Newsletter Archives - Mad Hedge Fund Trader

November 15 Biweekly Strategy Webinar Q&A

Below please find subscribers’ Q&A for the November 15 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.

Q: I was a little surprised that you closed the (TLT) $79-$82 vertical bull call spread so early. Why not wait longer?

A: I took an 84% profit in only four trading days and skipped the last 16% which I would have had to wait another month to get. I was much better off putting on another position and making another 100%. In this kind of market, you want to take quick profits and then roll them into new positions as fast as you can. That’s where you make the big money, and that's what we’ve been doing. You have to strike when the iron is hot.

Q: November’s results are phenomenal!

A: Yes they are, 55 years of practice makes it easy.

Q: Thoughts on Advanced Micro Devices (AMD)?

A: It’s going higher. I think the whole semiconductor sector is the leading sector in the market; we have seen that with these gigantic 30-40% moves in the semis. That will continue, and then it will spread out to the rest of big tech (which it’s already done), and eventually, we get to the industrials and commodities in the second half of 2024 when the big economic growth returns. So that is the script for the coming year.

Q: Will the upcoming Fed interest rate cuts crash the dollar, and which emerging currency should I buy?

A: Yes and yes. It will crush the dollar–we could be entering a new decade of a falling U.S. dollar. The number one currency to buy is the Australian dollar (FXA). It has the most leverage for a global economic recovery. And you can see when we get to the currency section of today’s webinar that the currencies are already starting to move. Whatever currency has falling interest rates is always the weakest, and the U.S. dollar is about to become just that.

Q: What’s the deal with casino stocks lately like Wynn Resorts (WYNN) and MGM Resorts International (MGM)?

A: These companies took on massive amounts of debt during the pandemic to stay in business, so they are now highly sensitive to interest rates. If you look at the collapse of these stocks in the last four months, it is almost perfectly in sync with rising interest rates, and that’s why the stocks performed so poorly. By the way, the same is true for all the cruise companies like Royal Caribbean (RCL), and Carnival (CCL). The flip side of that is when interest rates start to go down these stocks do great, and they are falling interest rate plays, so you probably should be buying the casinos, the cruise lines, and the hotel stocks here because they are all suffering from massive debt loads, the cost of which is about to decline sharply.

Q: Should we roll up the expiration of LEAPS to 2026?

A: Probably not a bad idea, because we may get weakness in commodities for the next several months before we enter a massive new bull market. If you have the 2025, you’ll probably make money on that, but to be ultra-safe you could roll it forward to 2026. We know there’s a global copper shortage developing because of EVs, but right now EV sales are slow, so you don’t want to be piling onto the leverage plays on that too soon. That’s also why I am not in Tesla (TSLA) for the Moment.

Q: What will happen if the Fed cuts interest rates and there’s no recession? Won’t prices of everything from houses to butter go wild?

A: They won’t go wild, but they will go up at a 2% inflation rate, which is what the Fed wants. And house prices, which have been flat for the last year, will rise. And they may rise greater than the inflation rate of 2%; they may rise more like 5%. Falling interest rates mean falling mortgages; we’ve already seen mortgage rates drop from 8 to 7.4%. It's one of the sharpest drops in history, and more drops bring more first-time home buyers into the market. And don’t forget that the Fed could also raise interest rates down the road. If the economy gets too hot again, they may raise again, but I think we’ll see a lot of cuts first.

Q: Do you think financial stocks will go up or fall with potential rate decreases?

A: Banks always go up during falling interest rates because their cost of funds goes down and the default rate on their loans also goes down, so they get a hockey stick effect on earnings; that’s why you’re seeing such monster moves in stocks like JP Morgan (JPM) and the brokers (SCHW) as well as the money managers like BlackRock (BLK).

Q: Does the bull market keep going since unemployment still hasn’t made a dent, meaning consumers are fueling the rise in stocks?

