Page 356 - Mad Hedge Fund Trader

Cyber Security is Still Growth

Since starting the company, CrowdStrike (CRWD) has brought cybersecurity to the cloud.

They have pioneered AI for cybersecurity, and quickly become the de-facto security platform that disrupts, displaces, and consolidates other vendors.

This stock has been really good to Mad Hedge Tech Letter followers, and we recently took profits in a successful in-the-money bull call spread in CRWD.

Money will flow into enterprise protection as the stakes get higher with hackers looking to strike gold.

When talking about the threat landscape, CrowdStrike pioneered commercial threat intelligence that governments and companies of all sizes depend on.

It's CrowdStrike that delivers billions of new threat detections every month to stop breaches.

It's CrowdStrike that is the search bar of security, where security analysts complete millions of queries daily.

What took hackers hours, has shrunk to minutes and seconds. Attack speeds will only accelerate.

The cloud is increasingly under attack and CRWD exists to protect businesses against these attacks.

CRWD tracked a 75% year-over-year increase in cloud intrusion attempts.

The cloud is today's battleground for cyberattacks.

Generative AI is an adversary force multiplier and the last few years have seen the onboarding of this new force multiplier.

Gen AI puts advanced cybercrime tradecraft in the hands of attackers of all skill levels. Gen AI will dramatically grow the adversary population.

CRWD collects trillions of threat signals daily, creating one of the world's largest and fastest-growing cyberthreat datasets.

From day one, CRWD has been an AI company, training the industry's most effective and accurate AI models to prevent attacks based on data mode.

Embedded in the Falcon platform is a virtuous data cycle where CRWD collects cybersecurity's very best threat intelligence data, builds, and trains robust preventative and generative models, and protects CRWD customers with community immunity.

In today's environment of heightened cyberattacks, the latest SEC breach disclosure regulation only increases the pressure on companies and their boards.

One of the best of breeds and its superior performance are a critical reason to why the share price has moved up in the last few years.

Let’s look at the numbers behind the business model.

Moving to the P&L, total revenue grew 33% year over year to reach $845.3 million.

Subscription revenue grew 33% over Q4 of last year to reach $795.9 million. Professional services revenue was $49.4 million, representing 26% year-over-year growth.

Subscription customers were five or more, six or more, and seven or more modules growing to 64%, 43%, and 27% of subscription customers, respectively.

CRWD is landing bigger with new customers on average adopting 4.9 modules out of the gate, an increase over last year. CRWD’s gross retention rate remained high at 98%.

CRWD is knocking it out of the park.

It’s hard to maintain growth company status in the head of major macro headwinds.

Many enterprise businesses are pulling back spend, but cybersecurity hasn’t been curtailed as of yet.

Tech companies are becoming more efficient and cybercrime hasn’t felt the pain of leaner software budgets.

This bodes well for the future of cyber security and the main players in the industry.

March 6, 2024

Jacque's Post

(WHY GOLD WILL SHINE IN 2024)

March 6, 2024

Hello everyone,

The price of gold has surged to a record high, driven by expectations of US interest rate cuts, investors hunting for haven assets and months of prodigious buying by central banks and Chinese investors.

On Tuesday, gold hit $2,141, beating the previous record of $2,135 set in December.

Tuesday’s move represents a continuation of a rally triggered on Friday by growing hopes of a Federal Reserve rate cut in June following weaker economic data. Gold, an asset with no yield, benefits from lower borrowing costs as investors feel they have not missed out so much by not putting their cash into bonds.

Gold’s 16-month rally from just above $1,600 in late 2022 has been primarily supported by record buying by central bank emerging markets after the US weaponised the dollar in its sanctions against Russia for its full invasion of Ukraine.

Chinese consumers have also participated in sending the metal higher as they are seeking a safe place to park their cash after local property and stock markets have tumbled.

Ross Norman, chief executive of Metals Daily, confirms that “Gold continues to flow to the east.”

