zscaler achieved revenue of more than $125 million. In the last quarter, revenue was up 60% year on year at $176.4 million.

Presently, they are a company that is focused on growth rather than profitability. In other words, they are continually pouring money into marketing, growth, and acquisition – a clear, long-term strategy.

2. Fortinet (FTNT)

Fortinet is one of the oldest cybersecurity companies and has been around since 2000, achieving a market cap of more than $35 billion. The company develops and sells a whole range of different cybersecurity products and services. This includes firewalls, anti-virus protection, endpoint security components, and much more.

An increase in revenue and increased forward guidance were reported in the company’s most recent earnings announcement. They have also taken part in an aggressive expansion plan with more than 65 deals last year, including a $75 million investment into Linksys.

3. Palo Alto Networks (PANW)

Palo Alto Networks is a multinational cybersecurity company that was founded in 2005. Last year, revenues topped $3 billion as the company services 70,000 businesses in more than 150 countries. The company was listed eighth in the Forbes Digital 100 list, and they count 85 companies of the Fortune 100 list as a client.

The main focus of products offered by the company revolves around network security, advanced firewalls, cloud security, and endpoint protection among other niches. PANW also operates Unit 42 which is an advanced threat intelligence team focused on finding new cyber threats and working with the FBI.

Shareholder returns are very good, and the company also has an excellent track record of consistent sales. The uptrend in the stock has accelerated since the lows of the pandemic in 2020.

4. CrowdStrike (CRWD)

CrowdStrike was founded in 2011 and focuses on proactive and incident response services. Its products include cloud systems for threat intelligence, endpoint security, and more. The company, with a former FBI official as one of its founders, has been active in the cyber-attacks of Sony Pictures in 2014 and the Democratic National Committee (DNC) in 2016.

Analysts believe the company still has huge growth potential as it can tap into international markets.

Since the company’s (IPO) launch in 2019, it has already become a market leader in the cybersecurity space. CrowdStrike is well-positioned to meet the issues faced by businesses today. Dealing with threats when they come is no longer viable. Companies must build the right infrastructure to mitigate threats in the first place. We just need to think about Medibank Private to know how important the right infrastructure really is.
CrowdStrike shines as a cloud-based platform. Its stock price is trading much higher than when it first launched in 2019. It is one to watch this year.

Ransomware demands amounted to nearly $20 billion last year. There is now huge pressure on companies to build the right infrastructure and systems before the threat.

The growth potential for cybersecurity stocks is now very interesting. It is not hard to see why investors are keen to focus on this sector and the companies leading the race forward.

Now, which one will I choose…

On Friday I will summarize John’s All Asset Class look at 2023.
You’ll get to see what’s in favour and what’s not.

May 2023 bless you with all you desire.

Cheers,

Jacque

 

“The big lesson in life, baby, is never be scared of anyone or anything.” - Frank Sinatra

“Do all the good you can, for all the people you can, in all the ways you can, as long as you can.” - Hilary Clinton (inspired by John Wesley quote).

 

Those of you who have received Jacque's Post for the last two years have been getting it for free. However, in this inflationary world, ever high bills have to be met and colleges paid for. So, I am asking you to chip in a modest $170 to continue your subscription for the coming year. Just click here and complete the form.

If for some reason the link doesn't work, please google Mad Hedge Fund Trader to get to our main site, click on the Store tab at the top, and click on the blue BUY NOW tab for Jacque's Post.

Many thanks for your support and I look forward to working with you for another year.

Jacque

 

 

Sunday evening

December 18, 2022

 

Hello everyone,

We’re now in the final week before Christmas.  The silly season is well and truly underway.

Got up early this morning and watched the World Cup final between France and Argentina.  What an amazing game!

Did anyone in Australia brave the wee hours to watch it?

Equities could be in for more pain in early 2023.

BlackRock (BLK) team doesn’t believe equities are fully priced for recession.  Corporate earnings expectations have yet to fully reflect even a modest recession, said Vice Chairman Philipp Hildebrand of BlackRock.  The Fed has promised it would continue to raise interest rates to rein in inflation in 2023 if necessary.  BlackRock analysts have warned that the strategy of “buying the dip” won’t work in this new economic environment.  BlackRock believes this macro volatility will be with us for some time.  They don’t see a return to conditions that will sustain a joint bull market in stocks and bonds of the kind we experienced in the prior decade. 

What to do if a recession happens?

