As our bodies begin to show signs of aging and fatigue, exploring ways to regenerate our organs has become crucial in ensuring a hale and hearty lifespan.
This demand has given rise to a branch of biotechnology and healthcare, which could very well be on the brink of becoming the next big thing in the mainstream biopharmaceutical industry: regenerative medicine.
For example, experts at Gladstone Institutes is applying gene therapy to repair heart damage. Basically, their goal is to reprogram scar tissue and transform it into a new heart cell.
What they do is inject the genes into the damaged heart caused by a heart attack. Then, these “new” genes alter the scar cells, converting them into beating hearts.
This approach no longer demands any cloning to obtain an extra set of organs. The Gladstone Institutes’ use of gene therapy allows us to regrow our own set of organs right inside our bodies.
And in case you’re wondering whether this type of work actually has a future or just another trend that would quietly disappear in the future, I’m telling you that this industry has incredibly potential.
Just look at the $12 billion valuation of a biotechnology unicorn called Samumed in San Diego.
Founded in 2008, this company has spent most of its lifetime operating under the radar. It impressively came out of the shadows last 2016 and was quickly dubbed as an “anti-aging” company.
To them, though, they’re a “de-aging” company. That is, they believe that people should be brought back to their peak health conditions before they can even begin to restore youth.
This ideology is exhibited by the company’s lead program: a knee osteoarthritis cure called Lorecivivint.
As we know, osteoarthritis has no known treatment that works to reverse the damage to the joint.
That’s why the doctors focus on handling or managing the symptoms. They tell their patients to exercise and lose weight to boost muscle strength and decrease the burden on their joints.
They also prescribe various drugs like painkillers, some anti-inflammatory pills, and even cortisone shots. Other patients would eventually need to go through replacement surgery.
This is where Samumed comes in.
The company created Lorecivivint to repair the joint damage. That way, patients will no longer need to go through all the burden of managing the symptoms of knee osteoarthritis.
In their proof-of-concept report, Samumed shared that one year after getting injected with Lorecivivint, the X-rays of the knees of the patients showed that there was an increase in “medial compartment joint space width.”
In simpler terms, the knees grew cartilage after a single shot of Lorecivivint.
Other than working on a cure for knee osteoarthritis, Samumed is also looking into treating male pattern baldness.
Another impressive biotechnology company focused on regenerative medicine is Humacyte, which recently shifted from being a clinical-stage firm to a commercial one.
Humacyte’s core work is on Human Acellular Vessels (HAVs) or “implantable regenerative human tissue.”
A use case for this is when a patient has damaged blood vessels. Typically, there are three options to treat this: take a vessel from another part of the body, try to implant a donated vessel, or utilize a plastic tube.
The first one requires at least two surgeries and, of course, losing a vessel in another part of your body.
Meanwhile, the second and third options expose the patient to the possibility of an infection or the body rejecting the vessel or plastic tube.
Humacyte’s HAVs offer a fourth option.
Since the HAVs carry similar properties as the native tissues of the patient’s body, they significantly lower the risk of rejection.
Basically, they’re “growing” HAVs that won’t be rejected by the body.
More importantly, the company is creating engineered off-the-shelf replacement tissue that can be implanted to anyone without using immunosuppressive drugs.
This is impressive because immunosuppressants are staples in ensuring that the body does not reject the organs. However, the use of this can be dangerous because it increases the risk of infections.
So far, Humacyte has been working on coming up with safer and more effective treatments for hemodialysis patients since the current methods tend to expose them to higher risks of infections.
If everything goes according to plan, then the company will be able to file for FDA approval by 2022.
While the technologies offered in the regenerative medicine space have been discussed and even praised for years, it’s only recently that these became commercially viable.
However, 2021 might just mark the year that all these will change.
Other than the private firms and smaller biotechnology companies like CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), and bluebird Bio (BLUE), bigger names in the biopharmaceutical space, including Pfizer (PFE), AstraZeneca (AZN), GlaxoSmithKline (GSK), Takeda Pharmaceuticals (TAK), and Regeneron (REGN), are also starting to invest more aggressively into it.
