• 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

Tag Archive for: (GOOGL)

MHFTR

September 13, 2018

Tech Letter

Mad Hedge Technology Letter
September 13, 2018
Fiat Lux

 

Featured Trade:
(THE THREAT TO YOUR DIGITAL LIFE FROM CHATBOTS),
(FB), (GOOGL), (MSFT)

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 MHFTR2018-09-13 01:06:122018-09-12 20:07:42September 13, 2018
MHFTR

The Threat to Your Digital Life from Chatbots

Tech Letter

Not all tech will survive.

Come hell or high water, chatbots are not going away today but have an ugly fate with the tech graveyard of past technologies in the near future.

The rise of pervasive technology has brought consumers a wave of modern technology – some useful and some that go straight rogue.

Microsoft (MSFT) was on the receiving end of tech gone bad when its Tay bot was duped into spewing anti-Semitic and racist blather.

Bill Gate’s brainchild allowed Tay to behave according to what it learned from fellow users with which it interacted.

The developers forgot that not all Internet speak is nice and bubbly.

In another humiliating episode, cyberhackers wielded a chatbot to masquerade as a woman asking men to hand over credit card information in order to become verified on the raunchy dating app Tinder.

Manipulating an app platform has been a favorite of cyberhackers where users blindly trust these brands with which they have become familiar, and barely question the motives behind these strange developments.

As cybercriminals endlessly hunt for monetization and opportunities ramp up, chatbots represent a critical vehicle to pillage prospective victims.

These examples are just two that were publicly reported.

In reality, flashpoints are widespread, and users are usually completely unaware that they are being victimized.

Some chatbots are even out just for data harvesting among other targeted activity.

The dark web is the perfect marketplace to sell hijacked data.

Many Internet users believe they can feel safe and secure behind the auspices of end-to-end encryption.

However, users seem to forget that this type of foolproof security has its limitations.

The easiest way to become exposed is by the other person on the other end of the message.

They can turn you in.

Paul Manafort found this out the hard way when the FBI seized messages from the people he sent them too.

WhatsApp, owned by Facebook, along with chat app Signal are the best ways to keep chats confidential if you trust the other party. This is where the conversation disappears in about ten seconds.

However, just because WhatsApp is secure now, does not mean it will be secure tomorrow.

WhatsApp co-founder and CEO Jan Koum quit in a vicious row against Facebook’s upper management flipping off the rogue ad-seller as the relationship came to a screeching halt.

He later said he was quitting to collect “rare air-cooled Porsches” and play “ultimate frisbee.”

Facebook plans to weaken WhatsApp’s encryption levels and is intent on harvesting the data to eventually install a digital ad business to this ad-less messenger.

Facebook has shown a blatant disregard to privacy. Plan on everything you have ever sent on WhatsApp being privy to all the workers in the Facebook office at some point in the near future.

In some eerie way, Facebook mimics the hackers that maneuvered around Tinder’s developers, but in a completely legal way showing zero concern for its end user.

That is a scary thing.

Facebook has become borderline criminal in the court of public opinion in Europe. And that sentiment has seeped into the hearts of minds of Americans as well, and rightly so.

In short, the tidal wave of junk tech such as chatbots and Facebook spinning your information to the hills will end badly.

The public has smartened up and cannot be misled by Facebook’s privileged management spouting out that its “values” are different as an excuse for obvious debacles.

The global chatbot market was $369.79 million in 2017, and by 2024, this industry will balloon to $2.17 billion.

Chatbots will have a ubiquitous presence in work and daily life.

Companies desire to curtail rising costs, and are doubling down on the chatbot revolution.

The current obstacle is that artificial intelligence (A.I.) is just not good enough yet for chatbots to comprehensively serve customers and never will be.

The chatbots rely on the data in their systems to solve problems to difficult questions, but humans need to receive answers on the fly in the case of multi-part complications.

Chatbots spectacularly fail at this endeavor.

Even worse, chatbots cannot empathize with a furious customer and feel out customers’ emotions to properly optimize the perfect solution.

And in some instances, humans do not feel at ease to discuss certain topics with software code.

Then there is the generational difference of age groups preferring to use what they are familiar with.

For older generations, this absolutely means speaking to a real human who lives, breathes, and sleeps at night.

