(EDIT) Archives - Page 2 of 8 - Mad Hedge Fund Trader

Ten More Trends to Bet the Ranch On

I believe that the pandemic and hyper-accelerating technology is bringing forward the future at an astonishing rate.

More applications will be created in the next year than over the last 40, some 500,000. The sum total of human knowledge is now doubling every year. The profits spun off and investment opportunities will be incredible, which is why I just doubled my ten-year forecast for the Dow Average (INDU) from 120,000 to 240,000.

Here are ten major trends for the economy and the markets that we can see already. It’s the unseen ones that will be really interesting.

(1) The Insurance Industry Changes Beyond All Recognition, confirming from “Recovery After Risk” to “Prevention of Risk”. Today, fire insurance pays you after your house burns down. Life insurance pays your next of kin after you die. And health insurance (which is really sick insurance) pays only after you get sick. During the next decade, we’ll see a new generation of insurance providers that offer you a service to KEEP you healthy and keep your house safe during a wildfire. Also, full autonomous driving will cut hospital admissions by half, dramatically dropping the cost of insurance. This is driven by machine learning, ubiquitous sensors, low-cost genome sequencing, and robotics to detect risk, prevent disaster, and guarantee safety before any costs are incurred.

(2) Autonomous Vehicles and Flying Cars (eVTOL) will make travel cheaper and easier. Fully autonomous vehicles (TSLA), (GOOGL), car-as-a-service fleets, and aerial ridesharing (flying cars) will be fully operational in most major metropolitan cities in the coming decade. The cost of transportation will plummet 3-4X, transforming real estate, finance, insurance, the materials economy, and urban planning. Where you live and work, and how you spend your time, will all be fundamentally reshaped by this future of human travel. Your kids and elderly parents will never drive. Already, a half dozen eVTOL companies have gone public raising more than $10B to fuel their growth. These vehicles are real and will help define the decade ahead. This is driven by machine learning, sensors, materials science, battery storage improvements, and ubiquitous gigabit connections.

(3) On-demand Production and On-demand Delivery Will Create an “Instant Economy of Things”. Urban dwellers will learn to expect “instant fulfillment” of their retail orders as drone and robotic last-mile delivery services carry products from local supply depots directly to your doorstep. Further riding the deployment of regional on-demand digital manufacturing (3D printing farms), individualized products can be obtained within hours—anywhere, anytime. I ordered a new high-end 50-pound garage door opener from Amazon Prime (AMZN) last month after my old one went kaput. Incredibly, they delivered it in hours! This is driven by networks, 3D printing, robotics, and AI.

(4) The Ability to Sense and Know Anything, Anytime, Anywhere. We’re rapidly approaching the era where 100 billion sensors (the Internet of Everything) are monitoring and sensing (imaging, listening, measuring) every facet of our environments, all the time. Global imaging satellites, drones, autonomous car LIDARs, and forward-looking augmented reality (AR) headset cameras are all part of a global sensor matrix, together allowing us to know anything, anytime, anywhere. In this future, it’s not “what you know,” but rather “the quality of the questions you ask” that will be most important. That gives us old guys a huge advantage. This is driven by the convergence of terrestrial, atmospheric, and space-based sensors, vast data networks, 5G and 6G communication networks (AAPL), next-gen Wi-Fi, and machine learning.

(5) Advertising Hyper Evolves. As ads become the primary driver of new services for free, AI becomes increasingly embedded in everyday life and your custom personal AI will soon understand what you want better than you do. In turn, we will begin to both trust and rely upon our AIs to make most of our buying decisions, turning over shopping to AI-enabled personal assistants. Your AI might make purchases based on your past desires, current shortages, conversations you’ve allowed your AI to listen to, or by tracking where your pupils focus on a virtual interface (i.e., what catches your attention). As a result, the advertising industry—which normally competes for your attention (whether at the Superbowl or through search engines)—will have a hard time influencing your AI. This is driven by machine learning, sensors, augmented reality, and 5G/networks.