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With the advancement of biotechnology and healthcare, it’s not hard to imagine a future where drugs and therapies will be tailored to every person’s unique genetic profile.
Thanks to the continuous work on mass customization in the world of pharmaceuticals and even in whole genome sequencing, it’s only a matter of time before we can come up with a personalized pill for each popper.
Nowadays, robotics and automation have started to become tightly integrated with the medical arena. In fact, robotics in the field of pharmaceuticals is no longer anything novel.
The majority of drug manufacturers across the globe are already utilizing robots to address their needs, such as packaging and warehouse storage.
What interests me most, though, is how automation plays an active role in developing actual therapies. After all, doing this entails so much more than simply feeding codes to robots to teach them how to move test tubes around a lab.
One company that has been gaining traction in this space is Multiply Labs. Established in 2016 with roughly $22 million in funding thus far, this San Francisco company aims to be a force multiplier not only in creating personalized pills but also cell therapies.
Run by mostly MIT graduates, Multiply Labs started out by letting their robots take 24-hour shifts to quickly deliver biologic drugs needed for clinical trials.
That offers tremendously faster turnaround times and shorter waiting periods for researchers and pharmaceutical companies.
Since virtually perfecting that process, the company has decided to expand its focus to handle more challenging and complex work.
Now, it has set its sights on using its robotics platform to ease bottlenecks in the development of cell therapies.
As we know, cell therapies are regarded as powerful tools in the battle against cancer. However, the production process is extremely labor-intensive. This makes their development incredibly expensive.
Let’s take CAR-T cell therapy, which boosts the body’s immune system to help it fight off cancer, as an example.
In CAR-T cell therapy, scientists need to extract blood from the patient. Then they’d have to isolate the immune cells, which they would need to genetically engineer.
After that, they have to carefully grow the new cells. Finally, they’d inject these genetically engineered new cells back into the patient.
In most cases, every step needs to be repeated for individual patients.
What Multiply Labs is trying to do is automate several stages, such as genetically altering the harvested cells, which can only be performed by highly trained professionals.
Not only will they be able to cut down on the time needed to complete the procedures, they would also be able to reduce—if not completely eliminate—human error.
Aside from working with the University of California San Francisco, Multiply Labs has been collaborating with Cytiva, a subsidiary of Dannaher (DHR), to move their services closer to commercialization.
Apart from Multiply Labs, another San Francisco company has been working on improving the expensive, logistically complicated, and oftentimes error-filled cell therapy space: Cellares.
Unlike Multiply Labs, which aims to ease the bottleneck in the cell therapy creation process, Cellares’ goal is to handle the entire procedure on its own.
Dubbing its work as the “Cell Shuttle,” what Cellares offers is basically a “factory in a box” solution to the creators of cell therapies.
Basically, the “Cell Shuttle” is an end-to-end solution that comes in the form of a box designed to deliver an automated cell therapy platform. Cellares’ product handles everything from beginning to end, starting from taking in the cells of the patient to injecting the genetically engineered versions back into the individual.
Raking in roughly $100 million in funding so far, Cellares’ plan is to allow the pharmaceutical companies to scale and deploy the “Cell Shuttle” based on their needs.
To date, Cellares’ latest collaborator in this venture is Poseida Therapeutics (PSTX).
However, there are thousands of cell-based and cell therapy clinical studies conducted across the globe. The cell and gene therapy (CGT) sector is projected to be one of the fastest-growing markets in the healthcare sector, with the segment estimated to reach $14 billion by 2025.
Moreover, CGT offers promising treatments for severe and chronic conditions like obesity, diabetes, and, of course, cancer. It can also be the answer to rare genetic conditions and their related complications.
That’s why it comes as no surprise that Big Pharma names like Pfizer (PFE), Novartis (NVS), Gilead Sciences (GILD), and GlaxoSmithKline (GSK) are taking interest in this niche.
However, the progress of smaller companies, such as bluebird Bio (BLUE), CRISPR Therapeutics (CRSP), and Editas Medicine (EDIT), also offers incredible potential in this space.
