Page 258 - Mad Hedge Fund Trader

How to Execute a Mad Hedge Trade Alert

From time to time, I receive an email from a subscriber telling me that they are unable to get executions on trade alerts that are as good as the ones I get. There are several possible reasons for this:

1) Markets move, sometimes quite dramatically so.

2) Your Trade Alert email was hung up on your local provider’s server, getting it to you late. This is a function of your local provider’s capital investment and is totally outside our control.

3) The spreads on deep-in-the-money options spreads can be quite wide. This is why I recommend readers place limit orders to work in the middle market. Make the market come to you. Better yet, if I send you a limit order at $9.00, split it up into five pieces and enter them at $9.00, $9.10, $9.20, $9.30, and $9.40. You might get the last one or two done immediately. When the high frequency traders dump their positions at the end of the day you might get filled on everything. If you enter a “Good until Cancelled” order you might get even better prices the next morning if the stock goes your way. This is what I do.

4) Thousands of market makers read Global Trading Dispatch. The second they see one of my Trade Alerts, they adjust their markets accordingly. This is especially true for deep-in-the-money options. A spread can go from totally ignored to a hot item in seconds. I have seen daily volume soar from 10 contracts to 10,000 in the wake of my Trade Alerts.

On the one hand, this is good news, as my Trade Alerts have earned such credibility in the marketplace. It is a problem for readers encountering sharp elbows when attempting executions in competition with market makers.

5) Occasionally, emails just disappear into thin air. This is cutting edge technology, and sometimes it just plain doesn’t work. This is why I strongly recommend that readers sign up for my free Text Alert Service as a back up. Trade Alerts are also always posted on the website as a secondary back up and show up in the daily P&L as a third. So, we have triple redundancy here.

The bottom line on all of this is that the prices quoted in my Trade Alerts are just ballpark ones with the intention of giving traders some directional guidance. You have to exercise your own judgment as to whether the risk/reward is sufficient with the prices you are able to execute yourself. Sometimes it is better to pay up by a few cents rather than miss the big trend. The market rarely gives you second chances.

Good luck and good trading.

John Thomas

October 3, 2024 - Quote of the Day

Quote of the Day

"Stocks are a lot safer than investors realize," said Tom Lee, chief US equity strategist of JP Morgan.

The Robots Are Getting Creative: 5 Jobs AI is Poised to Take Over

Mad Hedge AI

For years, we've been told that robots will take over manual labor and repetitive tasks, leaving creative pursuits as the exclusive domain of humans. But the rise of sophisticated AI tools like DALL-E 2, Midjourney, and ChatGPT is challenging that assumption. No longer confined to logic and data processing, AI is now generating stunning visuals, writing compelling copy, and even composing music. This begs the question: are creative jobs safe?

The answer, increasingly, is no. While human creativity and ingenuity are still highly valued, certain artistic roles are becoming increasingly susceptible to automation. Here are five creative jobs that AI is poised to disrupt in the near future:

1. Entry-Level Graphic Design:

Imagine needing a logo for your new online store. Instead of hiring a designer, you type a few keywords into an AI image generator, choose from a selection of impressive options, and customize the final product with a few clicks. This is the reality facing many entry-level graphic designers. AI tools can already create visually appealing designs for websites, social media posts, brochures, and more, often at a fraction of the cost and time.

What AI can do:

Generate variations of a design concept: Need a logo in different color schemes or layouts? AI can effortlessly produce countless iterations.
Adapt to different styles: Want something minimalist, vintage, or futuristic? AI can adjust its output to match your desired aesthetic.
Create basic layouts: AI can arrange text and images in visually appealing ways for brochures, flyers, and web pages.

What AI can't (yet) do:

Understand complex design briefs: While AI can follow basic instructions, it struggles with nuanced requests or abstract concepts.
Offer original creative thinking: AI relies on existing data and trends, potentially leading to derivative or uninspired designs.
Build client relationships and understand their brand identity: Human designers excel at understanding a client's vision and translating it into a cohesive brand identity.

2. Junior Copywriters:

From product descriptions to social media captions, AI is making significant inroads into the world of copywriting. Tools like Jasper and Copy.ai can generate grammatically correct and persuasive copy in seconds, making them a tempting alternative for businesses on a budget.

