• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu
MHFTR

More Biotech and Pharma Stocks to Soak Up

Diary, Newsletter, Research

One has to be truly impressed with the bounce in biotech and pharmaceutical stocks over the past month.

This is something to pay attention to, as biotech and technology will be two of the top-performing stock market sectors for the next 20 years.

If you want to be lazy, just buy these two sectors on every dip and you should outperform the main indexes (SPY), (INDU) by three or four to one.

Since June, there were sign that life was returning to this beleaguered sector.

Suddenly, every company has become a takeover target.

(GILD) followers like me had long bemoaned the company’s failure to profitably deploy its cash mountain by growing through M&A.

Something had to replace their its drug eventually, once everyone in the world was cured of the dread disease.

Once the top-performing sector, they went from heroes to goats, so fast that it made your head spin.

What I called “The ATM Effect” kicked in big time.

That’s when frightened investors run to the sidelines and sell their best stocks to raise cash.

After all, no one wants to sell other stocks for a loss and admit defeat, at least in front of their clients.

It’s not that the companies themselves were without blood on their hands.

Valuations were getting, to use the polite term, getting “stretched” after a torrid five-year run.

Gilead Sciences (GILD) soaring from $18 to $125?

Celgene (CELG) rocketing from $20 to $142?

It was a performance for the ages.

If a financial advisor wasn’t in health care during the salad days, chances are that he is driving a taxi for Uber in a bad neighborhood by now.

Raise your hand if you think Americans aren’t paying enough for their prescription drugs.

Yes, I thought so.

Here’s the key issue for health care and biotech for investors.

It’s all about politics.

Much remains to be seen about the future of health care in America.

Obamacare weathered the last assault by the administration. Will it survive the next one?

Remember, Obamacare passed by one vote only after a year of cantankerous infighting, and then, only when a member changed parties (the late Pennsylvanian Arlen Specter).

Nobody knows.

However our health care is fixed, open bidding for government contracts would be anathema to the industry, something from which they have, until now, been exempted.

I believe the United States will eventually stagger toward a national single payer system. But it may take another 20 years of turmoil to get there.

California will certainly take the first step. It is now considering a statewide single payer system that would provide full coverage to the state’s $39 million residents.

The bad news is that it would cost $400 billion. The good news is that it would save the state $375 billion in expenses, so it may be worth doing.

The state legislature in Sacramento is currently mulling alternatives.

It’s easy to understand why these stocks were so popular and are found brimming to overflowing in client portfolios and personal 401k’s and IRA’s.

We are just entering a Golden Age for biotech and health care.

Profit growth for many firms is exceeding 20% a year.

Hyper-accelerating biotechnology is rapidly bringing to market dozens of billion-dollar-earning drugs that were, until recently, considered in the realm of science fiction.

And we have only just gotten started.

Cures for cancer, heart disease, arthritis, diabetes, AIDS, and dementia?

You can take your pick. And the new CRISPR technology is accelerating everything further.

If you missed biotech and health care the first time around, you’ve just been given a second chance at the brass ring.

Here’s a list of five top-quality names to get your feet wet:

Gilead Sciences (GILD) – Has the world’s top hepatitis cure, which it sells for $80,000 per treatment. For a full report, clear here for “Keep Gilead Sciences on Your Radar."

Celgene (CELG) – A biotech firm that specializes in cancer cures (thalidomide) and inflammatory diseases. It also produces Ritalin for the treatment of ADHD.

Allergan (AGN) – Has the world’s third largest low-cost generic drug business. In addition, it has built a major portfolio of drug therapies through more than two dozen acquisitions over the past decade.

Regeneron (REGN) – Already has a great anti-inflammatory drug, and is about to market a blockbuster anti-cholesterol drug that will substantially reduce heart disease.

If you want a lower risk, more diversified play in the area, you can buy the Health Care Select Sector SPDR (XLV). Please note that a basket of stocks is going to deliver a fraction of the volatility of single stocks.

Therefore, we have to be more aggressive with our positioning to make any money, picking call option strikes that are closer to the money.

Johnson and Johnson (JNJ) is the largest holding in the (XLV), with a 12.8% weighting, while Gilead Sciences (GILD) is the fourth, with a 5.1% share. For a list of the largest components of this ETF, please click here.

The other classic play in this area is the Biotech iShares ETF (IBB) issued by BlackRock (click here for the link).

Their largest holding is Biogen (BIIB), followed by Gilead Sciences (GILD), Celgene (CELG), Amgen (AMGN), and Regeneron Pharmaceuticals (REGN).

I’ll be shooting out Trade Alerts on biotech and health care names as soon as I see another sweet entry point.

Until then, enjoy the ride!