(6) Cellular Agriculture Moves from the Lab to Inner Cities, Providing High-quality Protein that is Cheaper and Healthier. The next decade will witness the birth of the most ethical, nutritious, and environmentally sustainable protein production system devised by humankind. Stem cell-based “cellular agriculture” will allow the production of beef, chicken, and fish anywhere, on-demand, with far higher nutritional content, and a vastly lower environmental footprint than traditional livestock options. Traditional legacy steaks found at Ruth’s Chris and Morton’s will only to available to the wealthy. This is driven by biotechnology, materials science, machine learning, and agtech.

(7) Your Brain Will Integrate with Super-Fast Hardware and Software. My friend, technologist and futurist Ray Kurzweil, has predicted that by the mid-2030s, we will begin connecting the human neocortex to the cloud. This next decade will see tremendous progress in that direction, first serving those with spinal cord injuries, whereby patients will regain both sensory capacity and motor control. Yet beyond assisting those with motor function loss, several BCI pioneers are now attempting to supplement their baseline cognitive abilities, a pursuit with the potential to increase their sensorium, memory, and even intelligence. Recent demonstrations of a macaque monkey playing Pong using a Neuralink implant is proof of incredible progress. This is driven by materials science, AI/machine learning, robotics, and some fantastic imaginations.

(8) High-resolution Virtual Reality Will Transform Both Retail and Real Estate Shopping & the Future of Education. If you were a couch potato, you are about to become one on steroids. High-resolution, lightweight virtual reality headsets will allow individuals at home to shop for everything from clothing to real estate—all from the convenience of their living room. Need a new outfit? Your AI knows your detailed body measurements and can whip up a fashion show featuring your avatar wearing the latest 20 designs on a runway. Want to see how your furniture might look inside a house you’re viewing online? No problem! Your AI can populate the property with your virtualized inventory and give you a guided tour. On the education front, the use of VR and AI-driven avatars with technology such as that demonstrated by Dreamscape promises a future of game-like, immersive, and powerful education and training. This is driven by VR, machine learning, and high-bandwidth networks. Get your Oculus Rift from Facebook (FB) now!

(9) Increased Focus on Sustainability and the Environment will drive companies to invest in sustainability—both from a necessity standpoint and for marketing purposes. Breakthroughs in materials science, enabled by AI, will allow companies to drive tremendous reductions in waste and environmental contamination. One company’s waste will become another company’s profit center. Want to visit my chalet in Switzerland? You can do so by connecting your Oculus Rift headset to Google Maps….today! This is driven by materials science, AI, CRISPR, digital biology, and broadband networks.

(10) CRISPR and Gene Therapies Will Eliminate Disease. Perhaps one of the most powerful, underappreciated technologies in the world is CRISPR. In 2020, two incredible women won the Nobel Prize in medicine for its discovery, and revenues from CRISPR doubled between 2019 and 2020 to over $1.5B. A vast range of infectious diseases, from AIDS to Ebola, are now potentially curable, as are a wide range of genetic ailments like sickle cell anemia, thalassemia, and certain forms of congenital blindness. In addition, gene-editing technologies continue to advance in precision and ease of use, allowing families to treat and ultimately cure hundreds of inheritable genetic diseases. This is driven by various biotechnologies (CRISPR, Gene Therapy), genome sequencing, and AI. Only three companies have a monopoly in this sector right now, (CRSP), (EDIT), and (NTLA).

In the decade ahead, master entrepreneurs will look beyond the immediate effects of a given technology to seize secondary and tertiary, Google-sized business opportunities on the horizon.

As an investor, you should be asking yourself: What challenges or problems can I help solve? How can I leverage the coming waves of tech advancements?

I just thought you’d like to know.

John Thomas

January 17, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 17, 2023
Fiat Lux

Featured Trade:

(COMPROMISE IS THE BEST STRATEGY)
(JNJ), (AMGN), (TAK), (VRTX), (CRSP), (EDIT), (PFE), (CRBU), (SGMO), (LLY), (AXSM)

Compromise Is The Best Strategy

Biotech Letter

An optimist looks at bubbles and visualizes champagne, while a pessimist’s mind goes to Alka-Seltzer. The same thing happens with investors.

Some believe that the steep losses suffered by stocks and bonds in 2022 are a much-needed “cleansing,” which would set the stage for renewed partnerships and collaborations along with high returns. Others simply view it as the first chapter in a protracted bear market.

Meanwhile, a handful believes that it’s a combination of both perspectives—especially for the biotechnology industry.