Gold’s recent surge is still remarkable when you consider that the Fed’s benchmark rate is still at a 22-year high of between 5.25% and 5.5%, a level you would think would take the lustre out of gold’s allure. Seemingly, gold has broken its correlation with real rates and is instead being driven by central banks and Chinese household asset allocation. Furthermore, the expectation for slightly higher inflation trends in the future – higher than the pre-pandemic period - could explain this strong performance by gold. It is possible to interpret that this is a new era for gold which suggests that downside risks may be limited.

However, gold is still some way off its inflation-adjusted all-time high of $3,355.00 reached in 1980 when oil-driven inflation and turmoil in the Middle East capped a nine-year bull run.

Last week, the ISM Manufacturing Purchasing Managers’ Index indicated a far larger than expected contraction in the US manufacturing activity in January.

That propelled gold beyond what the market saw as its ‘triple top’ $2,070 mark, when Covid smashed the US in 2020. Russia invaded Ukraine in 2022 and the US banking crisis erupted last year.

Signs of pain in the US economy were reflected in government bond yields moving lower in the past week. This slowing also raised expectations that the Fed could cut rates in June.

Two-year Treasury yields have fallen by 0.23% points since the start of last week to 4.56%. Traders now place an 85% probability on the Fed delivering its first 0.25% point cut by June, up from 70% early last week.

New entrants in the sector have also contributed to the volatility and gold’s rise. Speculative trading, that is, option traders, have been positioning for bullion prices to rise. With the latter in mind, gold could also fall when trades reach expiration, or are liquidated.

Newmont Mining

Wheaton Precious Metals

Barrick Gold

Cheers,

Jacquie

March 6, 2024

Diary, Newsletter, Summary

Global Market Comments
March 6, 2024
Fiat Lux

Featured Trade:

(WHY THE DOW IS GOING TO 240,000)
(X), IBM (IBM), (GM), (MSFT), (INTC), (DELL), (NVDA), (NFLX), (AMZN), (META), (GOOGL), (BITO)

Why the Dow is Going to 240,000

Diary, Newsletter

For years, I have been predicting that a new Golden Age was setting up for America, a repeat of the Roaring Twenties. The response I received was that I was a permabull, a nut job, or a conman simply trying to sell more newsletters.

Now some strategists are finally starting to agree with me. They too are recognizing that a ganging up of three generations of investment preferences will combine to drive markets higher during the 2020s, much higher.

How high are we talking? How about a Dow Average of 240,000 by 2035, up another 515% from here? That is a 40-fold gain from the March 2009 bottom.

It’s all about demographics, which are creating an epic structural shortage of stocks. I’m talking about the 80 million Baby Boomers, 65 million from Generation X, and now 85 million Millennials. Add the three generations together and you end up with a staggering 230 million investors chasing stocks, the most in history, perhaps by a factor of two.

Oh, and by the way, the number of shares out there to buy is actually shrinking, thanks to a record $1 trillion or more in corporate stock buybacks for the past decade.

I’m not talking pie-in-the-sky stuff here. Such ballistic moves have happened many times in history. And I am not talking about the 17^th-century tulip bubble. They have happened in my lifetime. From August 1982 until April 2000, the Dow Average rose, you guessed it, exactly 20 times, from 600 to 12,000, when the Dotcom bubble popped.

What have the Millennials been buying? I know many, like my kids, their friends, and the many new Millennials who have recently been subscribing to the Diary of a Mad Hedge Fund Trader. Yes, it seems you can learn new tricks from an old dog. But they are a different kind of investor.

Like all of us, they buy companies they know, work for, and are comfortable with. During my dad’s generation that meant loading your portfolio with US Steel (X), IBM (IBM), and General Motors (GM).

For my generation, that meant buying Microsoft (MSFT), Intel (INTC), and Dell Computer (DELL).

For Millennials that means focusing on NVIDIA (NVDA), Netflix (NFLX), Amazon (AMZN), Meta (META), and Alphabet (GOOGL). Oh, and they like Bitcoin too (BITO).

That’s why the Magnificent Seven account for all of the past year’s monster gains.