 

 

 

 

 

Yes, It’s $1,000 a Pill.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-31 01:06:212018-08-31 03:33:42More Biotech and Pharma Stocks to Soak Up
MHFTR

It’s Time to Start Looking at Emerging Markets

Diary, Newsletter, Research

With major moves down across the entire commodity space this year, it’s time to take another look at emerging markets (EEM).

Buying low and selling high is what the Mad Hedge Fund Trader service is all about. The natural tendency of individual investors is the opposite. Emerging markets are now approaching decade lows.

The worst-performing asset class in the world from 2014-2018, emerging stock markets were certainly taken out to the woodshed for a severe thrashing, just like my grandfather used to do when he caught me shooting at the local stop signs with my .22.

The problem is that a strong dollar is causing the debts of most private companies in these countries to increase dramatically. They usually borrow in dollars because of the lack of local currency indigenous debt markets. When the dollar is weak the math works in reverse, decreasing their debts.

All it would take is a weak dollar and a rebound in commodity prices and it will be off to the races for emerging markets once again. So, it is time to start putting emerging markets on your radar once again.

I managed to catch a few comments in the distinct northern accent of Jim O'Neil, the fabled analyst who invented the “BRIC” term, and who recently retired from the chairman's seat at Goldman Sachs International (GS) in London.

O'Neil thinks that it is still the early days for the space, and that these countries have another 10 years of high growth ahead of them.

I have spent the past half century traveling in emerging economies, starting in 1968 when I spent a summer hitchhiking around Tunisia, Algeria, and Morocco.

To keep from getting bored in college (the advanced math classes were too easy), I took a course in tropical diseases. I then spent the next decade catching them all in Southeast Asia.

As I have been carefully monitoring emerging markets since the inception of this letter in 2008, this is music to my ears.

The combined GDP of the BRICs, Brazil (EWZ), Russia (RSX), India (PIN), and China (FXI), is rapidly approaching that of the U.S. China alone has already surpassed one-third of the $20 trillion figure for American gross domestic product.

“BRIC” almost became the “RIC” when O'Neil was formulating his strategy a decade ago.

Conservative Brazilian businessmen were convinced that the newly elected Luiz Inacio Lula da Silva would wreck the country with his socialist ways.

He ignored them and Brazil became the top-performing market of the G-20 since 2000. An independent central bank that adopted a strategy of inflation targeting was transformative.

Still, with growth rates triple or quadruple our own, (EEM) will not stay “resting” for long.

You can start scaling into the broad iShares MSCI Emerging Markets (EEM) ETF now. Or you can take a rifle shot with the PowerShares India Portfolio ETF (PIN), which has the brightest outlook of the bunch.

 

 

 

 

 

Some Markets Were Really Emerging

https://www.madhedgefundtrader.com/wp-content/uploads/2018/08/John-with-gun-story-2-image-5-e1535580803479.jpg 428 300 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-30 01:07:372018-08-29 22:15:39It’s Time to Start Looking at Emerging Markets
MHFTR

The Market Outlook for the Week Ahead

Diary, Newsletter, Research

Ahhhh…the wonders of global excess liquidity.

Last week saw senior-level felony convictions, the real estate and auto industries rolling over and playing dead, rising inflation, escalating trade wars, sagging exports. It’s as if an entire flock of black swans landed on the markets.

And what did stocks do? Rocket to new all-time highs, Of course! What, are you, some kind of dummy? Didn’t you get the memo? With $50 trillion of global excess liquidity spawned by a decade of quantitative easing, of course stocks will go straight up, forever!

Until they don’t.

Even my favorite, Apple (AAPL) blasted through to new highs at $219 after an analyst raised his target to $245. You may recall me loading the boat with Apple calls during the February meltdown when the shares hit $150.

My target for Apple this year was $200, which I then raised to $220. Am I going to raise my target again? No. As my late mentor, Barton Biggs used to say, “Always leave the last 10% for the next guy.”

It kind of makes my own split adjusted cost of Apple shares of 50 cents, which I picked up in 1998, look pretty good. Yup. That double bottom on the charts at 40 cents said it all.

I used the strength to increase my cash position from 80% to 90%, unloading my long position in Walt Disney options at cost. That leaves me with a single short position in bonds (TLT), which have to see yield on the 10-year U.S. Treasury bond market to fall below 2.67% in three weeks before I lose money.

I am even focusing a sharp eye on the Volatility Index (VIX) for a trade alert this week. If you buy the January 2019 (VXX) $40 calls at $2.90 and the ETF rises 25 points to its April high of $54, these calls would rocket by 382% to $14.00. Sounds like a trade to me! Then I can say thank you very much to Mr. Market, thumb my nose at him, and then take off for the rest of the year. TA-TA!

In the meantime, much of industrial America is getting ready to shut down. Tariffs on 50% of all Chinese imports come into force in September. It turns out that you can’t make anything in the U.S. without the millions of little Chinese parts you’ve never heard of, which also have no U.S. equivalent.