A: Yes, consumer spending is still doing well. People seem to be getting the money from somewhere and it seems to be rising wages. But I expect wage gains to drop by half; people will still get wage increases, but not the peak levels that the UAW got in their deal with Detroit. Is a Goldilocks economy that is setting up, and the economy keeps growing We never do get a recession, and all risk assets rise as a result. That is the outlook!

Q: Bullish on Berkshire Hathaway (BRK/B)?

A: I completely agree, it’s one of the best-run companies in the world. 93-year-old Warren Buffet and 99-year-old Charlie Munger have delivered double the performance of the S&P 500 over the last three years.

Q: When does the IPO market come back to life, and which industries will benefit the most?

A: AI and Technology will benefit the most. There are several AI companies in the wings waiting to go public, and they will be the first out the door with the highest multiples, and then the IPO business will broaden out from there.

Q: Will a worsening Chinese property market blow up the U.S. Stock rally or is it just a fake risk I shouldn’t worry about?

A: The Chinese (FXI) real estate market is detached from the global economy. There is no international implication, and it’s also typical of emerging markets to overbuild and then have a financial collapse. Nobody I know has suffered anything in China in a long time, and if anything, they’re liquidating what little they have left. It doesn’t affect us at all. It’s interesting reading about it in the newspapers, and that’s about it.

Q: What are some stocks we should consider day trading these days?

A: None. Most people who try day trading lose money doing it; some people pull it off but they have many years of experience. Algorithms from big brokers have essentially taken over the day trading business with high-frequency trading. You do better on a one-month view, which I do on my front-month options. Most 2023 Stock Gains Happened in only eight days, up some 14% since January 1, and only seven stocks accounted for most of the increase. If you are a day trader, you most likely missed all of this because most of the moves were on gap openings.

Q: Home builders (XHB) have just had a great run, is this an area too short?

A: “Short” is a term you need to remove from your language! You don’t want to short a big bull move like this. If anything, wait until May when the summer seasonals start to favor short positions, and it depends on how high the market runs up until then. Don’t ever think about shorting the very beginning of a new bull market in stocks–not for housing, not for anything! And the outlook for housing over the long term looks fantastic; there’s still an overwhelming supply and demand in favor of the home builders. Some 85 million new Millennials need to buy first-time homes.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Stay Healthy,

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

2023 Kherson Ukraine – Ha Ha Missed Me! It was a dud.

November 17, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

"The factory of the future will have only two employees: a man and a dog. The man will be there to feed the dog. The dog will be there to keep the many from touching the equipment," said organizational consultant, Warren Bennis.

November 16, 2023

Diary, Newsletter, Summary

Global Market Comments
November 16, 2023
Fiat Lux

SPECIAL STEM CELL ISSUE

Featured Trade:
(THE STEM CELLS IN YOUR INVESTMENT FUTURE)
(TMO), (REGN)

The Stem Cells in Your Investment Future

Diary, Newsletter, Research

I’ll do anything to postpone aging, as regular readers of this letter already know.

So when my doctor told me that she could extend the life of my knees by ten years with a stem cell injection, I was all for it.

You better pay attention too.

Stem cells, along with CRISPR gene editing (CRSP), are two hyper-accelerating medical technologies that promise to cure your ills, extend your life, and make you fabulously rich along the way.

Have I got your attention?

When my doc confirmed that she was already getting spectacular results from her other elderly patients, such as the dramatic regrowth of knee cartilage, it was like pushing on an open door.

Yes, these are the famous well-worn 71-year-old knees you have heard so much about over the past 15 years that hike and snowshoe 2,000 miles a year with a 50-pound backpack.

My doc is not lightweight. She is the orthopedic surgeon for the US Ski Team at Lake Tahoe, which is why I sought her out in the first place.

As a UCLA-trained biochemist, I have known about stem cells for most of my life. They only left the realm of science fiction two decades ago.

Early sources of stem cells relied on stillborn human fetuses, creating a religious and political firestorm that led to severe restrictions, a funding drought, or outright bans.

During the 2000’s, California was almost the only state that permitted stem cell research.

