First, there was your grade point average, then your SAT score, followed by GMAT and LSAT scores, and finally your FICO.
Now there is a new metric with which you will be judged, your “Influencer” score.
A new breed of marketing research firms are using data from social media sites, like Facebook, Linkedin, and Twitter, to rank members according to their ability to spur their friends to action.
Companies like Klout, Peer Index, and Twitter Grader are using complex algorithms to mine their data and rank members. This is far more than just a simple listing of “friends.”
Scores range from 1-100, with a major league socializer achieving a 40 ranking, and someone like Bono or Martha Steward coming in at a godlike 100.
These scores will be made public and could have a major impact on your career prospects, your credit rating, and even your sex life. I can hear this conversation coming already: “Thanks for the invitation to the opera, honey, but I have a better offer from an 80 score to go to the Giants game.”
Do you like your new BMW, American Express card, or Rolex watch and are you talking about it with your friends? Advertisers are willing to pay big bucks to get to know you.
Last year, Virgin America airline offered free tickets to Los Angeles and San Francisco to highly ranked influencers, while Audi made available special discounts for a new car. Las Vegas casinos are giving away weekends with complimentary show tickets and generous room service tabs.
I have to tell you that I am looking forward to the new system. I just passed 1,700 likes on Facebook and have a massive Twitter following.
My website gets 30,000 hits a day and is read in 125 countries, so I should score pretty highly.
I understand that Maria Shriver has recently become available. Hey, Maria! Want to check out my 90? I’ll even fire my cleaning lady!
Will a 90 Score Tickle Your Fancy?
https://www.madhedgefundtrader.com/wp-content/uploads/2012/06/shriver.jpg320240Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2024-12-31 09:04:172024-12-31 09:51:34So What is Your “Influencer” Score?
I was awoken from a dead sleep in the middle of the night in my suite on the Orient Express by a juddering halt and the smell of burning breaks in the air.
We were somewhere high in the Swiss Alps, and every single passenger on the first-class train had to be thinking that a murder had just been discovered.
It turned out that it had, just not what you think. In the darkness, we had hit a 400-pound wild boar astride the tracks. We spent four hours on a remote siding waiting for Swiss National Rail to deliver us a new engine.
I elicited chuckles when I ordered boar for lunch the next day. The matre’d assured me it wasn’t ready yet, as the meat had to soak in vinegar for 48 hours before cooking. That’s the kind of thing you only hear in Europe.
I boarded the train that morning at London’s Victoria Station in anticipation of the trip of a lifetime. Venice Simplon Orient Express didn’t disappoint, although I would not be surprised if the IRS questioned the $8,500 cost for the 34-hour trip as a business expense on my tax return this year.
The legendary train has featured in a dozen films (James Bond and Agatha Christie) two dozen television shows, and played a major part in countless novels. You can even buy a video game.
The modern Orient Express is, in fact, three different trains.
From Victoria Station in London to Folkestone on the coast, I traveled on a vintage British train from the 1920’s that was definitely showing its age.
Then I boarded a bus, which drove on to a flatbed rail car that whisked us through the tunnel under the English Channel. There, we claustrophobes closed our eyes and held our breath for 20 minutes, which, at the nadir, my altimeter watch showed us at 1,500 feet below sea level.
The real luxury started when I boarded a 1924 Pullman first-class sleeping car in Calais, France, lovingly restored to the day it was built.
I set my watch ahead one hour and back 100 years. Suddenly, the trees resembled those in impressionist paintings, the land was dotted with Norman fortresses, and gasoline was $8 a gallon.
The original Orient Express, from Paris to Istanbul, made its inaugural journey in 1882 and quickly became famous for its unheard-of luxury and speed. Modern bullet trains and cut-rate airlines put it out of business 90 years later.
The current incarnation started in 1977 when James Sherwood, who had built up a fortune through Sea-Land Containers, bought three dilapidated Pullman rail cars at an auction in Monte Carlo. Like all of us with insanely expensive hobbies, he sought a way for outsiders to fund his passion.
Hence, the Venice-Simplon Orient Express started luring big spenders and the romantically inclined in 1982 (click here).
I became one of the original passengers in England when my broker chartered it for a day of client entertainment, an ancient steam engine laboring all the way.
Over the next 30 years, Sherwood built Orient Express into one of the world’s preeminent luxury brands, on par with Cartier, Tiffany, and Channel.