Factories will have to either pass their costs on to consumers in a deflationary economy or shut down. What the administration has done is offset a tax cut with a tax increase in the form of higher import taxes. It was not supposed to work out like that.

The bond rally has pared back my August performance to a dead even at 0.02%. My 2018 year-to-date performance has pulled back to 24.84% and my nine-year return appreciated to 301.31%. The Averaged Annualized Return stands at 34.76%. The more narrowly focused Mad Hedge Technology Fund Trade Alert performance is annualizing now at an impressive 32.24%.

This coming week will be real estate dominated on the data front.

On Monday, August 27, at 10:30 AM EST, we obtain the Dallas Fed Manufacturing Survey.

On Tuesday, August 28, at 9:00 AM EST, we get the June S&P CoreLogic Case-Shiller National Home Price Index. Will we start to see the price falls that more current data are already showing?

On Wednesday, August 29, at 10:00 AM EST, we learn July Pending Home Sales, which lately have been weak.

Thursday, August 30, leads with the Weekly Jobless Claims at 8:30 AM EST, which saw a fall of 2,000 last week to 210,000.

On Friday, August 31, at 10:00 AM EST, we get Chicago Purchasing Managers Index for July. Then the Baker Hughes Rig Count is announced at 1:00 PM EST.

As for me, I think I’ll pop over to the Pebble Beach Concours d'Elegance vintage car show this weekend and place a bid on Ferris Bueller’s red 1962 Ferrari GT California. It’s actually a Hollywood custom chassis built around a Ford engine. I can’t afford a real vintage Ferrari GTO, one of which is expected to sell for an eye-popping $60 million this weekend.

Good luck and good trading.

 

 

 

 

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/08/Vinage-car-story-1-image-5-e1535147811707.jpg 345 580 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-27 01:07:252018-08-24 21:59:39The Market Outlook for the Week Ahead
MHFTR

Why the Dow is Going to 120,000

Diary, Newsletter, Research

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 120,000 by 2030, up another 465% from here? That is a 20-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 in corporate stock buybacks.

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 17th 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 U.S. 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 Netflix (NFLX), Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL).

That’s why these four stocks account for some 40% of this year’s 7% gain. Oh yes, and they bought a few Bitcoin along the way too, to their eternal grief.

There is one catch to this hyper-bullish scenario. Somewhere on the way to the next market apex at Dow 120,000 in 2030 we need to squeeze in a recession. That is increasingly becoming a topic of market discussion.

The consensus now is that an impending inverted yield curve will force a recession sometime between August 2019 to August 2020. Throwing fat on the fire will be a one-time only tax break and deficit spending that burns out sometime in 2019. These will be a major factor in U.S. corporate earnings growth dramatically slowing down from 26% today to 5% next year.

Bear markets in stocks historically precede recessions by an average of seven months so that puts the next peak in top prices taking place between February 2019 to February 2020.

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

To read my full research piece on the topic please click here to read “Get Ready for the Coming Golden Age.” 

 

 

Dow 1982-2000 Up 20 Times in 18 Years

 

 

Dow 2009-Today Up 4.3 Times in 9 Years So Far

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/08/John-on-mechanical-bull-story-1-image-3-e1534972073238.jpg 313 250 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-23 01:08:052018-08-22 21:23:50Why the Dow is Going to 120,000
MHFTR

Why Doctor Copper is Waving a Red Flag

Diary, Newsletter, Research

One of my responsibilities as a global strategist is to talk about how cheap stocks are at market bottoms, and how expensive they are at market tops. In all honesty I have to tell you that 9 ½ years into a bull market, we are now much closer to a top than a bottom.

If Dr. Copper has anything to say about it the global economy is already in a recession. Since the June peak, trade wars have taken the red metal down a gut-punching 22.7%. The world’s largest copper producer Freeport-McMoRan (FCX), a Carl Icahn favorite, is off an eye-popping 30.6% during the same period.

Should we be running around with our hair on fire?  Is it time to throw up on our shoes? I don’t think so…not yet anyway.

Dr. Copper achieved its vaunted status as a leading indicator of economic cycles for the simple reason that everyone uses copper. Building and construction took up 43% of the supply in 2017, followed by electronics (19%) and transportation equipment (17%).

China is far and away the world’s largest consumer of copper. In 2017, it bought 48% of total world output. However, red flags there are flying everywhere.

Back in the 2000s, when China was building a “Rome a Day,” demand for copper seemed limitless. Since then, Chinese construction has fallen to a low ebb as the greatest infrastructure build-out in history came to completion.

China has steadily moved from an export-oriented to a services-driven economy, further eroding the need for copper. I warned investors of this seven years ago. That is why the Mad Hedge Fund Trader has issued virtually NO commodities-based Trade Alerts since then.

Before the last financial crisis Chinese banks accepted copper ingots as collateral for business loans. That practice is now banned.