And while Poseida Therapeutics may be the first to collaborate with the likes of Cellares and Multiply Labs, the rest would undoubtedly follow suit in integrating robotics and healthcare in the near future.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2021-08-03 16:00:552021-08-05 20:26:27Shaking Up the Biotechnology and Healthcare Industry
Below please find subscribers’ Q&A for the July 28 Mad Hedge Fund TraderGlobal Strategy Webinar broadcast from Lake Tahoe, NV.
Q: What is your plan with the (SPY) $443-$448 and the $445/450 vertical bear put spreads?
A: I’m going to keep those until we hit the lower strike price on either one and then I’ll just stop out. If the market doesn’t go down in August, then we are going straight up for the rest of the year as the earnings power of big tech is now so overwhelming. Sorry, that’s my discipline and I’m sticking to it. Usually, what happens 90% of the time when we go through the strike, and then go back down again by expiration for a max profit. But the only way to guarantee that you'll keep your losses small is by stopping out of these things quickly. That’s easy to do when you know that 95% of the time the next trade alert you’ll get is a winner.
Q: Are you still expecting a 5% correction?
A: I am. I think once we get all these great earnings reports out of the way this week, we’re going to be in for a beating. I just don't see stocks going straight up all the way through August, so that’s another reason why I'm hanging on to my short positions in the S&P 500 (SPY).
Q: What’s the best way to play CRISPR Therapeutics (CRSP) right now?
A: That is with the $125-$130 vertical bull call spread LEAPS with any maturity in 2022. We had a run in (CRSP) from $100 up to $170 and I didn’t take the damn profit! And now we’ve gone all the way back down to $118 again. Welcome to the biotech space. You always take the ballistic moves. Someday I should read my own research and find out why I should be doing this. For those who missed (CRSP) the last time, we are one proprietary drug announcement, one joint venture announcement, or one more miracle cure away from another run to $170. So that will probably happen in the next year, you get the $125-$130 call spread, and you will double your money easily on that.
Q: I’m down 40% on the United States Treasury Bond Fund (TLT) January $130-$135 vertical bear put spread LEAPS. What would you do?
A: Number one, if you have any more cash I would double up. Number two, I would wait, because I would think that starting from the Fall, the Fed will start to taper; even if they do it just a little bit, that means we have a new trend, the end of the free lunch is upon us, and the (TLT) will drop from $150 down to $132 where it was in March so fast it will make your head spin. I'm hanging onto my own short position in (TLT). If you are new to the (TLT) space and you want some free money, put on the January 2020 $150-$155 vertical bear put spread now will generate about a 75% return by the January 21, 2022 options expiration. I just didn't figure on a 6.5% GDP growth rate generating a 1.1% bond yield, but that’s what we have. I'm sorry, it’s just not in the playbook. Historically, bonds yield exactly what the nominal GDP growth rate is; that means bonds should be yielding 6.50% now, instead of 1.1%. They will yield 6.5% in the future, but not right now. And that's the great thing about LEAPS—you have a whole year or 6 months for your thesis to play out and become right, so hang on to those bond shorts.
Q: Do you have any ideas about the target for Facebook (FB) by the end of the year?
A: I would say up about 20% from current levels. Not only from Facebook but all the other big tech FANGS too. Analysts are wildly underestimating the growth of these companies in the new post-pandemic world.
Q: Do you think the worst of the pandemic will be over by September?
A: Yes, we will be back on a downtrend by September at the latest and that will trigger the next leg up in the bull market. Delta with its great infectious and fatality rates is panicking people into getting shots. The US government is about to require vaccinations for all federal employees and that will get another 5 million vaccinated. Americans have the freedom to do whatever they want but they don’t have the freedom to kill their neighbors with fatal infections.
Q: What should I do with my China (BABA), (BIDU), (FXI) position? Should I be doubling down?
A: Not yet, and there’s no point in selling your positions now because you’ve already taken a big hit, and all the big names are down 50% from the February high. I wouldn't double down yet because you don’t know what's happening in China, nobody does, not even the Chinese. This is their way of addressing the concentration of the wealth in the top 1% as has happened here in the US as well. They’re targeting all the billionaire stocks and crushing them by restricting overseas flotations and so on, so it ends when it ends, and when that happens all the China stocks will double; but I have absolutely no idea when that's going to happen. That being said, I have been getting phone calls from hedge funds who aren’t in China asking if it's time to get in, so that's always an interesting precursor.
