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
I like to start out my day by calling readers on the US east coast and Europe, asking how they like the service, are there any ways I can improve the service, and what topics would they like me to write about.
After all, at 5:00 AM Pacific time, they are the only ones around.
You’d be amazed at how many great ideas I pick up this way, especially when I speak to industry specialists or other hedge fund managers.
Even the 25-year-old day trader operating out of his mother’s garage has been known to educate me about something.
So when I talked with a gentleman from Tennessee in the morning, I heard a common complaint.
Naturally, I was reminded of my former girlfriend, Cybil, who owns a mansion on top of the levee in nearby Memphis overlooking the great Mississippi River.
As much as he loved the service, he didn’t have the time or the inclination to execute my market-beating Trade Alerts.
I said, “Don’t worry. There is an easier way to do this.”
Only about a quarter of my followers actually execute my Trade Alerts, and a lot of them are professionals. The rest rely on my research to correctly guide them in the management of the IRA’s 401(k)’s, pension funds, or other retirement assets.
There is also another, easier way to use the Trade Alert service. Think of it as “Trade Alert light.” Do the following.
1) Only focus on the four best of the S&P 500’s 101 sectors. I have listed the ticker symbols below.
2) Wait for the chart technicals to line up. Bullish long-term “Golden crosses” will set up for several sectors, as with precious metals now.
3) Use a macroeconomic tailwind.
4) Shoot for a microeconomic sweet spot, companies and sectors that enjoy special attention.
5) Increase risk when the calendar is in your favor, such as from November to May.
6) Use a modest amount of leverage in the lowest risk bets, but not much. 2:1 will do.
7) Scale in, buying a few shares every day on down days. Don’t hold out for an absolute bottom. You will never get it.
The goal of this exercise is to focus your exposure on a small part of the market with the greatest probability of earning a profit at the best time of the year. This is what grown-up hedge funds do all day long.
Sounds like a plan. Now, what do we buy?
(ROM) – ProShares Ultra Technology 2X Fund – Gives you a double exposure to what will be the top-performing sector of the market for the next six months, and probably the rest of your life. Click here for details and the largest holdings.
(UXI) – ProShares Ultra Industrial Fund 2X – Is finally rebounding off the back of a dollar that will slow down its ascent once the first interest rate hike is behind us. Onshoring and incredibly cheap valuations are other big tailwinds here. For details and the largest holdings, click here.
(BIB) – ProShares Ultra NASDAQ Biotechnology 2X Fund – With technology, this will be the other hyper-growth sector in the stock market for the next 20 years. How much is a cancer cure worth to stock valuations? Oh, about $2 trillion. A basket approach favors this notoriously volatile sector by rotating in new winners to replace losers.
(UYG) – ProShares Ultra Financials 2X Fund – Yes, after six years of false starts, interest rates are finally going up, with a December rate hike by the Fed a certainty. My friend, Janet, is handing out her Christmas presents early this year. This instantly feeds into wider profit margins for financials of every stripe. For details and the largest holdings, click here.
Of course, you’ll need to keep reading my letter to confirm that the financial markets are proceeding according to the script. We all know that sectors can rotate rapidly, as they have just done.
You will also have to read the Trade Alerts, as we include a ton of deep research in the Updates.
You can then unload your quasi-trading book with hefty profits in the spring, just when markets are peaking out. “Sell in May and Go Away?” I bet it works better than ever in 2024.
Global Market Comments
April 30, 2025
Fiat Lux
Featured Trade:
(THE LAZY MAN’S GUIDE TO TRADING),
(ROM), (UXI), (BIB), (UYG)
“Half the world’s job will be wiped out over the next 30 years, and the middle class will be completely wiped out,” said technology guru Mosh Varde.
Mad Hedge Biotech and Healthcare Letter
April 29, 2025
Fiat Lux
Featured Trade:
(BIOTECH’S AWKWARD MIDDLE CHILD)
(GILD), (VRTX), (AMGN), (BMY)
Well, folks, I've been trading biotech stocks since before most of today's analysts had their first internships.
