Mad Hedge Technology Letter
November 1, 2024
Fiat Lux
Featured Trade:
(WILL THE TRIFOLD PHONE SAVE TECH?)
(HUAWEI), (AAPL)
Silicon Valley is usually on top of the innovation game, and as Huawei announced the launching of its trifold smartphone, one must ask whether Silicon Valley is late to the party or if this technology is even worth their time.
My guess is that foldable devices won’t move the needle, and these announcements aren’t really about moving revenue but to offer bluster in a global game of cat and mouse.
In general, the smartphone super cycle is about tapped out, and I don’t see a foldable phone as a reason for another re-acceleration of revenue.
There is a higher chance that in the next few years, this foldable technology is adapted for some other technology and written off on the balance sheet.
To think it could be some revolutionary new trend is beggars’ belief.
To be honest, many consumers are tired of screen time and can’t get off their screen because work duties connect them to the screen.
When needing a bigger screen to watch global sporting events, many would prefer a large-screen TV that doesn’t fold. This phone has no TV screen – not by a long shot.
It is a little difficult for me to understand the use case here for Huawei going big in the foldable screen business.
It’s not like the new phone will be cheap either, the new trifold smartphone will start at around $2,800, which is more expensive than most premium laptops.
Huawei announced its foldable product on the same day as Apple unveiling the new iPhone.
Apple announced its iPhone 16 Pro Max will start at $1,199 and the iPhone 16 at $799.
The first set of Apple Intelligence AI features will be available in a free software update next month.
Huawei’s Mate XT also comes with artificial intelligence features, such as text translation and cloud-based content generation.
The device is 3.6 millimeters thick when unfolded, with a 10.2-inch screen.
More than 3.5 million people had pre-ordered Huawei’s trifold Mate XT smartphone as of midday Tuesday.
The Chinese company has sought to make a comeback in the smartphone industry, which was hard hit after the U.S. slapped sanctions on the company in 2019. The U.S. in October 2022 imposed broader restrictions on American sales of advanced chips to Chinese businesses.
Apple fell out of the list of top five smartphone vendors in China in the second quarter of this year. It was the first time that domestic players held all five spots.
Clearly, Chinese tech views Apple as the top dog to compete against, but I would say that Apple’s star is waning in China.
They are being pushed out by the Chinese government, who are indirectly suggesting to Chinese consumers to go with domestic alternatives.
National champions and protecting them are the modus operandi in the age of deglobalization, and that will not change anytime soon.
As for the tech, foldable screens are a mediocre and lateral upgrade.
The size of a screen has a size limit to its usefulness, and building gargantuan screens does not suggest that it could trigger some new wave of untapped profits.
I believe Apple is smart in not aggressively pursuing foldables, and the quest continues to find the new killer tech that will take over.
Until then, tech stocks should grind up, but not in a dramatic fashion.
(DIGITAL GOLD – WHAT’S IT ALL ABOUT?)
November 1, 2024
Hello everyone
DEFINITION
Digital gold represents a modern evolution in precious metal investments, bridging traditional assets and innovative technology. In other words, it’s a way to invest in gold electronically. As a digital counterpart to physical gold, it enables investors to engage with gold markets online, eliminating challenges related to storage and security.
HOW DO YOU BUY/SELL DIGITAL GOLD?
The process of buying and selling digital gold involves a series of straightforward steps facilitated through online platforms or apps.
To buy gold digitally, users must create and verify an account and fund it using net banking or mobile wallets.
Once the account is funded, users specify the amount of digital gold they wish to purchase, enabling them to buy gold or buy gold online.
The platform will display the current market rate, and the equivalent physical gold will be securely stored in insured vaults.
When selling digital gold, users simply log in to their account, view the current market rate, and confirm the sale. The funds from the sale are then credited to their bank account. Users who prefer to receive physical gold can submit a redemption request, which may incur additional charges.
This entire process ensures a transparent and secure investment experience, providing peace of mind to investors. Moreover, an investor who buys and sells electronic gold enjoys enhanced liquidity and flexibility while also benefiting from the assurance of limited supply.