Q: What happened to the flu?
A: It got wiped out by all the Covid measures we took; all the mask-wearing, social distancing, all that stuff also eliminates transmission of flu viruses. Viruses are viruses, they’re all transmitted the same way, and we saw this in the Rite Aid (RAD) earnings and the 55% drop in its stock, which were down enormously because their sales of flu medicines went to zero, and that was a big part of their business. I didn’t get the flu last year either because I didn’t get Covid; I was extremely vigilant on defensive measures in the pandemic, all of which worked.
Q: Why would the Fed taper or do much of anything when Powell wants to be reappointed in February 2022?
A: I don’t think he is going to get reappointed when his four-year term is up in early 2022. His policies have been excellent, but never underestimate the desire of a president to have his own man in the office. I think Powell will go his way after doing an outstanding job, and they will appoint another hyper dove to the position when his job is up.
Q: What are your thoughts on the Chinese electric auto company Nio competing here in the U.S.?
A: They will never compete here in the U.S. China has actually been making electric cars longer than Tesla (TSLA) has but has never been able to get the quality up to U.S. standards. Look what happened to Nikola (NKLA) who’s founder was just indicted. Avoid (NIO) and all the other alternative startup electric car companies—they will never catch up with Tesla, and you will lose all your money. Can I be any clearer than that?
Q: You recently raised the ten-year price target up for the Dow Average from 120,000 to 240,000. What is Nasdaq's target 10 years out?
A: I would say they’re even higher. I think Nasdaq (NASD) could go up 10X in 10 years, from 14,000 to 140,000 because they are accounting for 50% of all earnings in the U.S. now, and that will increase going forward, so the stocks have to go ballistic.
Q: What do you think of Intel (INTC)?
A: I don’t like it. They had a huge rally when they fired their old CEO and brought in a new one. There was a lot of talk on reforming and restructuring the company and the stock rallied. Since then, the market has started insisting on performance which hasn’t happened yet so the stock gave up its gains. When it does happen, you’ll get a rally in the stock, not until then, and that could be years off. So I'd much rather own the companies that have wiped out Intel: (MU), (NVDA), (AMD), and (TSM).
Q: When you do recommend buying the Volatility Index (VIX), do you recommend buying the (VIX) or the (VXX)?
A: You can only buy the VIX in the futures market or through ETFs and ETNs, like the (VXX), the (XVZ), and the (SVXY), or options on these. I would be very careful in buying that because time decay is an absolute killer in that security, and that's why all the professionals only play it from the short side. That's also why these spikes in prices literally last only hours because you have professionals hammering (VIX). Somebody told me once that 50% of all the professional traders in the CME make their living shorting the (VIX) and the (VXX). So, if you think you’re better than the professionals, go for it. My guess is that you’re not and there are much better ways to make money like buying 6-to-12-month LEAPS on big tech stocks.
Q: Can the Delta variant get a bigger pullback?
A: Yes. I expect one in August, about 5%. But if Delta gets worse, the selloff gets worse. You saw what it did last year, down 40% in the (SPY) in only two months, so yes, it all depends on the Delta virus. I'm not really worrying about Delta, it's the next one, Epsilon or Lambda, which could be the real killer. That's when the fatality rate goes from 2% to 50%, and if you think I'm crazy, that's exactly what happened in 1919. Go read The Great Influenza book by John Barry that came out 20 years ago, which instantly became a best seller last year for some reason.
Q: Does the Matterhorn have enough flat space on the top to stand on it?
A: Actually, there is a 6’x6’ sort of level rock to stand on top of the Matterhorn. If you slip, it’s a 5000’ fall straight down on any side, and on a good weather day in the summer, there are 200 people climbing the Matterhorn. There's sometimes a one-hour line just to take your turn to get to the top to take your pictures, and then get down again to make space for the next person. So that's what it's like climbing the Matterhorn, it's kind of like climbing Mount Everest, but I still like to do it every year just to make sure I can do it, and one year I hope to win the prize for the oldest climber of the year to climb the Matterhorn. Every year this German guy beats me; he’s two years older than me.