Younger generations who grew up never going outside but instead addicted to a screen have an easier time routing their lives through technology.

Granted, chatbots are effective when answering rudimentary questions to direct the customer to a department where they will soon be talking to a human. But chatbots are not the solution to every customer service problem.

Then there is the question of whether a rogue chatbot is going to disperse your data to a nefarious hacker or even behave like Microsoft’s Tay chatbot.

Facebook is already a legal entity that disperses personal data for money.

As the tech sector advances, the weak technology will crash and burn.

Low-quality social media platforms such as Facebook and inferior technology-like chatbots will succumb to the same fate as the woolly mammoth.

Investors are experiencing this massive migration up in quality as the public and investors are doing everything to insulate themselves from the dark side of technology.

In a further blow to user-generated platforms Facebook and Alphabet’s Google (GOOGL), Brussels voted in favor of a law that would force tech companies to actively filter out copyrighted content uploaded to their platforms.

This will crimp profitability for the two giants, as the data and content received for free is being put under a stronger microscope.

Europe is doing everything it can to disrupt these two companies from their free lunch, and they are fed up with the negligence and arrogance in which they run their platforms.

This was evident when Europe slapped Alphabet on the wrist with a $5 billion antitrust penalty earlier this year.

Chatbots will eventually face the public opinion death squad, as fatigued Internet users will completely avoid chatting with software code and move their businesses to the competitor.

The ultimate problem tying chatbots and Facebook together is the utter lack of attention to the customers’ needs.

These two phenomena exist to make more corporate money in a myopic fashion.

Every shortcut available will be taken and has been taken.

Facebook will never be able to monetize its website like the pre-Cambridge Analytica scandal days. It will take a sweeping reset, most importantly dethroning Mark Zuckerberg from his perch in Menlo Park, California, to reinvigorate this lost firm.

Chatbots will not exist in a few years and technology will move on to more effective solutions.

It is the end of bad tech as we know it, as technology is evolving so fast, yesterday’s conquerors become todays pariah’s in just a few years.

 

 

 

Chatbots – A Flash in The Pan Tech

 ________________________________________________________________________________________________

Quote of the Day 

"Our goal has never been to make the most. It's always been to make the best,” said CEO of Apple Tim Cook.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/Iphone-image-3-e1536782011404.jpg 437 325 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-13 01:05:002018-09-12 20:07:07The Threat to Your Digital Life from Chatbots
MHFTR

September 12, 2018

Tech Letter

Mad Hedge Technology Letter
September 12, 2018
Fiat Lux

Featured Trade:
(HOW TO PLAY “SOFTWARE AS A SERVICE”),
(AMZN), (IBM), (ADBE), (CRM), (BABA), (CSCO), (SAP), (ORCL), (GOOGL)

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 MHFTR2018-09-12 01:06:142018-09-12 02:12:50September 12, 2018
MHFTR

How to Play “Software as a Service”

Tech Letter

If you have read any of our content in the first year of the Mad Hedge Technology Letter, the content is distinctly bullish technology stocks.

A fundamental driver propelling this cogent argument is the dominant Software-as-a-Service (SaaS) industry booming inside the confines of Silicon Valley.

If you want to boil down your tech investment thesis to one indispensable rule – only invest in tech companies that carve out prominent SaaS businesses.

If you stick with this nostrum, you will be delivered profits in spades.

We have recently taken in a swarm of new tech letter subscribers and understanding the panacea that is SaaS will entrench your portfolio in a glorious position to reap untold profits.

What is SaaS?

SaaS is a distribution method in which software is diffused to paid subscribers, usually on an annual, reoccurring payment plan, and the software is remotely stored on a centralized cloud platform awaiting use.

Unsurprisingly, SaaS remains the most lucrative segment of the cloud market.

In 2017, the tech industry did $60.2 billion in annual SaaS sales, that number is poised to explode to $117.1 billion in 2021.

The near doubling of sales underscores the robust nature of these tech firms setting up businesses of this ilk, and the positive effects dripping down to the bottom line.

Simply put, no SaaS business, no reason to invest.

SaaS isn’t the only cloud revenue companies can carve out. Tech firms also offer platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS).

However, SaaS is by far the prominent growth lever in the high-margin cloud industry.