He developed a massive global network of cross-marketing deals that tied in package tours, hotels, cruises, and other vintage trains.
Today, the parent company, Belmond, carries a market cap of $1.3 billion (click here for that site).
Ironically, the company today still only owns one of its dozens of rail cars. The rest have been sold to Middle Eastern investors with long-term leaseback contracts.
The dinner onboard is the highlight of the trip, a fabulous six-course, three-hour affair. There, you meet the other passengers, all dressed to the nines.
Most were wealthy elderly couples knocking off a bucket list item, along with a few young hedge fund managers, bitcoin investors, and a passel of mistresses.
I was one of the few Americans. I ate with a casino operator in Ireland and the owner of a manufacturing company in the UK. All I can say is thank goodness for the elastic waist on my tux trousers.
Having spent a lifetime analyzing corporate managements, I was fascinated by the operation of the train. While the onboard staff is limited to 79, they are supported by a management, marketing, and engineering team of no less than 4,500.
You don’t just show up with a 17-car train in Europe’s incredibly congested rail network. You must first file a route plan and get a clearance slot, much like any airline.
Engines and crews must be changed at every border. Mechanics are onboard with an ample stockpile of 1920’s rail car parts. Oblivious passengers are frequently left stranded behind at stations along the way and must be retrieved by taxis, which catch the train down the line.
To make up for the time we lost due to the unlucky boar, the rail authorities routed us through the 12-mile long transalpine tunnel under Splügen Pass, then along the sublime shores of Lake Como, where the train rarely travels.
We roared past George Clooney’s house, who, I am told, is a frequent passenger on the train. Amazed Italians were waving and taking pictures of us with their cell phones at every stop. Suddenly, the buildings were all shaded in pastels, the churches changed from Protestant to Catholic, and the trees resembled those in Renaissance religious paintings.
We raced over the causeway to Venice’s Marco Polo station that evening, dumping our considerable luggage into a private speedboat that whisked us away down a Grand Canal crowded with gondolas en route to the fabled Cipriani Hotel.
To be continued.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-12-31 09:02:172024-12-31 09:51:25Report from The Orient Express
“To get rich is glorious!” said Deng Xiaoping, the Chinese general who launched the country’s modern economy in the seventies.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/07/Deng-Xiaoping.jpg309249MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2024-12-31 09:00:192024-12-31 09:50:42December 31, 2024 - Quote of the Day
I spent thirty minutes last night trying to get an AI app to turn my cat into a Renaissance painting. The result looked more Picasso than Rembrandt, but it got me thinking about Apple's latest App Store strategy. They're pushing AI apps hard, and not just because someone in Cupertino has a thing for digital pet portraits.
Back in my hedge fund days, we had a saying: "Watch what they do, not what they say." Apple's (AAPL) quiet curation of AI-powered apps tells us more about where the market's heading than any flashy keynote ever could.
The numbers behind this shift are the kind that used to make my traders spill their morning coffee. We're looking at a 35% compound annual growth rate in the AI app market through 2030.
For perspective, that's the kind of growth rate I used to see in emerging market funds during the early 2000s boom - except this time, it's backed by actual revenue and not just optimistic projections.
Speaking of projections, the global AI market could hit $1,339 billion by 2030. I remember when reaching a billion in assets under management was considered a milestone. Now we're throwing around numbers that make billion seem quaint.
NVIDIA's (NVDA) been riding this wave like... well, like NVIDIA. Their GPU technology has become so fundamental to AI development that trying to run modern AI without it would be like trying to run my old hedge fund with an abacus. Trust me, I checked their order books - everyone from basement developers to major corporations is lining up for their chips.
Adobe's (ADBE) Firefly suite is particularly interesting. They've managed to thread the needle between AI innovation and artist compensation - something my legal team would have appreciated during our copyright disputes in the '90s. Their stock performance reflects this elegant solution to a complex problem.
Here's what's really catching my attention: the AI in mobile apps market is set to grow from $16.7 billion to $249.8 billion by 2033.
I've seen enough market cycles to know when numbers are just hype, but these align with what I'm seeing on the ground. Companies are integrating AI faster than my daughter downloads TikTok videos - by 2024, 72% of organizations will have AI in their operations.
Let's talk about C3.ai (AI) for a moment. Their stock chart looks like my heart rate monitor during the 2008 financial crisis, but there's substance beneath the volatility.