Q: When will Freeport McMoRan (FCX) start going up? I have the 2023 LEAPS
A: Good thing you have the two-year LEAPS because that gives you two years for inflation to show its ugly face once again. You just have to be patient with these. I think we’ll get a rally in the Fall along with all the other interest rate plays like banks, industrials, money management companies, and so on. (FCX) will certainly participate in that. In the meantime, if we get all the way down to $30 in Freeport McMoRan, I would double up your position.
Q: Why is oil (USO) not a buy? Oil is the ultimate inflation hedge.
A: Yes, unless all of the cars in the United States become electric in the next 15 years, which they will, wiping out half of all demand from the largest oil consumer. The United States consumes about 20 million barrels of oil a day, half of that is for cars, and if you take that out of the demand picture you dump 10 million barrels a day on the market and oil goes back to negative numbers like we saw last year. Never do counter-trend trades unless you’re a professional in from of a screen 24 hours a day.
Q: Should I take profits on my ProShares Ultra Technology ETF (ROM) November $90-$95 vertical bull spread and then enter a new spread when tech sells off?
A: Absolutely! When you have that much leverage and you get these price spikes, you sell! The leverage on this position is 2X on the ETF and 10X on the options for a total of 20X! Well done, nice trade and nice profit, go out and buy yourself a new Tesla and wait for the next dip in tech, which may have already started, and which could power on for the rest of August.
Q: What’s the next move for REITs?
A: REITs came off of historic lows last year; a lot of people thought they were going to go bankrupt, and for companies like (SPG) it was a close-run thing. I would be inclined to take profits on REITs here. The next thing to happen is for interest rates to go up and REITs don’t do that great in a rising rate environment.
Q: When is the off-season in Incline Village?
A: It’s the Spring and the Fall, in between ski season and the summer season. That means there are four months a year here, May/June and September/October, where I’m the only one here and the parking lots are empty. There is no one on the trails, the weather is perfect, the leaves are changing colors, and the roads aren’t crowded, so that is the time to be here. It’s a mob scene in the winter and a worse mob scene in the summer!
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
https://www.madhedgefundtrader.com/wp-content/uploads/2019/07/john-thomas-8.png422564Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2021-07-30 13:02:442021-07-30 14:11:16July 28 Biweekly Strategy Webinar Q&A
Below please find subscribers’ Q&A for the July 14 Mad Hedge Fund TraderGlobal Strategy Webinar broadcast from Lake Tahoe, NV.
Q: Which banks are best?
A: JP Morgan (JPM), Morgan Stanley (MS), and Goldman Sachs (GS). That's the trifecta. If you look at the charts, the brokers Morgan Stanley and Goldman Sachs are overwhelmingly outperforming everyone else. They will continue to do that, as the bull market in stocks is a money machine for them.
Q: What has caused interest rates to continue to drop so much in the last 1-2 months? Why are you confident you will see them rise from here on?
A: The reason they've dropped so much is there is a bond shortage (TLT). There is more demand for bonds and reach for yield around the world than the US government is able to supply. Therefore, the US government should do more borrowing and issue more bonds. That's what the market is telling them to do. When your 10-year yield goes to 1.2%, the message is that you're not borrowing enough, not that you're borrowing too much. How does this end? Eventually, the sheer volume of bond issuance will reach global demand. And we will also see some inflation, not much but some, and that will be enough to take us back up to the 1.75% yield that we had in March. I think we will see that by the end of the year, especially if the Fed tapers and cuts back at least the mortgage bond purchases, which is $40 billion/month. Why subsidize housing when there are nationwide bidding wars?
Q: Are you positive on CRISPR Technologies (CRSP)?
A: Yes, but it is a long-term play and I recommend the LEAPS on those that go out to 2023. That said, we did just have a big rally up to the 140s from the 100s so that 40% was pretty good. But that's the way these small biotech’s trade you get long periods of no movement and then sudden explosive moves to the upside when they make a breakthrough.