The indomitable presence inside the SaaS industry is Bill Gates’ creation Microsoft (MSFT).

Microsoft leads all companies with a 17% global share of the SaaS market.

The Redmond, Washington, outfit blew past stalwart Salesforce (CRM) nine quarters ago.

Microsoft’s sizzling SaaS business is an oversized contributor to its 45% revenue growth rate, which is head-and-shoulders above the industry average.

Salesforce (CRM), Adobe (ADBE), Oracle (ORCL) and SAP (SAP) fill out the top five largest global SaaS businesses, but it is really a tale of two stories.

Oracle and SAP, which are competing in the same market, are grappling with legacy database businesses and legacy tech, which are punished by investors.

John Dinsdale, a chief analyst at Synergy Research Group, mentioned two outliers of “Cisco (CSCO) and Google too who are making ever-bigger inroads into the SaaS market” leveraging Cisco’s multitude of software assets and Google’s G Suite.

The thing that makes SaaS the x-factor for tech companies is that inevitably every company from every walk of life will adopt this mode of software, giving legs to this distribution model.

Vendors are scrambling to put together some resemblance of a SaaS product together, and this trend is a vital contributor to an industry that is growing 32% YOY worldwide.

Kevin Cochrane, chief marketing officer of SAP Customer Experience lay bare his thoughts about this type of service describing it as the “Golden Age of SaaS.”

Companies are becoming digital first from end to end, explaining the sharp rise in IT professional salaries and rise in quality software products.

As we look around the corner to the IaaS part of the cloud industry, which is growing at around 30% YOY, there is one dominant player, and everybody knows its name.

Amazon (AMZN) is the No. 1 vendor with Microsoft, Alibaba (BABA), Google, and International Business Machines Corporation (IBM) trailing behind.

The top four IaaS players have carved out a total of 73% of the global market ravaging any resemblance of competition.

Amazon is the industry standard with the best record of customer success.

If Amazon branched off into the SaaS industry, it could unlock an additional $100 billion in annual revenue.

A shift into this direction could pad Amazon’s margin’s even more after successfully boosting North American e-commerce margins from 2.4% to 4.7%.

It’s not entirely inconceivable that Amazon could break the $2 trillion valuation in three to five years, as its revved up digital ad business registered growth of 129% YOY last quarter.

Microsoft seized the runner-up position in the IaaS market to Amazon by growing 98% YOY with sales eclipsing $3.1 billion in 2017.

Wherever you turn, whether toward the cloud business or gaming, investors can find Microsoft making sales.

Microsoft has been a favorite of the Mad Hedge Technology Letter and it’s hard pressed to find a better public tech company in operation now.

The SaaS industry is not a one-size-fits-all proposition.

Thus, there is abundant room for niche offerings that quench companies’ demand for specific services.

This is the reason why cloud companies have participated in a non-stop buying binge of smaller companies that fit their needs.

Microsoft purchased developer favorite GitHub for $7.5 billion earlier this year, and similar examples are scattered all over the tech ecosphere.

Artificial Intelligence (AI) will be the kicker that powers SaaS performance to new heights because incorporating this groundbreaking technology will enhance functionality and, in return, raise profits for all involved.

The scalability of SaaS products has allowed companies to offer software for affordable prices allowing the smallest of firms to adopt a digital-first strategy.

This software connects with other software seamlessly integrating an array of productive apps that help teams overperform and overdeliver.

In the American workplace, 73% of companies will be exclusively using SaaS to function by 2020.

American companies are using 16 apps on average per day, a 33% jump in the number of apps they were using just two years ago.

The migration to mobile has swallowed up SaaS products as well with more mobile-specific software rolling out to mobile devices.

The meteoric rise of SaaS offerings has cut IT security budgets substantially as security has been delegated to the cloud instead of in expensive in-house security teams.

No longer do tech firms need to beef up guarding their own gates.

Protection is provided on a centralized cloud with a third-party company ensuring safety.

This development has helped a new industry rise – cloud security.

Whether people realize it or not, the SaaS industry is here to stay and will become more prevalent in every industry going forward.

This is incredibly bullish for companies that sell SaaS products as revenue will continue to rise.