In the second quarter, nonperforming loans at Chinese banks notched their biggest rise in more than a decade, according to research from Capital Economics. Corporate bond defaults are on the rise, and earlier this week, official reports showed Chinese investment growth, which has long been a driver of the economy, fell to its lowest level since the late 1990s.

The pressure on the Chinese economy is beginning to take its toll in other places, too. China’s currency, the renminbi, has fallen more than 9% against the dollar in the past six months, and China’s CSI 300 index of blue chip stocks is off 19% this year.

The net effect of all of this has been to dilute the predictive power of copper. Copper may no longer deserve its PhD in economics, perhaps only a master’s degree or an associate of arts.

Copper is not alone in predicting imminent economic disaster. Oil (USO) has also been shouting the same. Texas tea has fallen by 15.8% since copper began its swan dive two months ago.

For sure, oil has been falling for its own reasons. Iran has sidestepped American sanctions by selling its oil directly to China, and there is nothing the U.S. can do about it. Every year, global GDP growth needs less oil to grow than before thanks to alternative energy sources and conservation.  A recent bout of OPEC quota cheating hasn’t helped either.

As any market strategist will tell you, falling copper and oil prices are not what sustainable bull markets in stocks are made of. I’m not saying a crash will happen tomorrow.

Personally, I believe that the bull market should spill into 2019. But when corporate earnings growth downshifts from 26% to 5% YOY, as it will in Q1 2019, watch out below!

 

 

 

 

 

 

 

The Big Trade War Victim

https://www.madhedgefundtrader.com/wp-content/uploads/2018/08/Pennies-story-1-image-7-e1534911783255.jpg 263 350 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-22 01:07:022018-08-22 04:42:46Why Doctor Copper is Waving a Red Flag
MHFTR

Profiting from America’s Demographic Collapse

Diary, Newsletter, Research

Demographics is destiny.

If you ignore it as an investor, you will be constantly behind the investing curve wondering why your performance is so bad.

Get ahead of it, and people will think you are a genius.

I figured all this out when I was about 20.

I realized then, back in 1972, that if I could just get ahead of the baby boomer generation everything magically seemed to work.

Buy what boomers want to buy next, and the world will be your oyster.

That strategy is still working today.

Back then, that meant buying residential real estate in California and New York, which has since risen in value 100-fold, and more once the generous tax breaks of home ownership are added in.

Now it means investing in health care and big pharma.

Except now, there is a new crowd in town: The Millennials.

As a long-term observer of America’s demographic picture, I was shocked to hear of a recent report from the U.S. Census Bureau (click here for the link).

The U.S. population grew by a scant 0.72% in 2012, the lowest since 1942.

You can’t start or expand a family when an essential partner in the process is off fighting WWII, and there were 17 million of them back then.

This is far below the 2.09% replacement rate that the country was holding onto only a few years ago.

At the end of 2016, there were 323.1 million Americans. This accounts for 4.3.08% of the global population of 7.5 billion, which was up 1.1%.

This places American population growth at the bottom of the international sweepstakes, down with Italy (0.32%), Germany (0.11%), and Poland (0.02%).

According to the World Bank, 22 countries suffered population declines, such as Portugal (-0.29%) and Japan (-0.20%) (click here for the link).

The tiny Sultanate of Oman, one of my old stomping grounds as a military pilot, enjoys the planet’s highest growth rate at 9.13%.

But then it helps if you have four wives.

The obvious cause here of America’s demographic dilemma was the recent weakness of the U.S. economy. There is a high correlation between economic health and fertility a year later.

So, we can only hope that the improvement in the economy this year sent more to the maternity ward.

If it doesn’t, it could be great news for your investment portfolio. Fewer births today translate into a shortage of workers in 20 years. That brings rising wages, flying inflation, and rapid price hikes. And stock markets love inflation because companies can pass costs onto consumers, while bond holders can’t.

Corporate profits go through the roof, as do share prices. It also produces fewer relying on government services in 40 years, which makes it easier for the government to balance the budget.

This Goldilocks scenario is already scheduled for the coming decade of the 2020s, when a 15-year demographic headwind flips to a tailwind, thanks to the coming demise of the “baby boomer” generation, now a big cost to the economy.

Demise, that is, except for me. As long as I hike 10 miles a day I’ll probably live forever.

The new data suggest that the coming “roaring twenties” could extend well into the 2030s and beyond.

California was the most populous state, with more than 39 million, followed by Texas and New York. Two states saw population declines, Maine and West Virginia, where the collapse of the coal industry is sucking the life out of local businesses.

Parsing through the report, it is clear that predictions of population trends are becoming vastly more complicated, thanks to the increasingly minestrone-like makeup of the U.S. people.

By 2040 no single racial group will be in a majority in the U.S. That is already the case for the entire state of California now. Hispanics now account for 38% of the population of the Golden State, followed by Caucasians at 37%.