Q: Are we going to see inflation?
A: We will have some inflation; but the major component of inflation now is used cars and rental cars, which are up 100% year on year, and that is totally unsustainable. That means a year from now, increase in used car prices will be zero, and will actually be a big drag on inflation. So that's what the Fed means when they say that any inflation will be temporary as we go through these tremendous YOY comparisons when demand goes from zero to near infinite. And that's happening in many sectors of the economy right now. You never get rich betting against a 40-year trend, and for inflation that is down.
Q: Has the market peaked for the short term?
A: My bet on a short-term peak is the last week of July when all the big tech companies report. And then we classically get reasonable selloffs after that—buy the rumor, sell the news. That's our next entry point for long positions in this market. Since the presidential election, the index has been unable to drop more than 4.8% as there is so much money on the sidelines trying to get in.
Q: Should I be max long ProShares Ultra Short Treasury Bond Fund (TBT) LEAPS?
A: Just make sure they’re long-dated LEAPS—at least six months to a year or longer. That way you have plenty of time for them to work. The current return on the (TBT) June 2022 $17-$19 vertical bull call LEAPS at $0.75 is 166%.
Q: What’s the chance of Biden’s budget passing?
A: 100%. It’s just a question of how much will be in there—we’re at $597 billion on infrastructure and $3.5 trillion for the rest of spending. That gives you a $4.1 trillion budget for the next fiscal year starting October 30, which is the biggest in history and biggest since WWII on an inflation-adjusted basis. That will go through and keep the stock market percolating for several more years. Dow $240,000 here we come!
Q: Would you sell calls against Apple (AAPL) today?
A: I would, I would do something like the August $165’s. Even then, it’s a high-risk trade because Apple has been on such a parabolic move for the last 2 months. So do that at your own risk; notice I’m not putting out trade alerts telling you to short Apple in any way shape or form. My target for the yearend is $200.
Q: Will Tesla (TSLA) use QuantumScape (QS) batteries to make their own solid-state ones?
A: Tesla will make their own solid-state batteries They are far ahead of QuantumScape with their own technology and eventually, they will wipe them out. So, I am not recommending QuantumScape—they are 10 years behind Tesla. Sorry, I didn’t make that clearer in my research piece.
Q: When do you expect the 7% drop in the market?
A: August/September is usually when the market bottoms. Let’s see if we get it this time. Predicting down moves has been somewhat of a fool's errand in a market when you have infinite QE, infinite fiscal stimulus, infinite monetary stimulus, and the highest economic growth in history. And again, I am upgrading my 10-year forecast for the market; I’m not looking for a Dow 120,000 by 2030 anymore, I’m looking for a Dow 240,000, and when you’re still at only a measly 34,933, you don’t get many 7% drops. In fact, we’ve had none since the election.
Q: Could Tesla make an all-time high by the end of the year?
A: Yes, especially if they make progress on the solid-state batteries. Tesla (TSLA) tends to have sideways periods that can last years and then explosive moves to the upside. It almost trades like a biotech stock.
Q: Is Virgin Galactic (SPCE) a buy here off the back of their successful rocket launch last week?
A: No, any business dependent on retail sales of tickets at $250,000 each has absolutely no chance of ever making a profit in its life. As much as I like Richard Branson, who I used to fly with, the fact is that this business will never make money. It's more of a public relations vehicle for all of the hundreds of Virgin Brands. They’ll never get the cost low enough to make this economic for the average person. Spaceships aren’t cheap, and they don’t sell them at Costco. In fact, you notice that after the rocket launch, the stock dropped 20%. However, if they do drop the price to $100,000 even I might buy a ticket but only if they let me fly the thing.
Q: What is your favorite FANG stock other than Apple?
A: It is Amazon (AMZN). I think it hits $5,000 by the end of the year. If they try to break it up it’ll be worth $10,000, which it will get to eventually (in like 5 years) anyway. They just have absolutely everything working there.
Q: Why is Alaska the worst state to do business in?