There is another gale force tailwind pushing stocks up. The enormous profits created by artificial intelligence are essentially replacing the Federal Reserve as an unlimited source of liquidity. If you missed the quantitative easing and the free money of the 2010s, you get another pass at the brass ring. But you have heard me talk about this before so I won’t bore you.

There is one catch to this hyper-bullish scenario. Somewhere on the way to the next market apex at Dow 240,000, we need to squeeze in a recession. Bear markets in stocks historically precede recessions by an average of seven months. But for the time being, it looks like smooth sailing.

When I get a better read on precise dates and market levels, you’ll be the first to know.

March 6, 2024 - Quote of the Day

Diary, Newsletter, Quote of the Day

“Economists say we’re having 2.5% growth. That’s a lie. The reality is that we have 5% growth for the top 20% of the economy, and 0% growth for the bottom 80% of the economy,” said Arthur Brooks, president of the American Enterprise Institute.

March 5, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 5, 2024
Fiat Lux

Featured Trade:

(THE SKINNY ON ECONOMIC GROWTH)

(LLY), (NVO), (AMGN)

The Skinny On Economic Growth

Biotech Letter

What might just give economies a bigger jolt than the frenzy of the Super Bowl or a jampacked Taylor Swift world tour? If you guessed the recent buzz around weight-loss drugs, take a bow. You see, it's not just about slimming waistlines anymore – these breakthrough medications could be a game-changer for the whole economy.

But first, a sobering reality check: health issues have been nibbling away at the U.S. labor force like a sneaky termite over the last 30 years, shaving off two to three percentage points.

Then there's the matter of early departures from this mortal coil, chipping away another 0.2 percentage points from annual labor growth.

Not to mention the legion of unsung heroes caring for the ailing, effectively benched from the workforce, leading to a 3% labor force deficit.

Among all the health issues affecting the labor force, obesity has been identified as a sneaky little gremlin, dragging down productivity and participation in the workforce.

With obesity affecting 40% of the U.S. population, we're talking about a hefty 1% slash in total output.

But what if there was a way to combat this? Enter stage left: Eli Lilly (LLY). Sure, you might know them as a big-league player in the pharma world, but did you know they're the brains behind blockbuster medications like Trulicity, Mounjaro, and cancer-battling Verzenio?

And the story gets even more exciting – it's not just their existing all-star lineup that's sent their stock soaring 180% since 2021. Their latest weight-loss marvel, Zepbound, got the FDA's green light last November. Think of it as Mounjaro's twin, sporting the same molecule but with a different name to keep things clear for their existing diabetes patients.

This breakthrough signals a massive shift in the obesity treatment landscape. The global anti-obesity market is projected to explode to a staggering $100 billion annually by 2030 – a dramatic leap from last year's $6 billion. To put that in perspective, global spending on cancer treatments is estimated at $220 billion this year.

Naturally, Lilly is poised to grab a big slice of that pie. Analysts are predicting a healthy 21.4% revenue boost this year, and nearly 24% by 2025. Talk about a growth spurt.

As for earnings? They're looking at nearly tripling in that timeframe. The future's so bright, Lilly might need shades.

But here's the catch: Lilly's stellar rise has its stock priced at a premium, and then some. We're talking 60 times this year's expected earnings. And while the company's profit train is set to chug along, not every stock can keep up those lofty valuations in the long haul.

And let's not forget about the competition. Novo Nordisk (NVO), with its own contenders Ozempic and Wegovy, is nipping at Lilly's heels, even as Amgen (AMGN) and others are hot on the trail with promising candidates of their own.

Yet, Lilly's not sweating it. With Zepbound (aka Mounjaro for the weight-conscious) already making waves as a go-to for obesity treatment, they're sitting pretty. It's like they've already won half the battle, with doctors and patients already in the know about this not-so-secret weapon.

Still, as tempting as it might be to hop on the Lilly bandwagon after seeing those numbers, we need to do a quick reality check before investing. It's important to remember that every stock has its ups and downs.

For starters, Lilly's stellar rise means their stock is trading at a premium – a hefty 60 times this year's expected earnings. And while the company's profit train is definitely chugging along, that kind of lofty valuation might be a bit too spicy for some investors' taste, especially in the long run.