DIGITAL GOLD & TANGIBLE GOLD: THE DIFFERENCES
Physical and digital gold differ significantly in ownership, storage, and transaction methods. Digital gold allows investors to purchase virtual units backed by actual gold stored in secure vaults, with taxation and investment aspects including tax rates on selling, holding time for long-term capital gains, and benefits as an efficient and safe alternative to traditional physical gold purchases. This approach offers the convenience of online transactions, with the value directly tied to the market price of physical gold.
Physical gold ownership involves direct possession of tangible items such as gold coins, gold bars, or jewelry, requiring secure storage and physical handling. Both options serve as viable investments; digital gold provides enhanced convenience and ease of transaction, while physical gold offers a tangible asset that some investors may prefer for diversification.
BENEFITS OF INVESTING IN DIGITAL GOLD ASSETS
Investing in digital gold offers several advantages over physical gold. One significant benefit is greater convenience; investors can purchase gold online without the need to store it physically. This eliminates the challenges and costs associated with storage, insurance, and transportation.
Gold mutual funds investors can also benefit from digital gold, which provides a way to diversify their portfolios without requiring physical ownership.
Digital gold platforms also allow for fractional ownership, enabling investors to build their holdings even with smaller amounts of money. This feature increases accessibility for a broader range of investors.
Digital gold is highly liquid, allowing for quick conversion to cash, which is often more cumbersome than physical gold, which requires finding buyers.
Transaction costs for digital gold are generally lower than those for physical gold. Since digital gold is often linked to gold exchange-traded funds (ETFs) or gold mutual funds, it provides transparency and real-time tracking. This is particularly beneficial for investors looking to mitigate market volatility and ensure a trustworthy investment process.
DISADVANTAGES OF INVESTING IN DIGITAL GOLD
Investing in digital gold offers numerous advantages, but it’s important to consider the accompanying disadvantages. Unlike physical gold, digital gold lacks tangibility, potentially leading to a less satisfying experience for some investors. (Some people just like that security of holding a piece of gold). On the other hand, physical gold investment often carries an emotional value and can have different taxation considerations.
Buying digital gold exposes investors to cybersecurity risks, as the security of digital gold holding depends on the robustness of the issuing platform. (That’s why I always recommend transferring your digital assets to a decentralized wallet for safekeeping).
While accumulating digital gold is relatively easy, platform fees and transaction charges may affect overall returns. Furthermore, digital gold holdings may face limitations on investment amounts and acceptance, distinguishing them from physical gold in terms of utility. You may also want to consider exploring gold futures contracts, which offer a different approach to trading precious metals.
BEST PLATFORMS TO USE FOR DIGITAL GOLD TRADING
You can buy and sell digital gold in the United States on several reputable online platforms and mobile apps. Major financial institutions like JPMorgan Chase and specialized digital gold providers such as Paxos, Uphold, Gold Money, and Vaulted offer blockchain-based digital gold products.
These platforms allow investors to add digital gold to their portfolios seamlessly. Each unit of digital gold is backed by physical metal stored in insured vaults, ensuring it remains a solid store of value. Investors purchase tokens representing specific amounts of precious metals, enabling secure and transparent digital transactions.
This approach offers a reliable way to incorporate digital gold into diversified investment strategies.
SECURE STORAGE SOLUTIONS FOR DIGITAL GOLD HOLDINGS
The physical gold bullion supporting digital gold holdings is stored in highly secure, insured, and audited vaults managed by reputable companies such as MMTC-PAMP and Safe Gold. These vaulting facilities employ advanced security systems to ensure the utmost safety and integrity of the stored physical gold.
Security measures include:
- Armed guards: Ensuring constant vigilance and immediate response to threats.
- Biometric access controls: Restricting access to only authorized personnel.
- CCTV surveillance: Offering 24/7 monitoring to deter and document any unauthorized activities.
- Theft prevention: Utilizing state-of-the-art technology to safeguard digital assets.