AppLovin (APP), meanwhile, is doing something fascinating with AI-driven advertising that reminds me of the early days of programmatic trading, just infinitely more sophisticated.
The subscription models these companies are using remind me of the early days of software-as-a-service, except now we're dealing with AI-as-a-service. The key difference? These apps actually deliver value beyond just moving desktop software to the cloud.
Capital expenditure in AI is expected to cross $1 trillion in 2025. Remember when hitting a billion dollars in tech investment felt monumental? Now, in a world where trillion-dollar valuations are becoming the norm, that barely qualifies as a headline.
What's particularly intriguing is the job creation potential - 133 million new roles by 2030. Having witnessed multiple technological transitions in finance, I can tell you this feels different. We're not just automating tasks – we're creating entirely new categories of work.
The AI app sector brought in $1.8 billion in 2023, with projections suggesting $30 billion by 2030.
These aren't just numbers pulled from an analyst's wishful thinking - they're based on current adoption rates and revenue patterns that remind me of the early internet boom, minus the pets.com-style absurdity.
For those looking to play this trend, I'm seeing opportunities across the spectrum.
Hardware leaders like NVIDIA continue to dominate their niche. Adobe has positioned itself perfectly at the intersection of creativity and AI.
Even companies like SoundHound (SOUN), while still finding their footing, show promise in voice AI that goes beyond asking your phone for weather updates.
Apple's AI app focus isn't just another tech trend - it's a clear signal of where consumer technology is headed. And after decades in the market, I've learned to pay attention when signals this strong appear.
Now if you'll excuse me, I need to go try that AI art app again. My cat's demanding a Baroque period portrait this time. And unlike my creative direction, they’re delivering results worth framing.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Douglas Davenporthttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDouglas Davenport2024-12-30 16:50:012024-12-30 16:50:01GROWTH IN THE ORCHARD
Let me introduce to you one of the hottest trends in tech.
It has been on the tip of everyone's tongue for years, and that might be an understatement, but the interaction of the Internet of Things (IoT) and artificial intelligence (AI) offers companies a wide range of advantages.
In order to get the most out of IoT systems and to be able to interpret data, the symbiosis with AI is almost a must.
If the Internet of Things is merged with data analysis based on artificial intelligence, this is referred to as AIoT.
Moving forward, expect this to be the hot new phrase in an industry backdrop where investors love these hot catchphrases and monikers.
What is this used for?
Lower operating costs, shorter response times through automated processes, and helpful insights for business development are just a few of the notable advantages of the Internet of Things.
AI also offers a variety of business benefits: it reduces errors, automates tasks, and supports relevant business decisions. Machine learning as a sub-area of AI also ensures that models – such as neural networks – are adapted to data. Based on the models, predictions and decisions can be made. For example, if sensors deliver new data, they can be integrated into the existing modules.
The Statista Research Institute assumes that there will be 200 billion networked devices by 2026.
This is exactly where AI comes into play, which generates predictions based on the sensor values received.
However, many companies are still unable to properly benefit from the potential of connecting IoT and AI, or AIoT for short.
They are often skeptical about outsourcing their data - especially in terms of security and communication.
In part because the increased number of networked devices, which requires the connection of IoT and AI, increases the security requirements for infrastructure and communication structure enormously.
It is not surprising that companies are unsettled: Industrial infrastructures have grown historically due to constantly increasing requirements and present companies with completely new challenges, which manifest themselves, for example, in an increasing number of networked devices. With the combination of IoT and AI, many companies are venturing into relatively new territory.
By connecting IoT and AI, a continuous cycle of data collection and analysis is developing.
But, companies can no longer deny the advantages of AIoT because this technical combination makes networked devices and objects even more useful.
Based on the insights generated by the models, those responsible can make decisions more easily and reliably predict future events. In this way, a continuous cycle of data collection and analysis develops. With predictive maintenance, for example, production companies can forecast device failures and thus prevent them.
The combination of the two technologies also makes sense from the safety point of view: continuous monitoring and pattern recognition help to identify failure probabilities and possible malfunctions at an early stage – potential gateways can thus be better identified and closed in good time.
The result: companies optimize their processes, avoid costly machine failures, and at the same time reduce maintenance costs and thus increase their operational efficiency.
In this way, IoT and AI represent a profitable fusion: While AI increases the benefit of existing IoT solutions, AI needs IoT data in order to be able to draw any conclusions at all.