A stock fund or a mutual fund is a great way to invest during a recession.  A fund tends to be less volatile than a portfolio of a few stocks.  And a stock fund offers the potential for high long-term returns if you can stomach the short-term volatility.  Well diversified funds are a good option for investors who don’t want the hassle and risks of investing in individual stocks.  One sound choice is an index fund based on the Standard & Poor’s 500, a well-balanced index that includes hundreds of America’s best companies and has returned about 10% over time.  Rather than trying to pick the winners, you own a piece of the market.

If you want a portfolio that may be somewhat less volatile, you could add some dividend stocks.  High-quality dividend stocks tend to fluctuate less than other kinds of stocks, meaning your portfolio will bounce around less.  Plus, they can offer a cash dividend that ensures you’re getting some income while you’re waiting for the market to turn.  If you don’t want to buy individual stocks, you could buy a dividend stock fund and enjoy the reduced risk that comes with diversification and still enjoy a solid dividend yield.

Real estate can be an attractive investment during a recession.  You may be able to buy it at a cheaper rate.  You also may be able to get a much better mortgage rate.

You could put your funds in a high-yield savings account.  Just make sure that inflation doesn’t eat away at your money.

It is important to stay focused on your long-term plan and the better days ahead once the market turns back around.  Work to keep your emotions from driving your decision-making in whatever way works best for you.

Wishing you all a wonderful week.

Cheers,

Jacque

 

"It’s never too late to be what you might’ve been."  - George Eliot

 

Tuesday
December 13, 2022

Hello everyone,

The CPI has been released and the markets breathed a sigh of relief as the numbers were softer than expected. Investors are hoping that this is the beginning of the end of inflation. All eyes are now on the Fed.

Bankman-Fried has been delivered more than a slap on the wrist. We have just learned that he has been denied bail in the Bahamas on FTX fraud charges as the judge has cited him as a flight risk.

What a foolish man he has been. Evidently, there was not a lot of grey matter working to determine the consequences of his actions.

He used customer funds to make political donations to both Democratic and Republican candidates. Apparently, he was trying to influence the direction of policies and laws in relation to cryptocurrency and the industry in general

He also stole money from FTX clients and parked it in his own hedge fund.

Well, you might not own a hedge fund, but you might own a property, or even be renting one out. If so, more of the same macro-economics in relation to real estate is in the crystal ball for 2023. Escalating demand and tight supply are likely to see rental increases persist, but more so in the capital cities than in the regional areas.

Higher interest rates are reducing borrowing capacities and reducing property prices. In 2023, expect this trend to continue.

If we look to the long term, when prices decline, interest rates stabilize and wages grow, we hope to see market conditions improve.

Always be mindful of a black swan lurking in the shadows. Hang on tight during the volatility. It, too, will pass.

I’ll be holding a Mad Hedge Christmas zoom get-together on the weekend. All welcome. Will send out the link in 24 hours.

Share your story with other Mad Hedge clients and pick up lots of good hints for trading the market.

All the very best.

Cheers,

Jacque

 

"Never let the fear of striking out keep you from playing the game." - Babe Ruth

 

Thursday afternoon

December 8, 2022

Hello everyone

What’s your preference? Buy and hold or be an active trader?

Some people may have answered both.

It seems 2023 will not be a time to buy and hold. Expect markets to be choppy. Wells Fargo expects the S&P to end 2023 at 4,200. It also says that equity markets will trade as low as 3,410 in the new year. The bank added that the probability of a soft landing is less than 10%. Furthermore, it envisions a sharp recession rather than a drawn-out slowdown.

Let’s talk about women and work and retirement.
Why is it that women earn less than men for doing the same job? I’ve never quite worked that one out. Not only are they discriminated against in income earned, but half of the women in the workforce say they are behind on retirement savings. More than half of women – 58% - receive half or less than half of their pre-retirement income, compared with 44% of men. Just 20% of women receive 7-% of their pre-retirement income, the amount some experts say retirees need to maintain their standard of living. In comparison, 30% of retired men have income that reaches that level.

Why do women come up short?

They are more likely to take time out of the workforce to care for children or aging relatives.
Women tend to work nine years less than men, which can reduce their retirement savings by 35%. This may also have an adverse effect on the amount of Social Security benefits they receive.
And then, of course, there is the wage gap. They earned just 82 cents for every dollar earned by men in 2020, according to the U.S. Census Bureau.
They may dip into retirement savings for emergencies.
They may choose not to marry, which also affects women’s retirement preparedness.

Women need to learn how to trade, so they can look after themselves.

China is set to ease Covid restrictions. What can we expect?
As they relax measures, 60% of people may get infected. They are nowhere near herd immunity. This may result in a drag on the economy and a temporary shortage of labour and increased supply chain disruptions.

Wishing you all a wonderful weekend.

Cheers

Jacque

"To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment." -
Ralph Waldo Emerson