After countless dinners with pharma execs and more investor conferences than I care to remember, there's one thing I've learned about this sector – these stocks are a lot like the experimental drugs themselves: sometimes miraculous, sometimes disappointing, and always requiring patience.
That brings us to Gilead Sciences (GILD), which has recently pulled off the financial equivalent of finding a $100 bill in an old jacket: a 90% gain since May 2024.
If you're an income-focused investor eyeing GILD's promising yield like a prospector spotting gold, I'd suggest taking a breath before you stake your claim.
After diving into this company's financial innards with the ruthless precision of a veteran hedge fund manager, I've uncovered some fascinating contradictions.
First off, GILD has undergone a remarkable transformation, shedding its growth-focused biotech skin to become what I call a "mature dividend machine" – offering 9 consecutive years of dividend increases since 2015.
Its current annual dividend of $3.16 per share yields 2.99%, significantly outpacing the biotechnology sector average of 1.92%. Not too bad for a company that cut its teeth on groundbreaking HIV and COVID treatments.
But here's where things get interesting. Despite GILD's revenue looking as seasonal as a summer blockbuster (with predictably lower earnings in the first half of each year), the company's fundamentals show troubling signs beneath the surface.
While Q1 2025 revenue was expected to land around $6.77 billion, the company's economic profitability has fallen off a cliff since 2024. Blame it on negative net income in early 2024 and a Cash Tax Rate that jumped from 25.4% to 30.6% faster than a trader fleeing a market crash.
The historical performance tells an even more sobering tale. From IPO to 2015, GILD delivered average annual returns of 32.25% in 79% of years – performance that would make even the most jaded investor whistle.
But since 2015? The stock managed profits in only 50% of years with an anemic average return of 0.99%, which translates to a 2.17% loss when adjusted for inflation. Ouch.
You might say that the entire sector's going through a rough patch these days, and I would have agreed with you except there are several biotechs still performing well.
Take Vertex Pharmaceuticals (VRTX). Those guys are up 36.7% over the past 52 weeks.
Or consider Amgen (AMGN), whose dividend is growing at a mouth-watering 8.94% annually over five years – nearly triple what GILD is serving up to its shareholders.
Even BioMarin (BMRN), a company most retail investors couldn't pick out of a lineup, has been quietly crushing it with 27.3% revenue growth while GILD's top line moves sideways like a crab with performance anxiety.
And don't get me started on Bristol Myers Squibb (BMY). Despite facing their own patent cliff dramas, they're maintaining a forward P/E of just 7.2 – practically giving away shares – while offering a dividend yield of 4.7%.
So, let me tell you something the glossy investor presentations won't: GILD's forward P/E ratio of 13.35x looks attractively cheap compared to the healthcare sector's 20.13x and the S&P 500's 18.60x.
After having had drinks with several institutional investment managers last week, though, I can assure you that discount exists for a reason.
The smart money has correctly identified that this company is no longer growing profitably, and certain whispers about their pipeline aren't inspiring confidence.
For dividend investors hoping to beat inflation while preserving capital, GILD presents a mixed bag. The dividend growth continues but remains stubbornly below inflation, creating a slow leak in real returns.
And, look, I know the Trump White House isn't exactly making life easy for companies like Gilead. Over whiskey last month with a former FDA bigwig (who shall remain nameless), I heard some concerning murmurs about potential cuts to HIV prevention programs.
Bad news when you're sitting on 40% of the U.S. PrEP market like GILD is.
Bottom line? I'm sticking with "hold" for now. The smart money moves when the smart money knows, and my Rolodex isn't flashing buy signals yet.
I've watched enough biotech darlings flame out to know that patience outperforms panic every time.
When GILD shows signs of recapturing that pre-2014 magic, you'll hear it from me before the CNBC talking heads catch wind of it.