A: Well, first of all, it’s only habitable for like 6 months of the year, and otherwise it’s too cold and heating bills are enormous. Also, nothing is produced in Alaska besides tourism and oil, which is subject to enormous volatility. They actually canceled the oil payouts for Alaskan citizens last year. Anything else you want to do in Alaska requires transportation costs from the US. So essentially there are 49 other better states to bring business ideas to.
Q: Will Amazon ever split their stock?
A: No, there's no reason or net benefit to it. Jeff Bezos has never been prone to financial engineering because he never needed to. Natural earnings growth was always so enormous he didn’t need to bother with any of these side games to jack the stock price. So, I would say “no” on a stock split.
Q: In a two-year LEAPS, you’re taking a long position, yes?
A: When you do a LEAPS spread, you're buying a 1-2 year call and you’re selling short a 1-2 year call against it. That cuts your price by ⅔ and increases your leverage by a factor of 3 and is a far greater risk/reward than just buying the 2-year call outright. If you want to learn more about LEAPS, send us an email about the Mad Hedge Concierge Service that is by application only.
Q: When is the recording up?
A: About two hours.
Q: Do you still love Freeport McMoRan (FCX)?
A: Yes, it’s taking the inflation vacation right now with the rest of the commodities, but I expect it to come roaring back by the end of the year. Electric vehicles need 200 pounds of copper compared to only 20 pounds for internal combustion cars.
Q: Thoughts on FireEye (FEYE)?
A: Yes, we love FireEye along with the rest of the cybersecurity plays, so buy on the dips. Hacking is a growth market and will never go out of fashion. BUY (PANW) and (HACK) on dips.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH or TECHNOLOGY LETTER, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
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Not a day goes by without a reader asking me what is the next stock ten, hundred, or thousand bagger. After all, I nailed the 295X move in Tesla (TSLA) starting in 2010.
Can’t I do better?
Well actually, I can, which is the purpose of the Diary of a Mad Hedge Fund Trader. There are many potentially Google (GOOG), Amazon (AMZN), and Apple (AAPL)-sized opportunities out there today. It’s just a matter of time before they become public and investable.
One thing I will tell you today is that they will have some or all of the following gale-force tailwinds below. These will turbocharge the value of everything you own now, as well as anything new you might pick up going forward.
The future is happening fast!
1)People are Getting Richer, as the middle-income population continues to rise worldwide. That means more customers for everything and astronomically greater earnings for the companies inventing and selling them. Everyday goods and services (finance, insurance, education, and entertainment) are being digitized and becoming fully demonetized, available to the rising billion on mobile devices. Thank the convergence of high-bandwidth and low-cost communication, ubiquitous AI on the cloud, growing access to AI-aided education, and AI-driven healthcare.
2) And they are Communicating with Each Other More. The deployment of both licensed and unlicensed 5G, plus the launch of a multitude of global satellite networks (Starlink, OneWeb, Viasat, etc.), allow for ubiquitous, low-cost communications for everyone, everywhere, all the time––not to mention the connection of trillions of devices. And today’s skyrocketing connectivity is bringing online an additional 3 billion individuals, driving tens of trillions of dollars into the global economy and into the pockets of shareholders. Thank the convergence of low-cost space launches (Space-X), hardware advancements, 5G networks, artificial intelligence, a new generation of materials science, and exponentially surging computing power.
3) Your Lifespan Will Increase by at Least Ten Years. A dozen game-changing biotech and pharmaceutical solutions (currently in Phase 1, 2, or 3 clinical trials) will reach consumers this decade as covered by the Mad Hedge Biotech & Healthcare Letter (click here for the link). Technologies include stem cell supply restoration, senolytic or age-related medicines, a new generation of Endo-Vaccines, GDF-11, and supplementation of NMD/NAD+, among several others. And as machine learning continues to mature, AI is set to unleash countless new drug candidates, ready for clinical trials. Thank the convergence of genome sequencing, CRISPR technologies (CRSP), AI, quantum computing, and cellular medicine.