Roughly two years following the decline of biotechnology stocks, several executives from small and midsize organizations finally concede that their share prices might no longer be able to bounce back anytime soon. In fact, some have been fielding panicked calls from execs of fledgling biotech firms, offering to sell their companies at a discount.

The alteration in the medical device and biotechnology landscape only started a few months before the previous year ended.

This is because, before the change in perspective, when the SPDR S&P Biotech exchange-traded fund (XBI) had slid by about 40% from its 2021 peak, many leaders in the biotech sector still believed that their companies could regain momentum.

The primary concern for smaller biotech and medical devices companies, which allocate years to developing and testing products without any commercially approved treatment, is that the continuous decline in their valuations has made it practically impossible to generate new money to fund any of their projects.

Given this scenario, many small and midsize biotechs would go under soon, particularly those with no data strong enough to provide near-term growth catalysts.

This is where Big Pharma names are expected to come in. After all, these large-cap companies offer an alternative option with their non-dilutive sources of funding and ever-growing war chests.

Big companies, though, have been more cautious in cutting big checks for acquisitions. Despite the high expectations last year, we only saw a few massive deals, including Abiomed’s sale to Johnson & Johnson’s (JNJ) for $19 billion and Amgen’s (AMGN) $30 billion agreement with Horizon Therapeutics.

Instead, these Big Pharma companies appear to prefer partnerships and collaborations. In these deals, they give out smaller payments to biotechnology firms to work with them on specific early-stage programs.

This type of investment seems to be a safer bet for big companies because it allows them to make several deals without spending too much. They can even collaborate with competing biotechs to determine which could develop the most effective and cost-efficient solution.

Smaller biotechs benefit from this type of deal as well.

In the pre-pandemic era, the valuations of these companies quickly soared based on the potential of their pipeline candidates. Some share prices would skyrocket with just a hint of positive data. This is no longer the case these days, not only because investors have become more discerning but also more anxious over experimental programs.

So instead of getting acquired, smaller biotechs can choose to strike partnerships with large-cap companies. This is an excellent way to inject some funding into their programs and, hopefully, provide them with revenue streams, especially since Big Pharma companies know how to market new products.

It sounds challenging, but a genuinely promising program could fetch a large sum.

Perhaps the most significant indicator that not all hope is lost comes from Takeda (TAK) when it purchased an experimental treatment undergoing tests as a potential psoriasis medication.

This candidate, developed by a privately held biotechnology firm called Nimbus Therapeutics, was sold for a whopping $4 billion upfront, plus roughly $2 billion more for future milestone payments. And here’s the clincher: Takeda got the experimental drug by a razor-thin margin.

In terms of acquisitions, some larger companies have been open to that route. For instance, AstraZeneca (AZN) shelled out $1.3 billion for CiniCor Pharma, while Ipsen (IPSEY) purchased Albireo Pharma (ALBO) for $1 billion.

While the future for smaller biotechs remains uncertain, several names continue to be in conversations whenever acquisitions are discussed.

There’s Vertex Pharmaceuticals (VRTX), which has long been reported to take interest in acquiring CRISPR Therapeutics (CRSP) and Editas Medicine (EDIT), with the latter looking more attractive thanks to its cheaper price tag.

Meanwhile, Pfizer (PFE) has been shopping around for a biotech to bolster its gene-editing programs, and so far, Caribou Biosciences (CRBU) and Sangamo Therapeutics (SGMO) are under serious consideration.

With its continuing interest in central nervous system diseases, such as Alzheimer’s and Parkinson’s, Eli Lilly (LLY) has been aggressive in its search for a company to acquire. Among the strongest candidates is Axsome Therapeutics (AXSM).

With this daunting reality setting in, one thing has become absolutely sure: the biotechnology sector has become a buyer’s market for big companies with cash to spare for acquisitions and collaborations.