- Unauthorized access prevention: Implementing multi-layered security protocols to prevent breaches.
These insured vaults undergo regular audits to maintain transparency and trust in the system, providing investors with peace of mind when they accumulate digital gold.
BLOCKCHAIN & ENCRYPTION
Blockchain technology underpins the recording and security of all transactions involving digital gold, ensuring an immutable and transparent distributed ledger. Digital gold platforms utilize advanced encryption and cryptographic techniques to safeguard user data and digital wallets. These methods prevent hacking and maintain the integrity of ownership records, thereby fostering a high level of trust and reliability.
- Immutable records: Transactions are permanent and unchangeable.
- Data protection: Advanced encryption secures user information.
- Hacking prevention: Security measures block unauthorized access.
- Reliable ownership: Precise records of digital gold ownership are maintained.
- Secure storage: Digital wallets provide a safe repository for digital gold.
CONVERTING DIGITAL GOLD TO PHYSICAL GOLD BULLION
You can convert your digital gold holdings into physical gold through reputable digital gold platforms, as physical gold remains a tangible investment option. These platforms offer a redemption process that transforms your digital gold into physical gold, such as coins or bars.
The process involves de-tokenizing your digital holdings and converting them into physical gold using blockchain technology. You typically need to submit a request specifying the denomination and quantity, following the platform’s terms and conditions.
Additional fabrication, shipping, and insurance fees may apply for physical delivery. To ensure a smooth transition, carefully review the terms and conditions provided by your digital gold platform.
THE OUTLOOK FOR DIGITAL GOLD
The outlook for digital gold is promising, driven by advancements in technology and shifting investor preferences toward more accessible and liquid investment options. As the investment landscape evolves, digital gold is gaining traction, particularly among younger investors. Blockchain technology enhances digital gold's resilience against market volatility and economic uncertainties.
Digital gold provides greater accessibility and convenience, improved security through blockchain technology, diversification potential in volatile markets, and lower costs compared to physical gold. These attributes particularly appeal to tech-savvy, younger investors.
Digital gold’s potential for diversification and growth positions it as a compelling alternative within the investment landscape.
HOUSEKEEPING
I’ll be sending out Zoom links shortly for our monthly meeting for October.
Cheers
Jacquie
Global Market Comments
November 1, 2024
Fiat Lux
Featured Trade:
(PLEASE USE MY FREE DATABASE SEARCH)
The original purpose of this letter was to build a database of ideas to draw on in the management of my hedge fund.
When a certain trade comes into play, I merely type in the symbol, name, currency, or commodity into the search box, and the entire fundamental argument in favor of that position pops up.
You can do the same. Just type anything into the search box with the little magnifying glass in the upper right-hand corner of my home page, and a cornucopia of data, charts, and opinions will appear.
Even the prices of camels in India (click here to find out why they’re going up).
The database goes back to February 2009, totaling 4 million words. Watching the traffic over time, I can tell you how the database is being used:
1) Small hedge funds want to see what the large hedge funds are doing.
2) Large hedge funds look to see what they have missed, which is usually nothing.
3) Midwestern advisors to find out what is happening in New York and Chicago.
4) American investors to find out if there are any opportunities overseas (there always are).
5) Foreign investors to find out what the heck is happening in the US (about 1,000 inquiries a day come in through Google’s translation software).
6) Specialist traders in stocks, bonds, currencies, commodities, and precious metals looking for cross-market insights, which will give them a trading advantage with their own book.
7) High net-worth individuals managing their own portfolios so they don’t get screwed on management fees.
8) Low net worth individuals, students, and the military looking to expand their knowledge of financial markets (lots of free online time in the Navy).
9) People at the Treasury and the Fed trying to find out what the private sector is doing.
10) Staff at the SEC and the CFTC to see if there is anything new they should be regulating.
11) More staff at the Congress and the Senate looking for new hot-button issues to distort and obfuscate.
12) Yet, even more staff in Obama’s office gauging his popularity and the reception of his policies.