Since then, the technology has developed to the point where it can be easily harvested throughout the human body.

Easy, except when the source is the bone marrow in your backbone.

“You may feel a slight twinge,” said my doctor, as she flushed the air out of a gigantic horse needle the width of a straw. “I only have to hammer this needle into your hip bone 20 or 25 times to get the marrow I need.”

This was NOT in the glossy brochure I had been provided.

I said, “Don’t worry, Marines are immune to pain.”

“Does that work?” she asked.

“No, not really,” I replied, grimacing. “But it sounds good.”

I felt every single blow and tried to imagine myself on a faraway tropical island. It turned out to be 55 blows. I counted.

Once she obtained the 10cc she needed, she popped it into a small centrifuge to separate the stem cells (clear) from the red blood cells (red).

She then used an ultrasound machine to inject my stem cells at the exact right spot in both of my knees.

Being the true journalist that I am, I took pictures throughout the entire procedure with my iPhone 15 (see below).

The problem with advanced, experimental treatments is that they are not covered by your health insurance. Still, I thought $2,000 for ten years of extra life for both knees was a bargain.

Stem cells are undifferentiated cells that can transform into specialized cells such as the heart, neurons, liver, lung, skin, and so on, and can also divide to produce more stem cells.

You can think of stem cells as chemical factories generating vital growth factors that can help to reduce inflammation, fight autoimmune diseases, increase muscle mass, repair joints, and even revitalize skin and grow hair.

Goodbye, Rogaine!

When you are young, you have oodles of these cells, which is why kids so rarely die from dread diseases.

However, as you age, your exposure to too much sunlight at the beach, too many chemicals in the food and water you eat and drink, and natural background radiation degrades your DNA and reduces your stem cell supply.

Supplies of stem cells diminish as much as 100 to 10,000-fold in different tissues and organs. Welcome to old age, and eventually death.

The procedure I underwent is called Autologous Adult Stem Cells Treatment.

The great thing about it is that since you are using your cells, the risk of rejection or infection is minimal. And they are free!

This approach has become the must-go treatment for the wealthy seeking to repair aging, sagging parts of their bodies.

They are often sold with vacation packages in exotic third-world countries where regulation and medical malpractice suits are nonexistent.

The fact that the treatments are now becoming widely available in the US testifies to their effectiveness.

Do any search on stem cell treatments, rejuvenation, or life extension and you will find hundreds and hundreds of private clinics offering to do so for high prices.

California leads the nation with 109 clinics (including 18 in Beverly Hills alone), followed by New York and Texas.

Just follow the money.

The market is now on fire and is expected to reach $270 billion by 2025.

As a result, several breakthroughs in longevity are just around the corner.

The industry is now branching out into fields considered unimaginable just a few years ago. I’ll cover some of the highlights.

Imagine using your stem cells to repair not only your knees but any other organ. This is already being done in the lab with animal trials.

In Japan, they are growing human eyes from scratch, including lenses and corneas.

At Stanford, stem cells are bringing dramatic improvements in stroke victims.

At USC they are deployed to bring rapid repairs to those with severe spinal cord injuries.

Several private firms have sprung up to facilitate the banking of your stem cells through cryogenic freezing, such as Lifebank. Just harvest them when you are young for future use.

Better yet, get born to wealthy parents who will pay to have your birth placenta and umbilical cord frozen, the two richest sources of stem cells known.

The key term to search for your investment strategy is Mesenchymal Stem Cells, the major stem cells for cell therapy, or MSCs.

These cells can differentiate into vital cells that can be used to cure autoimmune disease, cardiovascular disease, liver disease, and cancer.

There are now several hundred clinical trials involving these cells underway.

A more adventurous strategy is to buy the stem cells of others and have them injected into yourself, a procedure known as parabiosis.

A company in Monterey, CA named Ambrosia is doing exactly this for $8,000 a patient. The goal here is to reverse aging across every major organ system.

Of course, I think there’s got to be a trade here.

Not so fast.