America will come to resemble other, much smaller multiethnic societies, such as Singapore, South Africa, England, and Israel. This explains much about the current state of politics in the U.S. today.

Texas saw the greatest increase in population, with a jump of 387,397, to 26,020,000, as people flock in to take advantage of the big increase in local government hiring there.

Some 80% of new Texans were Hispanic and black, confirming my belief that the Lone Star State will become the next battleground in presidential elections.

This no doubt explains the recent rise of the white nationalist movement and the election of Donald Trump.

Single ethnic groups historically will only lose their majority with a fight.

This is why gerrymandering (redistricting) is such a big deal there, with the white establishment battling to hang onto power at any cost.

Further complicating any serious analysis is the rapid decline of the traditional American nuclear family, where married parents live with their children.

With a vast concentration of wealth at the top, and a long-term decline of middle-class earnings, this is increasingly becoming a luxury of a prosperous elite.

As a result, the country’s birthrate has declined by half since 1960.

Those who do are having fewer kids, the average family size dropping from three to two. In 1964, the final year of the baby boom, 36% of Americans were under the age of 18.

Today, that figure is just 23.5%, and is expected to fall to 21% by 2050. Only 80% of women have children now, compared to 90% in the 1970s.

One possible explanation is that the full, end-to-end cost of child-rearing has soared to $241,080 per child now.

I was a bargain as a kid, costing my parents only a tenth of that. Rocketing college costs are another barrier, with 70% of high school grads at least starting some higher education.

I went to Boy Scouts and Little League baseball, each of which cost $1 a month. A full scholarship covered my college expenses.

When I look at the checks I have written for my own children for ski lessons, soccer, youth sailing, braces, international travel, and assorted master’s degrees and PhDs, I recoil in horror.

Fewer women are following that old adage of “marriage before carriage.” Some 41% of children are born out of wedlock, up 400% in 40 years.

It is definitely an education and class driven divide. Only 10% of college-educated mothers are still single, compared to 57% for those with a high school education or less.

It is a truism in the science of demographics that educated women have fewer children. It makes possible careers that enable them to bring home paychecks instead of babies, which husbands prefer.

Blame Roe versus Wade, the Equal Rights Act, and Title Nine, but every social reform benefiting women of the past half-century has helped send the birthrate plummeting.

More women wearing the pants in the family hurts the fertility rate as well, as they are unable, or unwilling, to bear the large families of yore. The share of families where women are the primary breadwinners has leapt from 11% to 40% since 1960.

When couples do marry, they are sometimes of the same sex, now that gay marriage is legal, further muddying traditional data sources.

Some 2 million children are now being raised by gay parents. In fact, there is a gay baby boom underway, which those in the community call the “gayby” boom.”

All female couples have produced 1 million children over the past 30 years, 95% of whom select for blond-haired, blue eyed, Aryan sperm donors who are over six feet tall ($40 a shot for donors if you guys are interested and live walking distance from UC Berkeley).

I’m told by the sources that know that water polo players are particularly favored.

The numbers are so large that it is impacting the makeup of the U.S. population.

There was a time when I could usually identify the people standing next to me on San Francisco cable cars. That time has long passed. Now I don’t have a clue.

Whenever we go to war, we become our enemy to a modest degree, both as a people and a culture.

After WWII, 50,000 German and 50,000 Japanese wives were brought home as war prizes. Sushi, hot tubs, Toyotas, and Volkswagens quickly followed.

The problem is that the U.S. has invaded another 20 countries since 1945 and is now maintaining a military presence in 140. That generates a hell of a lot of green cards.

This has spawned sizeable Korean, and later, Iranian communities in Los Angeles, a Vietnamese one in Louisiana, a Somali enclave in Minneapolis, and large minority of Afghans in San Jose.

The fall of the Soviet Union in 1992 unleashed another dozen Eastern European ethnic groups and languages on the U.S. Haven’t you noticed the proliferation of Arab fast food restaurants in your neighborhood since we sent 20 divisions to the Middle East?

What all this means is that the grand experiment called the United States is entering a new phase.

Different ethnic, racial, religious, and even political groups are blending with each other to create a population unseen in the history of the world, with untold economic consequences.

It is also setting up an example for other countries to follow.

Get your investment portfolio out in front of it, and you could prosper mightily.

 

 

 

Ignore Demographics at Your Portfolio’s Peril

https://www.madhedgefundtrader.com/wp-content/uploads/2018/08/Kids-story-2-image-4.jpg 233 350 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-21 01:06:002018-08-20 21:10:11Profiting from America’s Demographic Collapse
MHFTR

The Market Outlook for the Week Ahead, or Is the Trade War on or Off?

Diary, Newsletter, Research

Is the trade war on or off? Trillions of dollars in cash flow and investment depend on the answer to the question.