 

 

 

 

________________________________________________________________________________________________

Quote of the Day

“Growth and comfort do not coexist,” – said CEO of IBM Ginni Rometty.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/Saas-image-3-e1536717382380.jpg 324 580 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-12 01:05:082018-09-12 02:12:03How to Play “Software as a Service”
MHFTR

September 10, 2018

Tech Letter

Mad Hedge Technology Letter
September 10, 2018
Fiat Lux

 

Featured Trade:
(GOOGLE’S BREAKFAST OF ROTTEN EGGS),
(TWTR), (FB), (GOOGL), (MSFT), (AMZN)

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 MHFTR2018-09-10 01:06:592018-09-07 18:49:55September 10, 2018
MHFTR

Google’s Breakfast of Rotten Eggs

Tech Letter

In a recent interview Google CEO Sundar Pichai admitted he is “not a morning person” and maybe that was his argument for skipping out on the grilling that his contemporaries Facebook (FB) COO Sheryl Sandberg and CEO of Twitter (TWTR) Jack Dorsey received in front of Congress.

Or maybe Pichai managed to down a rotten egg that morning when eating his favorite staple breakfast “omelet with toast," because his decision to abort his date with Congress was a shocking error of judgment for a CEO that has had a flair for controversy lately.

With the whole world watching, the empty chair with a simple name tag with Google plastered over it represents the arrogance and excesses of Silicon Valley all mixed into one incongruous mixture.

This rookie move will open a can of worms for the company made famous by its search algorithm that dominates the developed world.

Google will have a target on its back going forward while creating a massive public relations backlash for a company that must fiercely defend its ad-laden profit engine going forward.

Instead of taking it on the chin like Facebook and Twitter, Google has voluntarily veered into a sticky situation, and all to avoid a few stomach wrenching questions from Congress.

How did this all happen?

In the beginning of June, Google decided to scrap its relationship with the U.S. Department of Defense.

Project Maven, as it was known, provided Google’s artificial intelligence (A.I.) technology to systematically analyze drone footage for the U.S. government.

Pichai chose to avoid renewing the contract, and Google Cloud CEO Diane Greene agreed it was a black eye for the company that applied its own technology to conspire against damaging human life.

Throwing fat on the fire, Pichai followed up by dismantling Project Maven and giving the thumbs up for code-name Dragonfly. This was a secret project aimed at the mainland Chinese market and rolling out a censored version of Google’s search engine by altering its construction of unique search algorithms for a mainland Chinese audience.

This incensed the higher-ups on Capitol Hill, as this move was largely viewed as pandering toward the Chinese communist government for monetary purposes at an uber-sensitive time between the two powerhouse nations, which remain mired in a tumultuous trade war.

The timing couldn’t be worse for Pichai.

Dragonfly is already in beta mode and could be rolled out in the near future. However, I see it as dead on arrival, because there is no hope that Google can penetrate the fortress that is the Chinese business world.

Naturally, Google employees were dismayed and shocked by these startling revelations.

Pichai’s conspicuous no-show was in part driven by the potential wrath he would have faced by these recent reckless decisions that seemed to put the American government’s interests below the Chinese communist government.

The circus was there for everyone to see.

Sheryl Sandberg put on her bravest face.

It was obvious she had rehearsed every word to the utmost precision while Dorsey vehemently guarded his brainchild with honesty and zeal.

The testimonies made social media look perceivably criminal with a congressman even hinting the reason they aren’t allowed to do business in China was mainly a business model issue, and more specifically a legal issue.

Another congressman from West Virginia suggested Facebook’s Instagram was the source of the opioid epidemic ripping apart his state.

The only thing getting ripped apart during the intense grilling was Sheryl Sandberg’s well-practiced smile.

Dorsey and Sandberg were visibly uncomfortable with the line of questioning and rightly so.

Google would have looked worse if it showed up. But it managed to look 10 times worse than that by stonewalling the government’s invitation.

In a recent Pew Survey, data revealed 44% of youth between 18 to 29 last year deleted Facebook on their mobile phones.

Facebook is already a legacy platform in the throes of disruption cannibalized by its own asset - Instagram.

Instagram will be the sole survivor of Facebook by taking out Facebook itself, and that is bearish for overall business.

And that is if social media can hang on that long before it’s taken down by the hawks circling above in Washington.