November 10, 2022

Diary, Newsletter, Summary

Global Market Comments
November 10, 2022
Fiat Lux

Featured Trade:

(TEN MORE TRENDS TO BET THE RANCH ON),
(AAPL), (AMZN), (GOOGL), (TSLA), (CRSP), (EDIT), (NTLA)

September 22, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 22, 2022
Fiat Lux

Featured Trade:

(GOOD THINGS COME TO THOSE WHO WAIT)
(NTLA), (IONS), (TAK), (CRSP), (EDIT), (CRBU), (BEAM), (ALNY), (PFE), (REGN)

Good Things Come To Those Who Wait

Biotech Letter

CRISPR technology has been receiving so much hype over the past years. However, the promise of this gene editing platform has yet to be realized.

Crispr gene-editing therapies can apply permanent modifications to our DNA by zeroing in on specific genes and then incapacitating them or reworking harmful segments of their genetic instructions.

While this could change in the coming years, investors have become impatient with the progress and lack of any major breakthrough in genomics. Some are losing confidence that this sector could experience explosive growth.

This is what happened with Intellia Therapeutics (NTLA).

Earlier this week, the company showed data that patients who received a one-time gene-editing infusion exhibited sustained improvement in a genetic condition that can result in fatal swelling when left untreated.

To be more specific, Intellia’s update means it could deliver a potentially permanent solution for hereditary angioedema. In this condition, a patient has a miswritten gene in their liver cells that produces a specific protein that triggers a dangerous swelling throughout the body.

Applying the treatment to 6 patients, Intellia’s one-time treatment lowered blood levels of the harmful proteins by more than 90% and decreased the swelling.

This is a more notable effect than the results from existing drugs like Takhzyro from Ionis Pharmaceuticals (IONS) and Takeda Pharmaceutical (TAK).

Despite the encouraging update, Wall Street still spurned the stock, and its price fell.

It looks like investors have lost patience with the slow progress of clinical studies in genetic treatments, pushing some to take advantage of the positive news from Intellia to abandon their positions.

Actually, it’s not only Intellia that suffered from this mistreatment by the market. Investors have also been dumping other stocks utilizing the Nobel-prize-winning technology, Crispr-Cas9, including CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), Caribou Biosciences (CRBU), and Beam Therapeutics (BEAM).

Intellia was hailed the top CRISPR stock in 2021 when the company and its co-collaborator, Regeneron (REGN), shared their promising interim results from a Phase 1 study assessing NTLA-2001, a treatment for a rare genetic disease called transthyretin (ATTR) amyloidosis.

This Crispr infusion candidate managed to knock out rogue genes in the liver cells of 12 patients, halting ATTR’s poisonous effects on their hearts or nerves. Based on clinical data, Intellia’s therapy caused an over 90% drop in the fatal protein triggered by the genetic condition.

If successful, this one-and-done ATTR treatment from Intellia would go head-to-head against other chronic drug therapies like Onpattro by Alnylam Pharmaceuticals (ALNY) or Pfizer’s (PFE) Vyndagel, which generates $2 billion in sales every year.

Many companies use Crispr technology to edit human genomes in an effort to treat and possibly even cure rare genetic diseases. Their treatments typically utilize either an ex vivo or an in vivo approach. With ex vivo therapies, the genes are altered outside the patient’s body.

However, Crispr’s use is not only limited to targeting genetic conditions. There are also gene-editing companies that are working on leveraging the technology to come up with treatments for various kinds of cancer.

In particular, Crispr technology has been a biotech favorite in the development of chimeric antigen receptor T-cell or CAR-T therapies. There are used to genetically engineer immune cells to target specific tumors.

Apart from these, some biotech companies are using Crispr technology to conduct screening. This is different from genetic testing, though.

When using Crispr for screening, the genes are modified in a manner that makes them nonfunctional or inoperative. Crispr screening allows biotechs to explore which genes take on particular functions, which can be critical in the development of drugs and treatments.

Intellia’s recent updates are clear indications that Crispr technology works. Since this will be applied to humans, we should expect the timeline and adaptation to take longer.

I have become more and more thrilled with developments in the gene editing space. Moreover, I believe it’s no longer about “if” but when it will happen.

Overall, the gene editing sector is not for fast-paced investors. This is for those willing to wait for a very long time, particularly for stocks like Intellia Therapeutics.

June 9, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
June 9, 2022
Fiat Lux

Featured Trade:

(THE FUTURE OF BIOTECH IS IN GOOD HANDS)
(CRSP), (VRTX), (EDIT)

The Future of Biotech is in Good Hands

Biotech Letter

No advancement in the biotechnology and healthcare sector is quite as mysterious, promising, and powerful as CRISPR.