Global Market Comments
April 29, 2025
Fiat Lux
Featured Trade:
(THE NEXT THING FOR THE FED TO BUY IS GOLD)
(GLD), (GOLD), (GDX), (NEM)
A huge new buyer may eventually enter the gold market.
That could be a year off, maybe two, or three at the most.
I’ll give you a hint who: your taxes will pay for it.
If true, it could send the price of the barbarous relic soaring above $5,000, or even $50,000 an ounce, a target long led by the tin hat Armageddon crowd.
When I spoke to a senior official at the Federal Reserve the other day, I couldn’t believe what I was hearing.
If the American economy moves into the next recession with rising inflation, a near certainty, its hands will be tied. It dare not cut rates for fear of further fanning the flames.
At that point, our central bank’s primary tool for stimulating US businesses will become utterly useless, ineffective, and impotent.
What else is in the tool bag?
How about large-scale purchases of Gold (GLD)?
You are probably as shocked as I am by this possibility. But there is a rock-solid logic to the plan. As solid as the vault at Fort Knox.
The idea is to create asset price inflation that will spread to the rest of the economy. It already did this with great success from 2009-2014 with quantitative easing, whereby almost every class of debt securities was hoovered up by the government.
“QE on steroids” would involve large-scale purchases of not only gold, but stocks, government bonds, and exchange-traded funds as well.
If you think I’ve been smoking California’s largest cash export (it’s not almonds), you would be in error. I should point out that the Japanese government is already pursuing QE to this extent, at least in terms of equity-type investments.
And, as the history buff that I am, I can tell you that it has been done in the US as well, with tremendous results.
If you thought that President Obama had it rough when he came into office in 2009, it was nothing compared to what Franklin Delano Roosevelt inherited.
The country was in its fourth year of the Great Depression. US GDP had cratered by 43%, consumer prices had crashed by 24%, the unemployment rate was 25%, and stock prices had vaporized by 90%.
Mass starvation loomed.
Drastic measures were called for.
FDR issued Executive Order 6102 banning private ownership of gold, ordering citizens to sell their holdings to the US Treasury at a lowly $20.67 an ounce.
He then urged Congress to pass the Gold Reserve Act of 1934, which instantly revalued the government’s holdings at $35.00, an increase of 69.32%. These and other measures caused the value of America’s gold holdings to leap from $4 to $12 billion.
Since the US was still on the gold standard back then, this triggered an instant dollar devaluation of more than 50%. The high gold price sucked in massive amounts of the yellow metal from abroad creating, you guessed it, inflation.
The government then borrowed massively against this artificially created wealth to fund the landscape-altering infrastructure projects of the New Deal.
It worked.
During the following three years, the GDP skyrocketed by 48%, inflation eked out a 2% gain, the unemployment rate dropped to 18%, and stocks jumped by 80%. Happy days were here again.
However, in the 21st-century version of such a gold policy, it is highly unlikely that we would see another gold ownership ban.
Instead, the Fed would most likely move into the physical gold market, sitting on the bid for years, much like it did in the 2010s Treasury bond market for five years. Gold prices would increase by a multiple of current levels.
It would then borrow against its new gold holdings, plus the 4,176 metric tonnes worth $40 billion at today’s market prices already sitting in Fort Knox, to fund a multibillion-dollar tax cut.
Yes, this all sounds like a fantasy. But negative interest rates were considered an impossibility only a few years ago.
The Fed’s move on gold would be only one aspect of a multi-faceted package of desperate last-ditch measures to resuscitate the economy at some point in the future. The time to start buying gold is RIGHT NOW!
Persistent urban legends and Internet rumors claim that the vault is actually empty or filled with fake steel bars painted gold.
That is, until Treasury Secretary Steven Mnuchin visited the vault on his way to view the solar eclipse at government expense in August 2017.
He says the gold is still there. But only if you believe Steve Mnuchin. A lot don’t.
We’ll never know for sure. Visitors are not allowed.