When Facebook’s Cambridge Analytica scandal broke, the government was at sixes and sevens at attempting to figure out what on earth was going on behind the smoke and mirrors of the big data theatrics.

CEO Mark Zuckerberg was let off the hook with questions he wriggled out of, and Facebook shares powered on unabated.

This time it’s different.

Regulation is an imminent threat to social media revenues and could hurt earnings this quarter.

Investors need to migrate to higher tide, meaning Amazon (AMZN) and Microsoft (MSFT), because the waves still aren’t yet reaching those levels.

Amazon and Microsoft need to send a thank you note to Alphabet for screwing the pooch.

The administration has felt it convenient to barrage Silicon Valley to solidify the Republican base, and this tactic has resonated with the administration’s diehards.

A smorgasbord of FANG-bashing was the recipe to this madness. But now sights will be zoned in on dismantling Google, and Microsoft and Amazon will benefit from avoiding nasty, gut-churning headlines that turn up in the form of Twitter blitzkrieg.

Yes, Sheryl Sandberg, Facebook was “too slow” to react to foreign interference in the elections. But it is more accurate to characterize the battle social media faces against outside nefarious forces as impossible.

It is impossible for these social media platforms to police themselves while policing the whole world.

The incessant whack-a-mole scenario is the best-case outcome for the self-policing prospects of social media.

Once social media algorithms figure out how to stopgap one method of circumvention, the bad actors will move on to a more advanced way to manipulate the algorithmic police.

What does this mean for social media?

Costs are going up and will seep into profit margins.

Highlighting the upward trend of rising expenses for social media platforms is the daily cost of keeping CEO Mark Zuckerberg safe.

And remember, he lives in Palo Alto, California, one of the safest places on planet earth with a medium household income of $137,000.

In 2017, Facebook divvied up $7.3 million for Zuckerberg’s security detail and costs associated to it.

In 2018, shareholders approved a $10 million security package to keep Facebook’s head honcho safe. This underscored the ballooning risk of leading this controversial technology forum littered with conflict of interests, and on the verge of potentially perverting western democracy.

By the end of 2018, Facebook will increase its security division from 10,000 employees to 20,000.

And that is just the beginning.

Facebook’s security division is the fastest-growing division of fresh hires at Facebook.

Before Facebook and Twitter can ring in the profits, they face an exorbitant war against foreign “bot armies” intent on muddying the free flow of accurate information on domestic shores that target individuals deemed unaligned to the foreign actor’s interests.

There will be collateral damage and lots of it.

This does not sound like an easy road to profits, and it is not.

As midterm elections creep closer and closer, Facebook and Twitter must confront elevated headline risk, and any trading day could see shares wacked with a 10% haircut.

Following the government question-and-answer period, Twitter and Facebook will be designing a new resistance to stymie villainous foreign infiltration.

Ultimately, spending the bulk of employees’ work days realigning their business models to protect democracy, instead of creating new growth drivers, is not bullish for the stock price.

It is hard to breed much confidence in social media stock’s long-term narrative after listening to Dorsey and Sandberg speak.

They kept touching on needing help from government intelligence sources to aid them in catching the miscreants.

It makes sense to gradually nationalize social media platforms to unite the disconnect between social media’s war against foreign forces and the intelligence communities war against them.

It is clear hackers are exploiting the dislocation in cohesiveness between the cracks in social media and government intelligence.

But if that ever happens, it would be the end of Facebook and Twitter as we know it, as normal users would be averse to providing free content on a government-enabled platform as well as a strong blow to democracy itself.

It all makes sense now why Dorsey and Sandberg gave the answers they gave.

Their answers were akin to a faint plea for help while appearing contrite, hoping to persuade Congress to give them more time to figure it out.

This thinly veiled attempt to elongate the profit-making process and find a solution for a problem with no solution could end badly for these two companies.

Migrate to higher quality tech names in the short-term.

The resilient American economy powers on with the heavy lifting done by Silicon Valley albeit it with fewer lifters.

If social media stocks can get through the midterm elections unscathed, there is a trade on the table for these beleaguered companies rounding out a tumultuous year.

But getting to that point will be volatile, as this group of stocks have a rocky road ahead of them for the rest of the year.