It has long captivated the attention and imagination of serious scientists and researchers alongside the media and the public. It’s an understatement to say that it’ll be a significant area of development for decades to come, thanks to its capacity to remodel our genetic code accurately.

Among the frontrunners in the burgeoning CRISPR segment are CRISPR Therapeutics (CRSP) and Editas Medicine (EDIT).

Both biotechs have promising pipelines packed with innovative and potential cures for previously incurable genetic conditions.

The CRISPR programs appear to be the most advanced among their candidates despite still being in the early stages.

Nevertheless, any progress reported could likely push the entire CRISPR group to surge substantially.

Fortunately for this sector, there are at least two major catalysts in 2022.

CRISPR Therapeutics, which leverages the CRISPR technique, aims to submit its blood disorder treatment candidate, CTX001, for regulatory review by the end of 2022.

This program, which is developed in collaboration with Vertex Pharmaceuticals (VRTX), specifically plans to target sickle cell disease and beta-thalassemia.

So far, results have been positive, and the consensus is that it’s only a matter of time before both companies finally launch the much-awaited treatment commercially.

Another catalyst opportunity for CRISPR stocks this year is from Editas Medicine.

While this stock is not as popular as CRISPR Therapeutics, I think it holds the potential to become a massive star in the CRISPR gene-editing sector. What makes this biotech fascinating is the sheer number of candidates in its pipeline and the variety of options and applications they have for the technology.

At this point, Editas is focused on exploring the application of its in-vivo CRISPR genome editing therapy, called EDIT-101, to patients suffering from Leber congenital amaurosis 10 (LCA10).

LCA10 is an inherited and severe eye disorder that primarily affects the cornea and leads to a severe loss of vision or even blindness at an early age. This is caused by the mutation of the CEP290 gene.

This condition is an ideal target for Editas because CEP290 gene mutation can be found among 20% to 30% of LCA10 patients.

More than that, there is no existing approved treatment for it. This means that if Editas successfully completes the clinical trials for EDIT-101, it will possess a monopoly of this market.

Thus far, Editas has been delivering promising results on this treatment, and shareholders can expect definitive results from the study by the second half of 2022. Needless to say, positive data from the trials would tremendously boost Editas shares.

Aside from EDIT-101, Editas is also working on EDIT-301, which could be a competitor of CRISPR Therapeutics and Vertex’s CTX001.

However, the more exciting development for Editas is its advanced cell treatments in the oncology sector.

Recently, Editas announced its new gene-editing technology, called “SLEEK,” which means SeLection by Essential-gene Exon Knock-in.

This is groundbreaking because it improves cell therapies in a couple of factors. For example, it can deliver better knock-in of trans gene cargos. This means that SLEEK is more efficient in terms of artificially introducing a new gene into the genome of a patient.

It remains to be seen how Editas plans to take advantage of SLEEK in its future candidate. One thing’s for sure, though; this biotech has multiple shots on goal, making it hard for Editas to miss.

Taking all these into consideration, it’s safe to say that it’s not yet too late for investors to position themselves for lucrative long-term gains courtesy of these CRISPR stocks.

Despite the sharp decline in the gene-editing biotechnology sector over the past months, practically all the applications of CRISPR technology remain untapped to this day.

The most convincing tailwind for CRISPR-focused stocks is that the market for CRISPR-based treatments is estimated to multiply in value by approximately 13-fold between 2019 and 2030.

For that target to be reached, cutting-edge biotechnology companies should step up and develop the first generation of CRISPR-centered treatments. Considering where things stand right now, it looks like they are on the right track.

June 3, 2022

Diary, Newsletter, Summary

Global Market Comments
June 3, 2022
Fiat Lux

Featured Trade:

(JUNE 1 BIWEEKLY STRATEGY WEBINAR Q&A),
(AAPL), (GOOGL), (MSFT), (JPM), (BAC), (C), (UUP), (FXA), (FXC), (EEM),
(VIX), (CRM), (AAPL), (TSLA), (COIN), (EDIT), (CRSP), (LMT), (RTX), (GD)

June 1 Biweekly Strategy Webinar Q&A

Diary, Free Research, Newsletter

Below please find subscribers’ Q&A for the June 1 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley.