Almost all stem cell efforts are now confined to the research labs of major universities or are buried inside large biotech and drug companies.

A few researchers have spun off to set up their own private companies with substantial venture capital backing.

That said, there are a few peripheral listed plays.

Celgene is one of my favorites and is an early entrant in the field. They are using placenta-derived cells to cure a whole host of diseases, which you can find listed on their site at http://www.celgene.com/research-development/rd-locations/celgene-cellular-therapeutics/cell-therapy/

Thermo Fischer Scientific (TMO) provides a range of tools and supplies scientists need to pursue stem cell research (click here for their site at https://www.thermofisher.com/us/en/home.html

Regeneron (REGN) uses stem cells to pursue a broad range of serious medical conditions, including ophthalmology, cancer, rheumatoid arthritis, asthma, atopic dermatitis, pain, and infectious diseases. Visit their site at
https://www.regeneron.com

The problem with the entire biotech sector is that it can take a long time to deliver new drugs and procedures to market. So these may be next year's investments, instead of next week's ones.

And how are my knees doing? I knew you would ask.

A little swelling in my knees went away in a day. I sat funny for a few more days, thanks to my bone marrow extraction.

It will take about six months before any real growth in new cartilage in my knees can be measured with an MRI scan, which I have scheduled. So far, the results have been great.

But you know what?

My knees have not hurt an iota, despite my regular tortuous exercise regime. And I think that, right there, is a win.

If it works, my doctor wants to extract fat cells from my middle, known as Adipose Cells, and inject their stem cells, into my knees.

Talk about killing two birds with one stone!

This Won’t Hurt a Bit

November 15, 2023

Diary, Newsletter, Summary

Global Market Comments
November 15, 2023
Fiat Lux

Featured Trade:

(TESTIMONIAL),
(THE IRS LETTER YOU SHOULD DREAD),
(PANW), (CSCO), (FEYE),
(CYBR), (CHKP), (HACK), (SNE)

Testimonial

Diary, Newsletter, Testimonials

2023 is going to end extremely well, thanks to the help of JT!

The year started great with almost 15% gains in a few days in January. Then more profits along the way. When it was time to sit in cash, John strongly advised that and to go enjoy the outdoors.

During these past two weeks, he was back at it sending out alerts, all of which have worked out and provided a nice profit-taking day today. The (GOOGL) alert yesterday tops the recent list. It took just two market hours (plus the overnight hold) to make 80% of the maximum potential profit.

Last week, it was a real problem keeping up with him while skiing Breckenridge. It's a good problem to have, but I did manage to get into all the positions with my cell phone and enjoy the snow.

Trade well.

Bob from Colorado

November 15, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

“Your most unhappy customers are your greatest source of learning.” – Said American Health Expert Bill Gates

November 14, 2023

Diary, Newsletter, Summary

Global Market Comments
November 14, 2023
Fiat Lux

Featured Trade:

(WHY YOU WILL LOSE YOU JOB IN THE NEXT FIVE YEARS, AND WHAT TO DO ABOUT IT),
(INTU), (AMZN), (GOOGL), (TSLA), (BLK), (HRB)

Why You Will Lose Your Job in the Next Five Years, and What to do About it

Diary, Newsletter, Research

Yes, it’s happening.

And if you lose your job to AI in five years you will be one of the lucky ones.

It’s possible that your job is already gone, they just haven’t told you yet.

The shocking conclusion I am getting from dozens of research fronts is that artificial intelligence and automation are accelerating far faster than anyone realizes.

It is all extraordinarily disruptive.

This will cause corporate profits to rocket and share prices to soar but at the price of higher nationwide political instability.

A big leap took place at the beginning of the year when suddenly it appeared that everything got a lot smarter.

My local Safeway has started using self-checkout scanners to enable customers to avoid the long lines still operated by humans.

I hate them because I can never get them to scan pineapples correctly.

Soon, Amazon (AMZN) opened a supermarket in Seattle where there is no checkout stand at all. You simply just pick up whatever products you want, and it will scan them all on the way out to the parking lot.