 

I’m Not A Morning Person

 

 

 

 

________________________________________________________________________________________________

Quote of the Day

“I'm not a regular smoker of weed. Almost never,” – said CEO of Tesla Elon Musk on The Joe Rogan Experience podcast.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/Google-image-1.jpg 420 387 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-10 01:05:172018-09-07 18:49:04Google’s Breakfast of Rotten Eggs
MHFTR

September 7, 2018

Diary, Newsletter, Summary

Global Market Comments
September 7, 2018
Fiat Lux

Featured Trade:
(MONDAY, OCTOBER 15, 2018, ATLANTA, GA,
GLOBAL STRATEGY LUNCHEON),
(SEPTEMBER 5 BIWEEKLY STRATEGY WEBINAR Q&A),
(AMZN), (MU), (MSFT), (LRCX), (GOOGL), (TSLA),
(TBT), (EEM), (PIN), (VXX), (VIX), (JNK), (HYG), (AAPL)

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 MHFTR2018-09-07 01:08:042018-09-07 00:58:01September 7, 2018
MHFTR

September 5 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the Mad Hedge Fund Trader September 5 Global Strategy Webinar with my guest and co-host Bill Davis of the Mad Day Trader.

As usual, every asset class long and short was covered. You are certainly an inquisitive lot, and keep those questions coming!

Q: Do you think the collapse of commodity prices in the U.S. will affect the U.S. election?

A: Absolutely, it will if you count agricultural products as commodities, which they are. We have thousands of subscribers in the Midwest and many are farmers up to their eyeballs in corn, wheat, and soybeans. It won’t swing the entire farm vote to the Democratic party because a lot of farmers are simply lifetime Republicans, but it will chip away at the edges. So, instead of winning some of these states by 15 points, they may win by 5 or 3 or 1, or not at all. That’s what all of the by-elections have told us so far.

Q: What will be the first company to go to 2 trillion?

A: Amazon, for sure (AMZN). They have so many major business lines that are now growing gangbusters; I think they will be the first to double again from here. After having doubled twice within the last three years, it would really just be a continuation of the existing trend, except now we can see the business lines that will actually take Amazon to a much bigger company.

Q: Is this a good entry point for Micron Technology (MU)?

A: No, the good entry point was in the middle of August. We are at an absolute double bottom here. Wait for the tech washout to burn out before considering a re-entry. Also, you want to buy Micron the day before the trade war with China ends, since it is far and away its largest customer.

Q: Is Micron Technology a value trap?

A: Absolutely not, this is a high growth stock. A value trap is a term that typically applies to low price, low book to value, low earning or money losing companies in the hope of a turnaround.

Q: I didn’t get the Microsoft (MSFT) call spread when the alert went out — should I add it on here?

A: No, I am generally risk-averse this month; let’s wait for that 4% correction in the main market before we consider putting any kind of longs on, especially in technology stocks which have had great runs.

Q: How do you see Lam Research (LRCX)?

A: Long term it’s another double. The demand from China to build out their own semiconductor industry is exponential. Short term, it’s a victim of the China trade war. So, I would hold back for now, or take short-term profits.

Q: Is this a good entry point for Google (GOOGL)?

A: No, wait for a better sell-off. Again, it’s the main market influencing my risk aversion, not the activity of individual stocks. It also may not be a bad idea to wait for talk of a government investigation over censorship to die down.

Q: Would you buy Tesla (TSLA)?

A: No, buy the car, not the stock. There are just too many black swans out there circling around Tesla. It seems to be a disaster a week, but then every time you sell off it runs right back up again. Eventually, on a 10-year view I would be buying Tesla here as I believe they will eventually become the world’s largest car company. That is the view of the big long-term value players, like T. Rowe Price and Fidelity, who are sticking with it. But regarding short term, it’s almost untradable because of the constant titanic battle between the shorts and the longs. At 26% Tesla has the largest short interest in the market.

Q: I’m long Microsoft; is it time to buy more?

A: No, I would wait for a bit more of a sell-off unless you’re a very short-term trader.

Q: What would you do with the TBT (TBT) calls?

A: I would buy more, actually; preferably at the next revisit by the ProShares Ultra Short 20 Year Plus Treasury ETF (TBT) to $33. If we don’t get there, I would just wait.

Q: What’s your suggestion on our existing (TLT) 9/$123-$126 vertical bear put spread?