AIoT is, therefore, a real gain for companies of all sizes. They thus optimize processes, are less prone to errors, improve their products, and thus ensure their competitiveness in the long term.
Some hardware, software, and semiconductor stocks that will offer exposure into AIoT are Emerson Electric Co. (EMR), Garmin (GRMN), Ambarella (AMBA), Nvidia (NVDA), DexCom (DXCM), Cisco (CSCO), Intel (INTC), and Qualcomm (QCOM).
(THE HOUSING CRISIS IN YOUR FUTURE IS BROUGHT TO YOU BY CLIMATE CHANGE)
December 30, 2024
Hello everyone,
Most of us know about the changing climate. But few of us realize the implications of these changes on housing over the next 30 years and beyond.
We know about interest rates and the cost of housing, but what about the relationship between climate and the cost of housing?
It’s another crisis which is going to spread its tentacles worldwide. No country will escape.
Dave Burt, CEO of investment research firm DeltaTerra Capital, believes an overlooked and unpriced climate risk could see a repeat of a financial crisis in housing, albeit on a smaller scale in relation to the 2008 crisis. But still, it’s a damaging real threat to exposed communities.
Dave Burt was among the few skeptics who recognized the housing market was on the brink of collapse in 2007. He helped two of the protagonists of Michael Lewis’ bestselling book “The Big Short” bet against the mortgage market in the lead-up to the 2008 global financial crisis. As it turned out, they were right and were estimated to have made millions.
Now, Burt believes an overlooked climate risk could see history repeating itself.
Burt argues that DeltaTerra Capital’s research suggests that 20% of U.S. homes have “meaningful exposure” to a mispricing issue because of flood risk. If realized, he warned the fallout could resemble the extraordinary correction seen during the global financial crisis.
Even though he says that it could be a quarter the size and magnitude of the GFC, it still would be very damaging to exposed communities. Burt argues that there are cracks starting to appear in terms of the cost of insurance. Think about Hurricane Ian in Florida, for instance. The recovery here was an issue, particularly because this storm surge exposed a flood insurance nightmare for homeowners. We can also think about the people in Lismore, Australia, where the residents have endured about three major floods in 18 months. Some residents have left, never to return. Others have offered their house to the market for around 200k. The only way people will be able to live in these areas again is if the houses are built on stilts, if the community is relocated, or if major feats of engineering are undertaken to protect the town.
I would argue that most people do not lose a lot of sleep over the climate crisis in relation to their portfolio. But, a recent study has warned the U.S. housing market could be overvalued by around $200 billion due to unpriced flood risks.
This analysis was published in mid-February in the journal Nature Climate Change. Authored by researchers from the Environmental Defence Fund, the First Street Foundation, and the U.S. Federal Reserve, among others, the study modeled property-level changes in flood risk across the U.S. over the next three decades and warned that low-income households were particularly vulnerable to home value devaluation.
Jeremy Porter, head of climate implications at the First Street Foundation, said it is a huge concern because climate risk is not being priced into the housing market. He goes on to say that the costs now or the valuation of homes don’t consider the realization of that actual flood risk, and that’s not taking into account that there seems to be a huge amount of overvaluation attached to properties across the country.
Insufficient climate risk information when purchasing a home poses a significant financial hazard, as households could lose a large proportion of their property value overnight.
Eventually, Burt argues, there is going to be some sort of national tipping point where there is some type of bubble that bursts.
Presently, the study said that nearly 15 million U.S. properties face a 1% annual likelihood of flooding, with expected annual damages to residential properties forecast to exceed $32 billion.
In addition, the research also warned the increasing frequency and severity of flooding amid the deepening climate emergency could see the number of U.S. properties exposed to flooding increase by 11% and average annual losses jump by at least 26% by 2050.
The vacuum in climate-related information when purchasing property needs to be addressed. People need to understand what the climate-related costs are going to look like and rethink their property location if they cannot meet those costs.
Lower-income property owners are most at risk, and this, in turn, has the potential to widen the wealth gap in the U.S. and exacerbate inequality.
How will local government tax revenues be affected?
They could be hit quite badly, as the total for municipalities typically relies heavily on property taxes. Having that tied to a physical asset that is exposed to climate change introduces a lot of risk to the stability of that revenue stream, according to DeltaTerra Capital research.