4) More Capital for Everything Will Become Abundant. Over the past few years, humanity hit all-time highs in the global flow of seed capital, venture capital, and sovereign wealth fund investments. It is expected to continue its overall upward trajectory. Capital abundance leads to the funding and testing of "crazy" entrepreneurial ideas, which in turn accelerate innovation. Already, $300B in crowdfunding is anticipated by 2025, democratizing capital access for entrepreneurs worldwide. And even during a pandemic (2020), the world deployed more venture capital than ever before, handily beating out the last high-water mark in 2019. Thank global connectivity, dematerialization, demonetization, and democratization.
5) Distribution is Becoming Vastly Easier. The combination of Augmented Reality (yielding Web 3.0, or the Spatial Web) and 5G networks (offering lighting fast 100Mb/s - 10Gb/s connection speeds) will transform how we live our everyday lives, impacting every industry from retail and advertising, to education and entertainment. Consumers will play, learn and shop throughout the day in a new intelligent, virtually overlaid world. This is where technologies like SpatialWeb.net, Vatoms (new digital connections between products and customers), and Apple’s (AAPL) next generation AR & VR headsets will shine. Thank hardware advancements, 5G networks, artificial intelligence, materials science, and surging computing power.
(6) Everything is Getting Smarter: The price of specialized machine learning chips is dropping rapidly with a rise in global demand. Imagine a specialized $5 chip that enables AI for a toy, a shoe, a kitchen cabinet? Combined with the explosion of low-cost microscopic sensors and the deployment of high-bandwidth networks, we’re heading into a decade wherein every device becomes intelligent. Your child’s toy remembers her face and name. Your kid's drone safely and diligently follows and videos all the children at the birthday party. Appliances respond to voice commands and anticipate your needs. Thank AI, 5G networks, and more advanced sensors.
(7) Artificial Intelligence is Getting Smarter than We are. Artificial intelligence will reach human-level performance this decade (by 2030). Through the 2020s, AI algorithms and machine learning tools will be increasingly made open source, available on the cloud, allowing any individual with an internet connection to supplement their cognitive ability, augment their problem-solving capacity, and build new ventures at a fraction of the current cost. Thank global high-bandwidth connectivity, neural networks, and cloud computing. Every industry, spanning industrial design, healthcare, education, and entertainment, will be impacted.
(8) AI is Becoming a Service: The rise of “AI as a Service” (AIaaS) platforms will enable humans to partner with AI in every aspect of their work, at every level, in every industry. AI will become entrenched in everyday business operations, serving as cognitive collaborators to employees—supporting creative tasks, generating new ideas, and tackling previously unattainable innovations. In some fields, partnership with AI will even become a requirement. For example: in the future, making certain diagnoses without the consultation of AI may be deemed malpractice. And try trading stocks today without AI behind you. Thank increasingly intelligent AI, global high-bandwidth connectivity, neural networks, and cloud computing.
(9) Software Will Become an Integrated Part of Our Lives. As services like Alexa, Google Home, and Apple Homepod expand in functionality, such services will eventually travel beyond the home and become your cognitive prosthetic 24/7. Imagine a secure software shell that you give permission to listen to all your conversations, read your email, monitor your blood chemistry, etc. With access to such data, these AI-enabled software shells will learn your preferences, anticipate your needs and behavior, shop for you, monitor your health, and help you problem-solve in support of your mid- and long-term goals. Thank increasingly intelligent AI, neural networks, and cloud computing.
(10) EnergyWill Become Effectively Free when compared to today’s all-in costs. Continued advancements in solar, wind, geothermal, hydroelectric, small nuclear, and localized grids will drive humanity towards cheap, abundant, and ubiquitous renewable energy. The price per kilowatt-hour will drop below 1 cent for renewables, just as storage drops below a mere 3 cents per kilowatt-hour, resulting in the elimination of fossil fuels globally. And as the world’s poorest countries are also the world’s sunniest, the democratization of both new and traditional storage technologies will grant energy abundance to those already bathed in sunlight. We are also on the cusp of many breakthroughs in fusion power at nearby Lawrence Livermore Labs as capital, new materials, and entrepreneurs pour in this arena. Thank materials science, hardware advancements, AI/algorithms, and improved battery technologies.
I just thought you’d like to know.
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