A: It expires in 12 days, so I would run it into expiration. That way the spread you bought at $2.60 will expire worth $3.00. We’re 80% cash now, so there is no opportunity cost of missing out with other positions.

Q: Do you like emerging markets (EEM)?

A: Only for the very long term; it’s too early to get in there now. (EEM) really needs a weak dollar and strong commodities to really get going, and right now we have the opposite. However, once they turn there will be a screaming “BUY” because historically emerging nations have double the growth rate of developed ones.

Q: Do you like the Invesco India ETF (PIN)?

A: Yes, I do; India is the leading emerging market ETF right now and I would stick with it. India is the next China. It has the next major infrastructure build-out to do, once they get politics, regulation, and corruption out of the way.

Q: Do you trade junk bonds (JNK), (HYG)?

A: Only at market tops and market bottoms, and we are at neither point. When the markets top out, a great short-selling opportunity will present itself. But I am hiding my research on this for now because I don’t want subscribers to sell short too early.

Q: With the (VXX), I bought the ETF outright instead of the options, what should I do here?

A: Sell for the short term. The iPath S&P 500 VIX Short-Term Futures ETN (VXX) has a huge contango that runs against it, which makes long-term holds a terrible idea. In this respect it is similar to oil and natural gas ETFs. Contango is when long-term futures sell at a big premium to short-term ones.

Q: How much higher for Apple (AAPL)?

A: It’s already unbelievably high, we hit $228 yesterday. Today it’s $228.73, a new all-time high. When it was at $150, my 2018 target was initially $200. Then I raised it to $220. I think it is now overbought territory, and you would be crazy to initiate a new entry here. We could be setting up for another situation where the day they bring out all their new phones in September, the stock peaks for the year and sells off shortly after.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/John-and-friend-story-2-image-e1536281214497.jpg 400 300 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-07 01:06:262018-09-07 00:57:05September 5 Biweekly Strategy Webinar Q&A
MHFTR

September 5, 2018

Tech Letter

Mad Hedge Technology Letter
September 5, 2018
Fiat Lux

Featured Trade:
(WARREN BUFFETT’S GREAT TECH FIND IN INDIA),
(BRK/B), (AAPL), (GOOGL), (MSFT), (BABA), (NFLX)

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 MHFTR2018-09-05 01:06:552018-09-04 20:24:20September 5, 2018
MHFTR

Warren Buffett’s Great Tech Find in India

Tech Letter

Warren Buffett preaches searching among your “circle of competence” to find those gems of companies that will offer abundant value in the far future.

His time horizon has always been long – 10, 20, 30 years where a company has sufficient time to execute its business strategy.

The celebrated investor’s track record is unrivaled.

Another critical rule to his playbook of uncanny success is to invest in companies within your area of expertise to avoid erroneous investment decisions.

If an investor is uncertain if a company is within its “circle of competence,” then it is likely outside the circle and best to skip investing in the company for now.

The Oracle of Omaha has taken his investment playbook to the chicken tikka masala-loving country of India, dropping a few Benjamín’s on One97 Communications Ltd., the parent company of Paytm, an Indian fin-tech firm.

This disrupting digital payments company based in Noida, India, is the nation’s largest mobile-payments firm and quite an achievement in a country that loves paper cash.

It boasts a popular smartphone app used in daily lives, and mirrors digital payment businesses of the likes of China’s Alipay or Tencent’s WeChat payment platform.

When the Indian government laid down the heavy hand of fiscal regulation on the paper currency market with an eye toward the digital currency market, an outsized winner was Paytm.

The cost of printing paper money in India per year is more than $90 million by itself.

I am not saying that the Indian government is going into overdrive adopting bitcoin tomorrow, but its pivot toward fin-tech mobile payments and Buffett’s vote of approval show where all the deep lying tech value is marinating in the world.

It is not Silicon Valley that gets more expensive by the day.

Silicon Valley is largely saturated with venture capitalist firms cherry-picking the best firms before they go public and making many times their investment once they hit the New York public markets.

Well, we are still in the early stages of India’s rapidly developing tech scene. And 2018 has seen some blockbuster cash injections such as Walmart’s investment in e-commerce juggernaut Flipkart.

Buffett has championed investing into companies with a “margin of safety,” allowing him to buy stakes at levels he believes that are well below market value.