Q: What are the 3 best stocks to own for the end of the year?

A: Apple (AAPL), Alphabet Inc. (GOOGL), and Microsoft (MSFT). Those you want to buy on meltdown days, kind of like today. Make sure you scale into these—so maybe buy 20% on every down-500-point Dow day. Eventually, you’ll end up with a pretty decent position at a market low in a stock that will double in 3-5 years.

Q: Why these three stocks?

A: Lots of reasons: They’re huge, they’re safe, two out of three pay dividends, Alphabet is about to split, and they have huge moats so nobody can get into their sectors. They have near monopolies in what they do, and they have immense cash on the balance sheet. These are the kind of stocks that portfolio managers dream about. And watch what rallied the hardest in the last dead cat bounce we had—it was these three names. That tells you that they will lead any long-term bull market in the future. These are the stocks that people want to own.

Q: What will bring your predicted second half-bull market in the stock market?

A: Inflation drops from 8% to 4%. That will happen for a couple of reasons. The year-on-year comparisons become highly favorable starting from next month when inflation started to take off a year ago. Inflation numbers are going to be climbing the wall of worry from here on out. That could get us down to 4% by the end of the year. The second reason is the Ukraine War either ends or becomes a stalemate and is no longer a factor in the global markets, and we’ve had time to replace all the Russian oil and Ukrainian wheat.

Q: Are banks positioned to benefit from the coming rally?

A: Absolutely. I think big tech and banks will be the top-performing stock sectors for the next five years because inflation will go away, recession fears will go expire, and credit quality will improve, but interest rates will remain 300 basis points higher than they were during the pandemic. Buy (JPM), (BAC), and (C) on dips.

Q: What will be the worst performing sector?

A: Energy—anything energy-related will get absolutely slaughtered, which is why I don't want to touch it with a ten-foot pole right now. That includes oil companies, exploration companies, E&P companies, and master limited partnerships, as well as coal and other natural gas stocks. So, if you’re long these names don’t forget to sit down when the music stops playing. You could get your head handed to you at the end.

Q: Can we make lower lows?

A: Yes, that’s entirely possible. Market moves are basically random when you get down to these levels— down more than 20%. And on all future downturns, I would be spending your cash going back into the market expecting a second half rally.

Q: What about green energy?

A: Unfortunately, green energy is very tied to old energy because $120 oil makes green companies much more competitive from a cost point of view. So, I’m not going to go piling into green companies right here, especially if I think oil is topping out in the near future. Buying green energy companies here is the same as buying oil at $120 a barrel.

Q: What is the best way to play the declining US dollar?

A: Buy the iShares MSCI Emerging Markets ETF (EEM). Also, the Aussie dollar (FXA) and the Canadian Dollar (FXC), which benefit tremendously from commodity prices, which will rise for another decade in a global economic recovery.

Q: Why will energy be the worst sector?

A: If you end the war in the Ukraine or you replace Russian oil, either by finding new sources of oil, getting other producers to increase production which they can do (including the US), or by accelerating the move to alternatives, then you move oil back to pre-invasion prices which were about $70 a barrel or $50 lower than they are here.

Q: Best way to hedge a falling market?

A: Do what I'm doing: keep a balanced portfolio of longs and shorts, that way you always have something that’s going up. And if you do it through the options, you have time decay working for you on both sides of the equation. If you want to go outright, buy outright puts on individual stocks because they had double the moves of the indexes. And go to my short selling school which you can find by going to my website at https://www.madhedgefundtrader.com. There’s actually 12 different ways to benefit from falling markets.

Q: How deep in the money can we go on our call spreads?

A: Wait for the Volatility Index (VIX) to go over $30, and then go 15-20% in the money. And yes, you only make 10, 15, or 20% on those positions in a month but then you put together ten of them and that adds up to quite a lot of money. You want to find the position that has the greatest probability of happening—i.e. something that’s 20% in the money. Do that when the market has just dropped 20%, which it already has, and then you have a position that has a minuscule chance of losing money.

Q: How much longer do you see this current bear market bounce lasting?

A: Until yesterday.

Q: What's your favorite commodity ETF?