Traders and investors can be forgiven for being confused. It was only a week ago that a doubling of duties on Turkish imports were threatened because of an American pastor locked up there two years ago, triggering a stock meltdown.

Then, on Wednesday night presidential economic advisor Larry Kudlow hinted that he would meet with a Chinese trade delegation, prompting a 400-point Dow melt-up. Please note that except for Apple (AAPL), technology stocks did not participate in the rally one iota.

In the meantime, Apple continued its relentless march to my $220 target for $2018, so you might think about taking some money off the table. The market capitalization now stands at a staggering $1.05 trillion, the largest in the world.

It vindicates my call that at any time the administration could suddenly declare victory in the trade war, prompting a major stock market rally, regardless of the outcome.

So what happens next. Expect the trade talks to fail, or not happen at all. Market meltdowns will be followed by melt-up, then meltdowns again. Certainly, that's what the soybean (SOYB) market believes, that new canary in the coal mine for our global trade wars. It barely moved this week.

Hey, if trading were easy it would pay the federal minimum wage rate of $7.25 an hour, so quit your complaining!

As if trade wars were the only thing to worry about these days.

There is a mass protest underway at Alphabet (GOOGL) over the company's proposal to re-enter the China market. No one wants to assist the Middle Kingdom's harsh censorship regime, and some 1,000 employees have already signed a petition to this effect.

Emerging markets (EEM) continue to get pounded by trade wars and a strong U.S. dollar (UUP), which has the effect of increasing their companies' local currency debt.

Elon Musk continues his slow motion public nervous breakdown, cutting Tesla's stock at the knees down to $305. I hope you all took my advice last week to unload the stock at $380.

Netflix (NFLX) shares are undergoing a serious pullback now that it is in between upgrade launches, and the trade wars and strong dollar eat into international subscriber growth, about 80% of the total. Don't forget to buy this dip.

With the Mad Hedge Market Timing Index stuck dead on 50, I am not inclined to reach for trades here. A reading of 50 gives you the perfect "do nothing" indicator.

As is always the case when I return from vacation my first few trades are a rude awakening. August is now showing a modest return of 0.23%. My 2018 year-to-date performance has clawed its way up to 25.03% and my nine-year return appreciated to 302.61%. The Averaged Annualized Return stands at 34.91%. The more narrowly focused Mad Hedge Technology Fund Trade Alert performance is annualizing now at an impressive 32.24%.

This coming week housing statistics will give the most important insights on the state of the economy.

On Monday, August 20, there will be nothing of note to report. It will just be another boring summer day.

On Tuesday, August 21, same thing.

On Wednesday, August 22 at 9:15 AM, we learn July Existing Home Sales. Will the rot continue? Weekly EIA Petroleum Inventory Statistics are out at 10:30 AM. The Fed Minutes from the meeting six weeks ago are out at 2:00 PM EST.

Thursday, August 23 leads with the Weekly Jobless Claims at 8:30 AM EST, which saw a fall of 12,000 last week to 212,000. Also announced are July New Home Sales. The two-day Jackson Hole Symposium of central bankers starts in the morning.

On Friday, August 24 at 8:30 AM EST, we get July Durable Goods. Then the Baker Hughes Rig Count is announced at 1:00 PM EST.

As for me, it is back to school week for me, so I will be making the rounds with the new teachers at two schools. I have to confess that at my age I have trouble distinguishing between the students and the teachers.

Finally, a sad farewell to Aretha Franklin, the Queen of soul, who provided me with a half century of listening pleasure. When I was young, I couldn't afford to go see her, and when I got old I didn't have the time. Isn't life lived backward?

Good luck and good trading.

 

 

 

 

 

 

 

 

UP, DOWN, UP, DOWN!

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-20 01:07:242018-08-20 01:07:24The Market Outlook for the Week Ahead, or Is the Trade War on or Off?
MHFTR

Why Banks Have Performed So Badly This Year

Diary, Newsletter, Research

I went to the local branch of Wells Fargo Bank (WFC) yesterday, and I was appalled. The bank occupied the most expensive corner in town. It was staffed by a dozen people, all of whom spoke English as a second language.

Ask even the simplest question and they had to call a support center and wait 10 minutes on hold for the answer. It took an hour for me to open a checking account for one of my kids. The branch was in effect a glorified call center.

I thought, "This can't last." And it won't.

Banks were supposed to be the sector to own this year. They had everything going for them. The economy was booming, interest rates were rising, and regulations were falling like leaves in the fall.

Despite all these gale force fundamental tailwinds the banks have utterly failed to deliver. The gold standard J.P. Morgan is up only 8.46% on the year, while bad boy Citibank (C) is down 5.47%, and the vampire squid Goldman Sachs (GS) is off a gut-punching 10.27%. Where did the bull market go? Why have bank shares performed so miserably?