13) As far as I know, no justices at the Supreme Court read my letter. They’re all closet indexers.
14) Potential investors/subscribers attempting to ascertain if I have the slightest idea of what I am talking about.
15) Me trying to remember trades that I recommended long ago but have forgotten.
16) Me looking for trades that worked so I can say, ‘I told you so.’
It’s there, it’s free, so please use it.
Mad Hedge Biotech and Healthcare Letter
October 31, 2024
Fiat Lux
Featured Trade:
(BORN WITH A SILVER SEQUENCE)
(ILMN), (PACB), (TMO)
When my kids were born years ago, the most advanced technology in the delivery room was the fetal heart monitor, which had all the predictive power of a Magic 8 Ball with a medical degree.
Those primitive days feel like ancient history now.
Today, as I watch my friends' grandchildren entering the world, they're getting something I would have traded my first hedge fund for: a complete genetic blueprint that makes a heart monitor look like two cups and a string.
Enough nostalgia. Let me cut straight to the chase, because nothing makes me twitchier than analysts who dance around the point like nervous fathers in a delivery room.
What I want to say is that I'm betting big on something called whole genome sequencing (WGS) for every newborn. And don't worry - this isn't just another biotech pipe dream cooked up by optimistic PhDs with too much venture capital.
Having spent years in Japan during the 1970s watching semiconductor technology transform from an expensive curiosity into an industrial necessity (rather like sushi in Manhattan), I recognize the same patterns emerging here.
The cost trajectory alone is enough to make a value investor weep with joy - from $100 million per genome in 2001 (roughly the price of a small island) to less than $600 today, with Illumina (ILMN) pushing to bring it to $100.
And what do we get for this bargain-basement pricing?
The numbers from the GUARDIAN project are juicier than an insider trading tip - and completely legal, I might add.
They're screening newborns for over 200 genetic conditions, while most hospitals are still stuck at 30, like they're using a genetic View-Master instead of an IMAX theatre.
In their first 4,000 participants, they found actionable diagnoses in 3.7% of newborns - conditions that traditional screening would have missed like a banker misses market crashes.
Let's look at the hard economics.
In NICU settings, ultra-rapid genome sequencing is already saving $14,265 per child and changing patient management in 37% of cases.
Early intervention in spinal muscular atrophy alone saves over $4 million in lifetime costs per patient - the kind of numbers that make healthcare administrators actually smile, a rare sight indeed.
These clinical benefits translate directly to the bottom line.
Just consider the market size. We're looking at $62.9 billion by 2030, growing at 18.2% annually.
The newborn screening market alone will hit $2.27 billion by 2025, and if that doesn't get your investment synapses firing, you might want to check your own genetic predisposition to opportunity recognition.
But impressive market numbers are just the beginning.
The technology landscape is shifting faster than trading algorithms during a Flash Crash. Stanford Medicine is now diagnosing genetic diseases in under eight hours - a process that used to take longer than getting approval for a mortgage.
Companies like Illumina, Pacific Biosciences (PACB), and Thermo Fisher Scientific (TMO) are playing a game of genetic leapfrog, each advance more impressive than the last.
Meanwhile, Sophia Genetics and their AI cohort are turning genetic data into actionable insights faster than you can say "double helix."
Having watched technology transformations unfold before, I know what I'm seeing.
My years in Japan taught me one crucial lesson (aside from never mix wasabi with everything just because you can): the difference between routine technological advancement and true paradigm shifts is as clear as the gap between a good investment and a great one.
What we're witnessing now - plummeting costs, advancing technology, and clear market demand - is rarer than a hedge fund manager admitting they were wrong.
And the implications are staggering. Think about this: we're approaching an era where every child starts life with a complete genetic roadmap.
It's like getting the ultimate user manual at birth, except this one actually tells you something useful, unlike those assembly instructions from Swedish furniture companies.
Smart money should be building positions now, while the broader market is still scratching its head like a freshman in advanced calculus.