A: My favorite commodity stock is Freeport McMoRan (FCX), the world’s largest copper producer. Rather than pay the extra management fees for an ETF, I prefer just to go straight to the source and buy (FCX).

Q: When do you think the Fed will pivot to dovish or neutral?

A: This summer. It’s just a question of whether it’s the July or the September meeting.

Q: When you say “buy on dips”, what does that mean? 1%, 3%, 5%?

A: Well in this market, a dip would be a retest of the previous lows which is going to be down 10% or 15% on the major positions in your portfolio. If you’re day trading, a dip is only 1%, so it really depends on your timeframe and your risk tolerance. That’s why I always tell people to scale by doing everything in incremental pieces—20%, 25%, and so on. You never know what the market’s actually going to do on a short-term basis. Randomness can’t be predicted.

Q: If you plan to enter a LEAPS on Apple, what strikes would you do?

A: Well, first of all, I want to see if Apple drops all the way to $125, which is a lot of people’s downside target. If it did, then I would do the $125/$135 call spread two years out, and that will probably double. And if it starts a long term up trend, then I’ll keep rolling up the strike prices. If, say, Apple goes to $125, you put your LEAPS on. If the stock rises to 150, then take profits on the $125/$135 and roll into the $150/$160. That’s how you can get like 1,000% returns like we got on Tesla (TESLA) a few years ago. You just keep rolling up your strike prices on every weak day and maintain your leverage.

Q: When do we bet the farms on Editas Medicine Inc. (EDIT) and Crispr (CRSP) Therapeutics?

A: Never. These are small, highly speculative companies which will make money someday, but if the someday is in five years and you’re betting the farm with a LEAPS, you lose the farm. It's going to take a long time for these smaller biotech stocks to come back. If you want to play biotech, go with the big ones like Amgen. It takes a long time to convert cutting-edge technology into profits. The big companies already have a stable of reliable money-making drugs on hand.

Q: Salesforce Inc. (CRM) is up big on earnings—what should I do with the stock?

A: Buy the dips. It’s still way, way below its all-time highs, so use the weekdays to accumulate Salesforce for the long term. It’s one of the best cloud plays out there.

Q: What do you think about NVIDIA Corporation (NVDA)?

A: I absolutely love it. It rallied 20% off the bottom. Use any other additional weak days like today to increase your position. This stock someday is worth $1,000, up from today’s $195.

Q: Do you like SPACS?

A: No, I hate them and think they’re a rip-off. And a lot of them have become totally illiquid and untradable, so you have no choice but for them to shut down and return their money if they have any left. I’ve hated SPACS from day one and people are now getting their comeuppance on these.

Q: What do you think about the weakness in Coinbase Global Inc. (COIN) down here?

A: It’s just going down with all the other high-risk, speculative, meme stock type plays, which include all of the crypto plays like Bitcoin. I would avoid all of those. You want to buy quality at the discount now, and you want to buy the Cadillacs at Volkswagen prices and leave the speculative plays for the next generation, Gen Z, who are already highly interested in stocks.

Q: What is your favorite non-US country to invest in?

A: Australia, because you get a double play there on the currency, which should go up 30% from here, and they will benefit from a global commodity boom which continues for another ten years. They pretty much sell a lot of the major commodities like iron ore, wheat, sheep, and so on. It’s also a really nice country to visit. The only negative with Australia are the sharks.

Q: Biotech takeover targets?

A: Well (EDIT) and (CRSP) would be two of them. Things in the sector are so cheap that they are all potential takeover targets. M&A (Mergers and Acquisitions) will be a major play in the biotech sector for the foreseeable future.

Q: Should we sell short the defense industry here?

A: No, even if the war ends tomorrow, you might get some profit-taking, but the fact is that long term military spending is increasing permanently. The peace dividend now has to be paid back, and that is great for all the defense companies, so I would not be shorting them. If anything, I’d be buying on dips. Buy Lockheed Martin (LMT), Raytheon (RTX), who make the Javelin antitank missile for which there is now a two-year order backlog. You can also throw in General Dynamics (GD) for good measure which builds nuclear submarines and the Stryker armored vehicle.

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 12 years are there in all their glory.

Good Luck and Stay Healthy,

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

Keep Those Defense Plays

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