The obvious reason could be that the improved 2018 business environment was entirely discounted by the big moves we saw in 2017. Last year, banks were the shares to own with (JPM) shares up a robust 24.5%, while (C) catapulted by 29.3%.

It is possible that bank shares are acting like a very early canary in the coal mine, tweeting about an approaching recession. Loan growth has been near zero this year. That is not typical for a booming economy. It IS typical going into a recession.

When the fundamentals arrive as predicted but the stock fails to perform it can only mean one thing. The industry is undergoing a long-term structural change from which it may not recover. Yes, the bank industry may be the modern-day equivalent of the proverbial buggy whip maker just before Detroit took over the transportation business.

Managing a research service such as the Mad Hedge Technology Letter, it is easy to see how this is happening. Financial services are being disrupted on a hundred fronts, and the cumulative effect may be that it will no long exist.

This explains why this is the first bull market in history where there has been no new hiring by Wall Street. What happens when we go into a bear market? Employment will drop by half and those expensive national branch networks will disappear.

Financial services are still rife with endless fees, poor service, and uncompetitive returns. Online brokers such as Robin Hood (click here) will execute stock and option transactions for free. Now that overnight deposits actually pay a return they make their money on margin loans. They have no branch network but are still SIPC insured.

Legacy brokers such as Fidelity and Charles Schwab (SCHW) used to charge $25 a share to execute and are still charging $7.00 for full-service clients. And it's not as if their research has been so great to justify these high prices either. In a world that is getting Amazoned by the day, these high prices can't stand.

Regular online banking service also pay interest and are about to eat the big banks' lunch. Many now pay 1.75% overnight interest rates and offer free debit and credit cards, and checking accounts. Of course, none of these are household names yet, but they will be.

To win the long-term investment game you have to identify the industries of the future and run from the industries of the past. The legacy financial industry is increasingly looking like a story from the past.

 

 

 

 

 

Are Big Banks Ready for the Future?

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-14 01:22:162018-08-14 01:22:16Why Banks Have Performed So Badly This Year
MHFTR

The Market Outlook for the Week Ahead, or Coming Home to Trouble

Diary, Newsletter, Research

Ho Hum. Another week, another financial crisis. And why did I rush back from the bucolic mountain pastures of Zermatt? To come back to the smoke-laden skies from the Northern California forest fires? It all must be an early sign of dementia.

Trump's foreign policy now seems crystal clear; to destroy the economies of all our allies. That's what he accomplished with NATO member Turkey today by doubling tariffs, triggering an instant 20% devaluation of the Turkish Lira. Turkey has been at war with Russia for 600 years.

Most Turkish companies have their debts in U.S. dollars or Euros (FXE), so you can write them off. That puts European banks at risk of another crisis, which could quickly turn global in nature. The flip side of this move was to take the U.S. dollar (UUP) to a new high for the year, thus crushing our own exporters even further.

Did our stock market care? Well. Actually yes, taking the Dow Average down 300 points. Will it care more than today? Probably not. All we are seeing is profit taking in some of the most overbought high fliers.

That is, unless, you are a soybean farmer, who saw prices collapse yet again. I watch bean prices closely these days, as it is an indicator of the market's expectation of intensifying trade wars.

After four decades of efforts to develop the Chinese markets, those efforts are going up in flames. And that business is not coming back now that the U.S. has proved itself an unreliable partner. As anyone in business will tell you, you only get to offend a customer once.

Markets generally believe that the U.S. trade war against the rest of the world is nothing more than a negotiating ploy. If that is not the case and they go on and on, you can move up the next recession and bear market by a year, like to tomorrow.

Perhaps the most important news of the week was the July Consumer Price Index leaping to 2.9%, a decade high. This is on the heels of the 2.7% pop in Average Hourly Earnings that came with the July Nonfarm Payroll Report.

Yes, ladies and gentlemen, this is called inflation. And while bonds normally get destroyed by such a data point, fixed income markets instead decided to focus on the strong U.S. dollar.

That was enough to entice me to sell short the U.S. Treasury bonds (TLT) for the first time in three months. With the Fed raising interest rates on September 25 by 25 basis points, what could go wrong?

Tesla (TSLA) sucked a lot of the air out of the room this week with its mooted buyout at $420 a share. I think it will happen. There is a global capital glut right now, with trillions of dollars of capital looking for a home. Ownership of Tesla would be a great hedge for Saudi Arabia against falling oil prices, which already owns 4% of the company. And guess who the world's largest per capita buyer of Tesla's is? Norway, which has a $1 trillion sovereign wealth fund of its own. The proposed $82 billion price tag for Tesla would look like pennies on the dollar.

Tip toeing back into the market with two cautious positions has boosted my August performance to 1.32%. My 2018 year-to-date performance has clawed its way up to 26.14% and my nine-year return appreciated to 302.61%. The Averaged Annualized Return stands at 34.91%. The more narrowly focused Mad Hedge Technology Fund Trade Alert performance is annualizing now at an impressive 32.24%.