What AI can do:

Write different types of creative content: AI can generate blog posts, articles, website copy, and even scripts for videos.
Adapt to different tones of voice: Whether you need something formal, playful, or informative, AI can adjust its writing style accordingly.
Optimize copy for SEO: AI can incorporate relevant keywords and phrases to improve search engine rankings.

What AI can't (yet) do:

Conduct in-depth research and interviews: Human copywriters excel at gathering information and crafting compelling narratives.
Understand complex topics and write with authority: AI often struggles with nuanced or specialized subjects.
Inject personality and unique voice: While AI can mimic different writing styles, it lacks the genuine voice and perspective of a human writer.

3. Stock Photographers and Illustrators:

With AI image generators capable of producing stunning, royalty-free images on demand, the stock photography and illustration industry is facing a major upheaval. Why pay for expensive stock photos when you can generate a custom image tailored to your exact needs?

What AI can do:

Create realistic and stylized images: AI can generate photographs, illustrations, and even 3D models in a variety of styles.
Customize images to specific requirements: Need a picture of a cat wearing a hat in a specific pose? AI can make it happen.
Generate variations of an image: AI can easily create different versions of an image with different lighting, angles, or compositions.

What AI can't (yet) do:

Capture real-life events and emotions: While AI can generate realistic images, it can't replicate the spontaneity and authenticity of a photograph taken in the real world.
Offer a unique artistic vision: AI-generated images often lack the personal touch and individual style of human artists.
Understand the nuances of visual storytelling: Human photographers and illustrators are skilled at conveying emotions and narratives through their work.

4. Music Composers for Background Music and Jingles:

Need a catchy jingle for your latest ad campaign or some background music for your YouTube video? AI-powered music generators can create custom tracks in a variety of genres, eliminating the need to hire a composer.

What AI can do:

Compose music in different styles: AI can generate music ranging from classical to electronic, jazz to pop.
Create custom tracks based on specific parameters: Need something upbeat, melancholic, or suspenseful? AI can tailor the music to your needs.
Generate variations of a melody or chord progression: AI can easily experiment with different musical ideas.

What AI can't (yet) do:

Compose complex and emotionally resonant music: Human composers excel at creating music that evokes deep emotions and tells a story.
Collaborate with other musicians and artists: AI lacks the ability to engage in creative collaboration and improvisation.
Understand the nuances of music theory and composition: While AI can generate technically sound music, it may lack the depth and originality of human-composed music.

5. Translators for Simple, Repetitive Texts:

AI-powered translation tools like Google Translate have come a long way, and they're becoming increasingly capable of handling simple, repetitive texts like product descriptions, instruction manuals, and website copy.

What AI can do:

Translate text quickly and efficiently: AI can translate large volumes of text in a fraction of the time it would take a human translator.
Handle multiple languages: AI translation tools can often translate between dozens of different languages.
Improve accuracy over time: As AI models are exposed to more data, their translations become more accurate and nuanced.

What AI can't (yet) do:

Translate literary or creative texts: Human translators are essential for capturing the nuances of language and style in literature, poetry, and other creative works.
Understand cultural context and adapt translations accordingly: AI may struggle with idioms, humor, and other culturally specific elements.
Provide quality assurance and editing: Human translators are still needed to ensure that translations are accurate, consistent, and culturally appropriate.

The Future of Creativity in the Age of AI

The rise of AI in creative fields is not necessarily a cause for panic, but it does signal a need for adaptation. While AI excels at automating repetitive tasks and generating basic creative outputs, it still lacks the human touch – the ability to truly understand and respond to complex emotions, cultural nuances, and abstract concepts.

To thrive in this new landscape, creatives will need to embrace AI as a tool, leveraging its capabilities to enhance their own work and focus on tasks that require uniquely human skills like critical thinking, empathy, and creative problem-solving. The future of creativity is not about man vs. machine, but rather a collaborative partnership where humans and AI work together to achieve new heights of artistic expression.

October 2, 2024, 2024

Tech Letter

Mad Hedge Technology Letter
October 2, 2024
Fiat Lux

Featured Trade:

(INFLATION COULD AFFECT TECH STOCKS)
($COMPQ)

Inflation Could Affect Tech Stocks

Tech Letter

Either way, accelerating inflation is coming back.