This allows him to sleep at night because even if the company tanks short-term, he knows that eventually it will pull it together.

India can now lay claim to more than 390 Internet users, and 300 million of those use Paytm.

When 77% of a country’s population is using an app, you know there is some staying power, as the first mover advantage in the tech world has a powerful and long-term network effect such as the AWS’s foray into the cloud business.

Paytm does have a crowded lineup of heavyweights breathing capital into its company in the form of investments from Masayoshi Son’s SoftBank Vision Fund and Jack Ma’s Alibaba (BABA).

China’s presence in the Indian tech scene is strong, but it has not doubled down there as it has in Southeast Asia, where it enjoys a healthier political connection that is largely void of border skirmishes.

India is the largest democracy in Asia and a strong ally of the United States. Although American tech companies won’t be welcomed with a pristine red carpet, they do have ample opportunity to invest in the burgeoning Indian tech scene.

Buffett’s stake amounts to a 3% to 4% stake in Paytm, and the valuation has spiked to more than $10 billion.

This comes on the heels of Buffett’s adding to his position in Apple (AAPL) that sees him now own 5%.

Apple’s services division is its new cash cow and is on track to eclipse $50 billion in annual revenue next year.

Apple’s services division surpassed $30 billion in the first three quarters of 2018. Its evolution comes at a timely period where smartphone growth has peaked while invaded by low-quality Chinese substitutes.

After sliding to annual low’s in April 2018 of $160, Apple has literally gone ballistic, powering past the $1 trillion valuation mark and is trading at all-time highs around $230.

Apple is another example of why this bull market is predominantly propped up by tech companies that continue to grow earnings at an insane pace.

Only a few companies have fallen into booby traps set forth by the regulatory hurdles first set by the Europeans and General Data Protection Regulation (GDPR).

Apple is losing its smartphone battle in India, but Indians can’t afford iPhones yet and even Netflix (NFLX) is seen as an expensive streaming service.

The average Indian does not possess the purchasing power that North America and Europe have.

Apple has only extracted 1% of smartphone sales in India compared to leader Xiaomi, which leads the market with a 28% share. Further down-market Chinese phone maker Oppo lags with 10% and Vivo with 12%.

It doesn’t matter for Apple.

Apple continues to milk the North American and European markets to great effect padding profits with its high-quality services business.

China was the undeveloped market that launched Apple’s profits sky high. And American tech companies are ostensibly using this same strategy in India and hoping to cement the best strategy for revenue down the road.

Buffett’s investment is finally a green light for India if there ever was one, and every Silicon venture capitalist has to be licking their chops to squeeze value out of India.

The value is deep lying, but it will pay dividends within five to 10 years as India’s economy rises with its citizen’s discretionary income.

With every Tom, Dick, and Harry lusting after the India market, it will drive valuations firmly higher for the foreseeable future.

The fear of missing out (FOMO) will expedite the pivot toward India where many of the most conservative investors could ironically end up.

The tech relationship between America and India is demonstrably synergistic with Indian born CEOs heading Google (GOOGL) and Microsoft (MSFT) among other influential tech companies.

Berkshire’s (BRK/B) funds join the Chinese, Japanese, and Silicon Valley venture capitalist’s capital queuing at India’s front door awaiting to unlock value.

Buffett even opted out of investing in ride-sharing behemoth Uber, because apparently the “margin of safety” was not sufficient enough in the proposal.

Buffett was even quoted on a local Indian television station gushing about the country saying, “If you’ll tell me a wonderful company in India that might be available for sale, I’ll be there tomorrow.” That day has surfaced in the form of his investment in Paytm.

Apparently, Buffett’s expertise lies in India now and Indian-born Ajit Jain is one of four Berkshire executives running the company on a day-to-day basis.

This will pave the way for more tech investments in the swiftly evolving Indian tech scene, and Berkshire will ring in the profits of these Indian assets down the road.

 

 

 

 

________________________________________________________________________________________________

Quote of the Day 

“Our favorite holding period is forever,” – said legendary American investor Warren Buffett.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/Smartphone-pie-chart-image-4-e1536092245855.jpg 459 580 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-05 01:05:342018-09-04 20:21:48Warren Buffett’s Great Tech Find in India
Page 65 of 77«‹6364656667›»

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