So, what's the takeaway for those who want in on the action? Lilly's current price tag might give you pause, especially if you're looking for a bargain.

It's been a wild ride for this stock, and sometimes the best moves involve waiting for the market to catch its breath.

However, their dominant position in a rapidly expanding market definitely makes them a player worth watching closely. I suggest to buy on the dip.

Switching gears for a second, let’s take a look at the big picture. It turns out that widespread use of GLP-1 medications like Lilly's could deliver way more than just individual weight loss. We're talking about a potential shot in the arm for the entire U.S. economy.

Think about it: if 30 million Americans hop on the GLP-1 train with drugs like Mounjaro and Zepbound, and a conservative 70% of them see benefits, we could see a 0.4% boost in the U.S. GDP. And that's just the starting line.

In a best-case scenario, where 60 million Americans embrace these treatments and a whopping 90% benefit, the GDP could potentially surge by a full 1%. Even with more modest projections, with 15 million users and a 50% success rate, the economic impact would still be noteworthy.

This isn't just pocket change – it's serious economic muscle. With the right push, these weight-loss drugs could be the breakthrough prescription our economy needs, adding some serious pep to our growth alongside countless individual health transformations. Now, isn't that a story worth following?

March 5, 2024

Diary, Newsletter, Summary

Global Market Comments
March 5, 2024
Fiat Lux

Featured Trade:

(I HAVE A NEW OPENING FOR THE MAD HEDGE FUND TRADER CONCIERGE SERVICE),
(TESTIMONIAL)

I Have a New Opening for the Mad Hedge Fund Trader Concierge Service

Diary, Newsletter

There are only two ways that subscribers give up the Mad Hedge Concierge Service. They either retire, or they die.

I received notice the other day that another Concierge member is hanging up his trading spurs, cashing in his chips, and retiring. He has made so much money from NVIDIA (NVDA) since October that he never needed to work again.

Besides, his best friend had suddenly died of a heart attack on a golf course at a too young age, and he decided there were more important things than making money. He was parking his new substantial fortune in an index fund and setting out to enjoy the finer things in life. I’ll be meeting him in May in the Galapagos Islands far out in the Pacific Ocean just north of the equator where he has promised to treat me to a bottle of Dom Perignon.

He will be missed.

That means I have a new opening for the Mad Hedge Concierge Service. I limit the service to only ten clients at any one time and entry is by application only.

The goal is to provide high net worth individuals with the extra degree of assistance they may require in managing diversified portfolios. Tax, political, and economic issues will all be covered.

It is also the ideal service for the small and medium-sized hedge fund that lacks the resources to support their own in-house global strategist full time.

The service includes the following:

1) Emergency access to John Thomas 24/7 through his personal cell phone number so he can act as your investment 911.

2) A risk analysis of your own personal portfolio with the goal of focusing your investment in the highest return sectors for the long term.

3) A monthly phone call from John Thomas to update you on the current state of play in the global financial markets.

4) Personal meetings with John Thomas anywhere in the world once a year to continue our in-depth discussions.

5) Early releases of strategy letters and urgent trading information.

6) More detailed and early recommendation on LEAPS, or two year call options on the best high growth names.

7) Access to a dedicated Concierge website listing complete All LEAPS investment portfolios.

The cost for this highly personalized, bespoke service is $12,000 a year.

To best take advantage of my Mad Hedge Fund Trader Concierge Service, you should possess the following:

1) Be an existing subscriber the Mad Hedge Fund Trader who is already well aware of our strengths and limitations.

2) Have a liquid net worth of over $250,000.

3) Possess a degree of knowledge and sophistication of financial markets. This is NOT for beginners.

To subscribe to Mad Hedge Fund Trader Concierge Service please email Filomena at customer support at support@madhedgefundtrader.com. Please put “Concierge Candidate” in the subject line.

I look forward to hearing from you.