What does that mean for your tech portfolio ($COMPQ)?

It is complicated is the simple answer, and prices threaten to escalate because of the economic disruption ahead caused by the International Longshoremen's Association (ILA) protesting at 14 major ports along the East and Gulf coasts, halting container traffic from Maine to Texas.

This fight is first about pay but more about rejecting automation.

The action marks the first such shutdown in almost 50 years.

On Monday, USMX (United States Maritime Alliance) said it had increased its offer, which would raise wages by almost 50%, triple employers' contributions to pension plans, and strengthen health care options.

USMX has accused the union of refusing to bargain, filing a complaint with labor regulators that asked them to order the union back to the table.

The union wants to see per-hour pay increase by five dollars per year over the life of the six-year deal, which he estimated amounted to about 10% per year.

Imports in the US surged over the summer as many businesses took steps to rush shipments ahead of the strike.

She said more than 100,000 people could find themselves temporarily out of work as the impact of the stoppage spreads.

That would hit consumers and businesses which tend to rely on so-called "just-in-time" supply chains for goods, he added.

In case you are wondering, it takes an estimated 4-8 years to convert a port to full automation and between $500 million to $2B.

For reference, Shanghai’s Yangshan port took about 4-6 years from conception to full operations.

Yangshan’s port barely needs humans to operate, and it mostly down by a handful of IT guys behind computers.

They don’t need 50,000 people to do the job.

Clearly, the amount of job destruction is something that the longshoremen association is aware of and is actively fighting against modernization.

What it does mean is that Americans will pay higher prices.

Higher inflation will result in rising bond yield, which will strengthen the dollar.

Last time, the US dollar skyrocketed, tech prices rose during covid, and the rest of the equity market sank relative to big tech except energy stocks.

The USMX is fighting against any and all automation, shows the gaining power of unions in the United States.

Tech firms have been cutting staff in bunches and automating as fast as possible with AI.

With the possibilities of another covid-style shortage of many everyday goods, price inflation could return instantly, and that is very bad news for the S&P and Dow index.

The tech-heavy Nasdaq has proven that it fights calamities quite well and is durable in times of catastrophe, albeit if the electricity and keyboard are still functioning.

Ultimately, I see chaos happening and, at best, agreed on wage hikes that are not insignificant that will be passed on to the consumer.

From what I can understand, each time chaos rears its ugly head in the United States, tech somehow is unscathed in the aftermath and benefits.

If crazy wage increases are agreed on, get ready for another tech rally, and even if there is a long work stoppage, tech will gain over any other sector.

With interest rates dropping, it is hard not to see tech stocks experiencing a melt-up going into yearend, even if bond yields spike higher because of external events outside the realm of tech.

Automation is coming for all industries, and the longshoremen are trying to kick the can down the road at the expense of the end customer.

I am bullish tech going into Christmas.

October 2, 2024

Jacque's Post

(MARKETS ARE SHAKEN BY AN ESCALATION IN THE MIDDLE EASTERN CONFLICT)

October 2^nd, 2024

Hello everyone.

How did we get here?

Israel invaded Lebanon to disrupt Hezbollah. They took out the leader through a series of strikes. Israel is now being hit with missiles from Iran as a retaliatory strike. The question is, what is Netanyahu’s move following this strike?

Biden’s Response

Biden has been put in a very difficult position, as diplomacy efforts to secure a ceasefire between Israel and Hamas and Israel and Hezbollah appear to have failed.

The Biden administration is focused on avoiding a war with Iran. Having said that, the administration has bolstered its military presence in the region to protect Israel and deter Iran. Additional troops will be sent to the region also to support the roughly 40,000 American troops in the area.

Effect on Markets

The indexes could sell off around 5% or so over a period of two weeks and then recover that as investors pour in to buy up stocks, which would probably take us to around the end of October or at least the last week.

QI CORNER

SOMETHING TO THINK ABOUT

What your iPhone carries on it could be a biosecurity risk.

DNA analysis of microbes found on the phones of international travelers has found antibiotic-resistant bacteria and harmful pathogens are entering Australia.

Dr. Lotti Tajouri from Queensland’s Bond University said that “mobile phones act as contaminated mobile Petri dishes.

The molecular geneticist was part of a team that swabbed phones from international travelers who had flown into Sydney.