This coming week will be a very boring week on the data front.

On Monday, August 13, there will be nothing of note to report. It will just be another boring summer day.

On Tuesday, August 14, at 6:00 AM EST, we get the weekly NFIB Small Business Optimism Report.

On Wednesday, August 15, at 9:15 AM, we learn July Industrial Production.

Thursday, August 16, leads with the Weekly Jobless Claims at 8:30 AM EST, which saw a fall of 13,000 last week to 222,000. Also announced are July Housing Starts. At 4:30 PM, we learn the July Money Supply, which we might have to start paying attention to, now that inflation is on the rise.

On Friday, August 17, at 10:00 AM EST, we get Leading Economic Indicators. Then the Baker Hughes Rig Count is announced at 1:00 PM EST.

As for me, I will be stuck indoors this weekend and the government has warned me not to go outside unless absolutely necessary because the air quality is so bad. Maybe I can sneak out to Costco at some point to replenish my empty refrigerator.

Good luck and good trading.

 

 

 

 

 

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-13 01:07:302018-08-13 01:07:30The Market Outlook for the Week Ahead, or Coming Home to Trouble
MHFTR

Why You Should Avoid the Cryptocurrencies Like the Plague

Diary, Newsletter, Research

With Bitcoin probing new lows in its 9-month-old bear market, I am starting to get deluged with questions from readers as to whether it is time to buy.

My answer is always the same.

I wouldn't touch it with a 10-foot pole. I wouldn't even buy it with Donald Trump's money.

Bitcoin was a great buy at $1.00. At $6,000? Not so much. At the December $20,000 high? Yikes!

The inquiries are being driven by analysis from friends of mine, such as Tom Lee of Fundstrat, concluding that the theoretical value of Bitcoin could be as high as $50,000.

These are based on some obscure calculations of Bitcoin's value relative to the size of the global monetary base.

By the way, the same calculations done elsewhere suggest that gold (GLD) should also be worth $50,000 an ounce. Today, gold is trading at a lowly $1,218.

Here is the problem that I have with all cryptocurrencies.

The security is terrible.

When your Platinum American Express card is stolen, you just conveniently call the 800-number listed on the back of the card.

Not so with cryptocurrencies. When it's gone, it's gone. There is no recourse anywhere.

According to Chainalysis, a New York-based firm that sells ant- money laundering software, about 10% of all outstanding cryptocurrencies were stolen last year worth about $225 million.

More than 30,000 investors have fallen prey to ethereum-based scams alone, losing an average of $7,500 each.

The security for Bitcoin is no better.

There are in fact 32 cryptocurrencies now trading online, including Auroracoin, Dash, Gridcoin, Primecoin, and Zcash.

Most of these are originated abroad, often in countries with no U.S. extradition treaty.

New cryptocurrency issuance is expected to exceed $1.6 billion this year.

There is no limit. The number of cryptocurrencies that can ultimately be issued is infinite. Think of them as modern-day tulips.

According to the FBI, cyber-fraud in the U.S. topped $390 billion in 2015. Retired FBI chief Robert Mueller once told me that the bulk of all American crime now takes place online.

It is THE preferred method of picking your pocket.

Cryptocurrencies most often fall victim to the phishing scams by crooks posing as legitimate cryptocurrency creators, or "miners" as they are known.

Once the victims open up their digital currency accounts, they are cleaned out.

It doesn't help that cryptocurrencies have become the currency of choice for a number of criminal enterprises, including those employing ransomware attacks.

About 99% of the daily trading volume in Bitcoin takes place with Chinese counterparties.

They need it to sidestep strict foreign exchange restrictions and capital controls.

The average Chinese is not allowed to take more than $50,000 a year out of the country. Extensive disclosures on the use of funds are also required to discourage money laundering.

Bitcoin has also been popular in other emerging countries where the convertibility of their own currencies is either sketchy or nonexistent.

It is possible that cryptocurrencies and the blockchain technology they use have a role in the financial system in the future. I'm thinking the FAR future.

However, massive investments are first required in infrastructure and security. The technology needs to mature.

When online commerce first emerged in the mid-1990s, I was similarly suspicious.

I used a low-limit credit card for my first Amazon purchase, even though I personally knew the founder of the company.

That way, if my card got stolen, the loss would be manageable.

I may take a similar approach to cryptocurrencies in the future. Again, in the FAR future.

Personally, I would rather buy gold if a currency alternative was my inclination.

For a much more extensive discussion of Bitcoin specifically, please click here for "Is There a Bitcoin in Your Future."

 

 

 

Pick Your Poison

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-08-09 01:07:552018-08-09 01:07:55Why You Should Avoid the Cryptocurrencies Like the Plague
Page 23 of 44«‹2122232425›»

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Scroll to top