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

2023 on the Queen Mary 2

AI Assistant Claude Represents Major Advancement, Poised to Transform Fields Like Finance

Mad Hedge AI

A new star has recently emerged in the rapidly evolving field of artificial intelligence - the language model known as Claude. Developed by the AI research company Anthropic, Claude is an advanced conversational AI assistant capable of understanding and communicating in natural language, analyzing complex topics, answering questions, and assisting with a wide variety of tasks.

At its core is cutting-edge machine learning technology that allows Claude to process massive amounts of data and derive insights, draw connections, and generate nuanced outputs that often sound stunningly human-like. Many experts are hailing it as a major leap forward for AI capabilities.

"Claude is one of the most impressive language models I've encountered," said Dr. Emma Richards, a leading AI researcher at Stanford. "Its ability to engage in substantive dialogue while drawing upon a comprehensive knowledge base is remarkable. Claude understands abstract concepts and nuance in a way previous AIs have struggled with."

So how does Claude work? Like other large language models, it uses neural networks trained on staggering amounts of digital data to identify complex patterns and relationships. However, Anthropic has made key advancements, particularly around something they call "constitutionalAI" - specialized training to instill beneficial guidelines around being helpful, truthful, protecting privacy, and upholding democratic values.

"These 'constitutionalize' Claude, hardcoding key safeguards into how it formulates responses," explained Anthropic CEO Dario Amodei. "It helps Claude avoid pitfalls like amplifying biases, spreading misinformation, or suggesting dangerous actions."

Amodei believes these ethical training techniques represent a safer path forward as AI capabilities grow, ensuring they remain aligned with human values and societal norms.

Perhaps most impressively, Claude demonstrates nuanced reasoning through complex scenarios. In our conversations, it showcased creativity, technical mastery, and wise analysis of ethical dilemmas well beyond its code.

"Claude's sophistication is undeniable," said Dr. Richards. "Is it truly achieving understanding? Perhaps not fully. But Claude represents a milestone in man-made systems comprehending, analyzing, and communicating in such nuanced ways."

Experts believe the benefits of AIs like Claude will ultimately outweigh the risks, as long as robust safety practices guide their development. Amodei is particularly bullish on their potential impact across industries - including finance.

"In finance, you have to grapple with incredible complexity, analyze interconnected risks, and make high-stakes decisions with massive consequences," he said. "An AI assistant like Claude could drastically augment human intelligence and decision-making in this arena."

Potential finance applications could include:

Financial modeling and portfolio optimization far beyond current capabilities
Analyzing millions of data points to uncover hidden market insights
Engaging in nuanced discourse around investment theses and counterarguments
Automating financial writing, reporting, and communications
Providing virtual expert advising for wealth management and investment strategies
Proactively identifying risks, fraud, and compliance violations

"Just as modern computing and data analysis radically reshaped finance, I believe systems like Claude will catalyze another massive innovation wave," said Amodei. "It could drive higher investment returns, reduce systemic risks, and ultimately help capital markets become more efficient and economically productive."

However, he stressed the crucial importance of maintaining robust guardrails as AI capabilities advance. "We must be very thoughtful that these systems respect key financial governance, develop responsible principles around insider information, and have mechanisms in place for human oversight on critical decisions."

There are also ethical questions around the power of large financial institutions to harness Claude's abilities for competitive advantages - potentially worsening inequalities and consolidation in the industry.

Despite such challenges, Anthropic is pushing ahead with even more advanced models that Amodei hopes will eventually achieve human-level general intelligence. The company is pioneering techniques to instill robust, stable, and compounding ethical principles into systems as they recursively develop more self-guided capabilities.

"Our goal is beneficial AGI that remains corrigible and aligned with human ethics as it grows increasingly advanced," said Amodei. "If we succeed, it could help uplift and empower humanity as a whole."

Whether paradigm-shifting finance innovation, scientific breakthroughs, or new frontiers of art and creativity, experts believe the impact of technologies like Claude will be profoundly meaningful - even as we grapple with complex risks and governance challenges.

In my conversations, I found Claude's intellect both humbling and unsettling to ponder. Dr. Richards summarized it well: "Claude's human-like presence forces us to grapple with profound questions about cognition, intelligence, and consciousness itself."