The results from about 6.8 million arrivals into Australia between January and October 2023 estimated that 749.2 million microbes may have been introduced to Australia in 2022 via mobile phones.

Tajouri points out that not only can bacteria on phones be harmful to personal health, but they can also be a risk to flora and fauna when unknowingly brought into the country by travelers.

One example is a fungus called ‘Fusarium solani’ that has been linked to the shot hole borer, a tiny beetle that has been devastating trees in Western Australia for three years.

The borers have a symbiotic relationship with the fungi and can kill a tree in two years.

Tajouri reminds us that protecting our “biodiversity and reducing the spread of superbugs is critical not only for the economy but for our national security.”

He goes on to say that there is a clear argument to be made that “international travelers’ phones should be decontaminated upon arrival to Australia, in addition to existing biosecurity measures.”

Tips to keep your phone clean

The US Centres for Disease Control and Prevention has a list of ways to improve your phone hygiene.

1/ When outside of your home, keep your phone in your pocket, purse, or car.

2/ When shopping, use a written shopping list, not a list kept on your smartphone.

3/ Use a credit card for payment, preferably a contactless one, and not the mobile pay option on your smartphone.

4/ After being in public places, only touch your phone after you have washed or sanitized your hands.

5/ Use a hands-free device when making calls so that your phone is not pressed against your face.

Cheers

Jacquie

October 2, 2024

Diary, Newsletter, Summary

Global Market Comments
October 2, 2024
Fiat Lux

Featured Trade:

(FRIDAY OCTOBER 25 SALT LAKE CITY UTAH STRATEGY LUNCHEON)
(TRADING DEVOID OF THE THOUGHT PROCESS),
(SPY), (INDU), (TLT), (USO)

Trading Devoid of the Thought Process

Diary, Newsletter

It seems that all anyone has to do is blow their nose these days, and high-frequency trading will amplify the movement, a multiple of what we would have seen in past years. It's like the butterfly flapping its wings in the Amazon.

The exit of institutional money to trading in in-house dark pools, the concentration of trading into single-sector exchange-traded funds (ETFs), and the departure of the traditional individual investor are all exaggerating these moves. It doesn’t help that stock markets are sitting just short of all-time highs.

You could run off and trade something else besides stocks. That’s easier said than done, as virtually all other asset classes have become equally untradeable.

Bonds have gone crazy, rising to mathematically impossible levels. You’re still trying to catch a falling knife in commodities, as the recent action in oil proved, but the Chinese may have just reversed that. Precious metals are at all-time highs. Foreign currencies have gone comatose, with the US dollar rolling over like the Bismarck.

What’s a poor trader to do? Take up the action in collectible Beanie Babies? Rare French postage stamps? Rare vintage Madeira’s?

There are only two ways to deal with a market like this. Turn off the TV, cancel your newswire feeds, quit reading research, and just look at your screens.

Buy the low numbers and sell the high ones.

It is no more complicated than that. Don’t confuse matters with the thought process. The markets are now so illogical you will only muddy the waters.

The other method is to become boring. Just find the cheapest, low-fee index fund you can find, like one of Vanguard’s, buy it, and stuff it under your mattress. I’m pretty confident that it will be up 10% by the end of the year. 90-day T-bills at 4.75% is not a bad second.

That means you will probably beat most hedge managers out there, as you would have done for the past seven consecutive years. Try to earn more than 10% in these choppy markets, and you could end up losing 10% or 100%.

As for me, I am going to stick with trading. At least I’ll be there when it turns easy again, which has to be soon, and I’ll make a hell of a lot more than 10%.

And was never very good at the “boring” thing.

My New Investment Strategy

One of My Rare Madeira's

SOLD OUT - Thursday, January 16, 2025 Sarasota, Florida Strategy Luncheon

Lunch

Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in Sarasota, Florida on Thursday, January 16, 2025. The cost of the luncheon will be $277.

An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.

I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.

The lunch will be held at an exclusive Sarasota hotel. The precise location will be emailed with your purchase confirmation. Mad Hedge guests will be assigned their own dedicated table in a ballroom with 200 other participants.

I look forward to meeting you, and thank you for supporting my research.

To purchase tickets for this luncheon, please click here.

Trade Alert - (MU) October 1, 2024 - BUY

Tech Alert

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