Once the software is perfected (it is self-learning), and the consumers are educated, 5 million checkout clerks will be joining the unemployment lines.

Uber has been testing self-driving taxis in Phoenix, AZ, with sometimes humorous results. It seems that other human-driven cars like crashing into them. There has been one fatality so far when the human safety driver was caught texting.

When they figure this out, probably in two years, 180,000 taxi drivers and 600,000 Uber and Lyft drivers will have to hit the road.

Some 3 million truck drivers will be right behind them.

Notice that I am only a couple of paragraphs into this peace and already 8,780,000 jobs are about to imminently disappear out of a total of 150 million in the US.

Two decades from now, only vintage car collectors or the very poor will be driving their cars if Tesla (TSLA) has anything to do with it.

I let my Model X drive me around most of the time. It has reaction time, night vision, and a 360-degree radar system that are far better than my 71-year-old senses.

However, all new Teslas now come equipped with the hardware to use it. They are all only one surprise overnight software upgrade away from the future.

And it's not just the low-end high school dropout jobs that are being thrown in the dustbin of history.

Automation is now rapidly moving up the value chain.

A rising share of online news is machine-generated and is targeting you based on your browsing history. You just didn’t know it.

It was a major influence in the last election.

Blackrock (BLK), the largest fund manager in the country, has announced that it is laying off dozens of stock analysts and turning to algorithms to manage its vast $8.6 trillion in assets under management.

As the April 15 tax deadline relentlessly approaches, you are probably totally unaware that an algorithm prepared your return, particularly if you use a low-end service like H & R Block (HRB) or Intuit’s (INTU) TurboTax.

Because of the simultaneous convergence of multiple technologies, half of all current jobs will likely disappear over the next 20 years.

If this sounds alarming, don’t worry.

We’ve been through all of this before.

From 1900 to 1950 farmers fell from 40% to 2% of the labor force. The food output of that 2% has tripled over the last 60 years, thanks to improved seed varieties and farming methods.

The remaining 38% didn’t starve.

They retrained for the emerging growth industries of the day, automobiles, aircraft, and radio.

But there had to be a lot of pain along the way.

More recently, some 30% of all job descriptions listed on the Department of Labor website today didn’t exist 20 years ago.

Yes, disruption happens fast.

And here’s where it gets personal.

Since I implemented an AI-driven, self-learning Mad Hedge Market Timing algorithm to assist me in my own Trade Alert service six months ago, MY PERFORMANCE HAS ROCKETED, FROM A 21% ANNUAL RATE TO 51%!

As a result, YOU have been crying all the way to the bank!

The proof is all in the numbers (see chart below).

Those trading without the tailwind of algorithms today suddenly find the world a very surprising and confusing place.

They lose money too.

The investment implications of all of this are nothing less than mind-boggling.

Wages are almost always the largest cost for any business, especially the labor-intensive ones like retailing, fast food, and restaurants.

Reduce your largest expense by 90% or more, and the drop through to the bottom line will be enormous.

Stock markets have already noticed.

Maybe this is why price-earnings multiples are trading at a multi-decade high of 19.5X.

Perhaps, the markets know something that we mere humans don’t?

It also is the largest budgetary item in any government-supplied service.

I bet that half of the country’s 7 million teaching jobs will be gone in a decade, taken over by much cheaper online programs.

Today, my kids do their homework on their iPhones, complete class projects on Google Docs, and get a report card that is updated and emailed to me daily.

They’re probably to last generation to ever go to a physical school.

(That’s life. Just as the cost of driving them to school every day becomes free, they don’t have to go anymore).

You can always adopt a “King Canute” strategy and order the tide not to rise.

Or, you can rapidly adapt, as I did.

The choice is yours.

November 14, 2023 - Quote of the Day

Diary, Newsletter, Quote of the Day

“The stock market is one of those things that looks better the more expensive it gets,” said Barbara Marcin, portfolio manager of the Gabelli Dividend Growth Fund.