The companies that establish themselves as leaders in this field won't just be successful - they'll be as fundamental to healthcare as smartphones are to teenagers.
As both a parent and an investor who's seen more market cycles than a laundromat, I haven't been this excited since I discovered you could actually make money going short. This is one of those rare moments when doing well and doing good align so perfectly, it's like finding a unicorn that also files your taxes.
Don't miss this one. Some opportunities in life are as rare as a bearish call at a bull market convention - this is one of them.
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
Global Market Comments
October 31, 2024
Fiat Lux
Featured Trade:
(ORDER EXECUTION 101)
Given the recent difficulty in placing orders in this violent, illiquid market, I have been inundated with requests for how to execute orders. So, I thought I’d take some time today to expound on the basics of order execution 101.
There are three basic ways to intelligently get an order into the market:
1) The No Brainer Average In. Buy half on receipt of my Trade Alert and half at the close. It’s that simple. If there is a tight spread and lots of volume, such as you usually get with the (SPY), just go to the market.
This is what a lot of institutions do and is why you get the volume spikes in the market at the opening and the close every day.
If you are trying to get into an illiquid position, such as with a far-month option on the Japanese yen, the spreads can be quite wide, possibly as much as 10%.
Going to the market can mean giving up a large chunk of your profit upfront. So, place limit orders in the middle of the spread, giving the market makers time to lay off risk in the underlying security or in the futures.
That will enable them to tighten up the spread and fill your order without taking you to the cleaners.
2) The Scale In. Let’s say I issue a trade alert to buy a spread at $4.00. The market is indicating a price of $3.85-$4.15. Break this down into seven orders of $3.85, $3.90, $395, $4.00, $4.05, $4.10, and $4.15. Then, forget about them.
By the end of the day, one will certainly get done, and maybe a few more. They will all get done only if the stock drops. But whatever happens, you will end up with a nice average and the low of the day in a rising market.
The reverse logic is true for put spreads.
2) The Principal Method. If you are a large, high-net-worth individual or institution, you can call your broker and ask him to make a market in any security. He will give you a bid and an offer wide enough to compensate for the risk he is taking, and you just lift the leg you want.
Warning: if your broker consistently loses money trading with you, he will quit returning your phone calls. That has happened to me a lot.
3) The Discretionary Method. Find a broker you trust to execute on a best-efforts basis at his discretion. He will want to grow your business and will do the best price he can. Expect to pay a higher commission and fees for this service, as you should. A lot of independent financial advisors now operate on this basis.
4) Overnight GTCs. If you live in a foreign time zone when the US stock market is closed, such as Australia, simply enter a spread of Good-Until-Cancelled orders overnight. For example, if I send out a trade alert to buy at $9.00, enter limit orders GTC at $9.00, $9.10, $9.20, $9.30, and $9.40. You should get done on some or all of these. This also applies to Americans who work during the day or don’t want to sit in front of a screen all day.
But a good broker worth his salt will usually earn his keep and then some, so it is worthwhile.
He has the news feeds right in front of him, has access to in-house and third-party research, like this newsletter, and is talking to clients and other traders all day long. So he should use this information to your advantage.
Don’t expect his service to be price competitive with discount online execution services. You get what you pay for.
Better not to be penny-wise and pound-foolish. Caution: many brokers won’t take these orders unless they know you well, as they are afraid of getting sued.
Be very careful of using limit stop losses these days. In the big flash crashes, some unfortunate investors got filled with market orders down 90%, especially with ETFs.
Better to let your broker use a “pocket” stop loss where he will call you before executing
If you get a Trade Alert from me and the security has already moved 5%, don’t chase it. The 3% rule applies to ETF’s.
Sometimes, merely going for a refill on your coffee, taking out the trash, or reading the morning papers is enough to miss an opportunity in this market.
I know because I have done it plenty of times myself.
Keep your discipline. Wait for the price to come back to you, or wait for the next Trade Alert. There are plenty of fish in the sea, and it is just a matter of time before another juicy one swims by.