This is not just a domestic issue. It is a problem for countries worldwide. And it morphs into a humanitarian crisis when you start looking at the issue through a global lens.
Munich Re, the world’s largest reinsurance company, observed steep economic losses in 2022 as the climate crisis drove more extreme weather events, such as Hurricane Ian in the U.S. and apocalyptic flooding in Pakistan. Reinsurance refers to insurance for insurance companies.
It estimated that these losses amounted to $270 billion last year, of which around $120 billion was covered by insurance. The insured loss total continues a trend of high losses in recent years.
Someone must pay in the end. Whether insured or uninsured, it becomes an increasing economic burden.
So, before you purchase your next property, consider the climate cost also.
Be safe and enjoy time with family and/or friends.
Cheers,
Jacque
“The world is reaching the tipping point beyond which climate change may become irreversible. If this happens, we risk denying present and future generations the right to a healthy and sustainable planet – the whole of humanity stands to lose.” - Kofi Annan, Former Secretary-General of the UN.
There's an old Wall Street saying that the market has a way of turning exuberance into experience. After decades of trading, I've watched this play out more times than I can count, and these days that wisdom is ringing in my ears like a persistent trading reminder.
Just last week, I watched the S&P 500 touch $5,994.89 (up another 0.3%) while the Nasdaq Composite flirted with $20,000, sitting pretty at $19,886.60 (up 0.6%). Feels a bit like déjà vu, doesn't it?
Let's rewind the tape to November 30, 2022. While most folks were arguing about whether to serve turkey or ham for the holidays, OpenAI quietly dropped ChatGPT into our laps. Talk about a stealth bomber.
Since then, the S&P 500 has rocketed up 49%, while the tech-heavy Nasdaq has left Earth's orbit entirely with a 75% gain. And that's not a typo, folks - I triple-checked those numbers.
Full disclosure: I've been around this rodeo circuit long enough to see a few "next big things" come and go. Remember blockchain? (If you're wincing right now, you probably bought some crypto at the top). Let me share a little story about that particular circus.
Take the Amplify Transformational Data Sharing ETF (BLOK) - a name that probably took longer to create than some blockchain projects lasted.
This fund has actually kept pace with the Nasdaq and outperformed the S&P 500 since 2018. Impressive, right? Well, hold onto your hardware wallets, because here's where it gets interesting.
Peek under the hood, and you'll find MicroStrategy (MSTR), a company that's up nearly 3,000% since January 2018. But here's the kicker - they didn't get there by revolutionizing blockchain.
They basically turned themselves into a publicly traded Bitcoin piggy bank. It's like entering a marathon and winning by taking an Uber to the finish line. Technically effective, but not exactly what the prospectus advertised.
And don't get me started on the First Trust Indxx Innovative Transaction & Process ETF (LEGR). Despite having tech heavyweights like JD.com (JD), Baidu (BIDU), and Alibaba (BABA) in its portfolio, most of these stocks have been underwater since 2018.
The fund's saving grace? AMD's (AMD) 1,200% moonshot, powered by - plot twist - artificial intelligence, not blockchain.
So what does this tell us about AI stocks heading into 2025? Well, the Nasdaq's got an interesting story to tell.
Since 1971 (yes, I've been watching it that long), it's only had back-to-back losing years twice. The last time was over two decades ago. It's like that friend who keeps failing upward - somehow, it just works.
But here's my two cents after decades in the trenches: investing in megatrends is like trying to pick the next Beatles at a high school talent show. Sure, somebody in that auditorium might be the next Paul McCartney, but good luck figuring out who.
Want my advice? If you're itching to play the AI game, stick to the established players or passive index funds. You know, the ones that actually have revenue and aren't just PowerPoint presentations with "AI" slapped on them.
It's like I always tell newer traders - sometimes the safest way to join a gold rush isn't by prospecting, but by selling picks and shovels to the miners.
After all, history and my battle-scarred portfolio suggest that while markets should keep climbing in 2025, not every AI company is going to be sending champagne to their shareholders.
Sometimes the smartest play isn't trying to outsmart the market - it's just making sure you've got a seat at the table when the feast begins.
And speaking of feasts, did I mention I owned MicroStrategy back when they were actually a software company? But that's a story for another day...
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Douglas Davenporthttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDouglas Davenport2024-12-27 16:43:542024-12-27 16:43:54HERE WE GO AGAIN?
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