(GLW), (LUMN), (T)
While cruising down Highway 1 last weekend, I received a call from an old friend who runs one of America's largest data centers. He sounded unusually animated, almost giddy.
"John, you wouldn't believe what's happening with our fiber requirements," he said, nearly shouting over the roar of his Tesla. "We're ordering three times more optical cable than last year, and we still can't keep up with demand."
Why the sudden surge? Two letters: AI.
If you thought the AI revolution was just about software, think again. That intelligence needs a nervous system, and Corning Incorporated (GLW) is perfectly positioned to be the backbone supplier of that infrastructure.
The numbers back this up. In Q4 2024, Corning's optical communications segment saw sales jump a stunning 93% year-over-year. Not a typo - ninety-three percent. This wasn't some fluke quarter either.
For the full year, the segment grew 16%, pushing revenue to $4.66 billion and making it Corning's largest business by sales.
I've been following Corning since my days in Japan in the 1970s when they were pioneering fiber optics. Back then, the technology seemed almost magical - glass strands carrying phone calls.
Today, these same glass threads (albeit vastly improved) are what's enabling AI to function at scale.
Let me break it down. Modern AI systems require absurd amounts of GPU computing power. These processors generate tremendous heat and need to communicate with each other at lightning speed. The faster the speed required, the more fiber connections you need.
It's a perfect storm for Corning.
The company's management team clearly recognizes the opportunity. They've launched what they call their "Springboard Plan" targeting over $4 billion in revenue and 20% operating margins by 2026.
The optical communication segment alone is projected to grow at a 30% CAGR through 2027. For context, the long-term average growth rate for the S&P 500 is 3%.
If you’re still not convinced, let's look at who's buying.
Lumen (LUMN) recently inked a deal to have Corning supply 10% of its global fiber optics for the next two years. AT&T (T) signed a deal worth over $1 billion in late 2024.
When telcos are throwing around billions, you know something significant is happening.
And Corning isn't just talking - they're innovating to meet the moment. In March, they launched their GlassWorks AI Solutions, which can dramatically increase data throughput. Their fiber enables 2-4 times more capacity in existing conduits.
That's crucial because nobody wants to tear up streets to lay new pathways if they can avoid it.
What I find particularly attractive about Corning is that it's not a one-trick pony. Yes, optical communications is driving growth, but the company has diversified segments in display glass, life sciences, automotive, and specialty materials. These provide steady cash flow that can fund R&D and growth initiatives.
In other words, Corning can place big bets on the AI revolution without betting the farm.
The latest earnings report confirms this financial strength. Q4 2024 sales jumped 18% year-over-year to $3.9 billion, but even more impressive was the EPS increase of 46% to $0.57.
Profitability is accelerating faster than revenue - the holy grail for any corporation. Free cash flow hit $1.25 billion for 2024, up a hefty 42% from the previous year.
All this would be moot if the stock was outrageously expensive, but it's not.
Corning trades at a forward P/E of 18.30x, slightly below the sector median of 19.04x and in line with the broader S&P 500 at around 18x.
The forward PEG ratio of 1.12x represents a 21.46% discount to the sector median of 1.42x, suggesting the market hasn't fully priced in Corning's growth potential.
There are risks, of course.
As a global supplier, Corning could face headwinds from President Trump's tariffs and ongoing US-China trade tensions. This could impact both demand for their products in China and the cost of raw materials.
But with 170 years of business experience, Corning has weathered far worse storms.
I remember visiting Corning's headquarters in upstate New York back in the 1980s when I was covering technology for a major business magazine. What struck me was their combination of cutting-edge science with old-school manufacturing discipline.
That culture persists today, and it's exactly what's needed to capitalize on the AI infrastructure boom.
So is Corning a worthwhile investment? At its current price, it offers an attractive risk/reward profile for long-term investors. I suggest you buy the dip.
Mad Hedge Technology Letter
April 28, 2025
Fiat Lux
Featured Trade:
(GOOGLE GIVES US SOME GOOD NEWS)
(GOOGL), (NVDA)