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Tag Archive for: (MSFT)

MHFTR

IBM’s Self Destruct

Tech Letter

International Business Machines Corporation (IBM) shares do not need the squeeze of a contentious trade war to dent its share price.

It is doing it all by itself.

Stories have been rife over the past few years of shrinking revenue in China.

And that was during the golden years of China when American tech ran riot on the mainland before the dynamic rise of Baidu (BIDU), Alibaba (BABA), and Tencent, otherwise known as the BATs.

Then the Oracle of Omaha Warren Buffett drove a stake through the heart of IBM shares earlier this year by announcing he was fed up with the company’s direction and dumped a 35-year position.

Buffett unloaded all of his shares in favor of putting down an additional 75 million shares in Apple (AAPL) in the first quarter of 2018.

Topping off his Apple position now sees Buffett owning a mammoth 165.3 million total shares in the resurgent tech company.

Buffett’s shrewd decision has been rewarded, and Apple’s stock has rocketed more than 20% since he jovially declared his purchase in May.

IBM has been a rare misstep for Buffett, who took a moderate loss on his IBM position disclosing an average cost basis of $170 on 64 million shares that Berkshire bought in 2011.

IBM has flatlined since that Buffett interview, and slid around 25% since its peak in mid-2014.

IBM is grappling with the same conundrum most legacy companies deal with – top line contraction.

In 2014, IBM registered a tad under $93 billion in annual revenue, and followed up the next three years with even lower revenue.

A horrible recipe for success to say the least.

In an era of turbo-charged tech companies whose value now comprise over a quarter of the S&P, IBM has really fluffed its lines.

IBM’s prospects have been stapled to the PC market for years.

A recent JP Morgan note revealed the PC market could contract by 5% to 7% in the fourth quarter because of CPU shortages from Intel (INTC).

The report’s timing couldn’t have been worse for IBM.

The PC industry has been tanking for the past six consecutive years unable to shirk shrinking volume.

Intel is another company I have been lukewarm on lately because it is being outmaneuvered by chip competitor Advanced Micro Devices (AMD).

Even worse, this year has been a bad one for Intel’s management, which saw former CEO Brian Krzanich resign for sleeping with a coworker.

The poor management has had a spillover effect with Intel needing to delay new product launches as well.

To read more about my timely recommendation to pile into AMD in mid-August at $19, please click here.

Meanwhile, AMD shares have gone parabolic and surpassed an intraday price of $34 recently.

Investors should ask themselves, why invest in IBM when there are so many other tech companies that are growing, and growing revenue by 20% or more per year?

If IBM does manage to eke out top line growth in 2018, it will be by 1% to 2%, similar to Oracle’s recent performance.

Unsurprisingly, the price action of Oracle (ORCL) for the past year has been flatter than a bicycle ride around Beijing.

Live by the sword and die by the sword.

Thus, the Mad Hedge Technology Letter has been ushering readers into high-performance stocks that will bring technological and societal changes.

If you put a gun to my head and forced me to give sage investment advice, then the answer would be straightforward.

Buy Amazon (AMZN) and Microsoft (MSFT) on the dip and every dip.

This is a way to print money as if you had a rich uncle writing you checks every month.

Legacy tech is another story.

The IBMs and the Oracles of the world are bringing up the tech sector’s rear.

To add insult to injury, the lion’s share of IBM’s revenue is carved out from abroad, and the recent surge in the dollar is not doing IBM any favors.

IBM’s Watson initiative was billed as the savior for Big Blue.

The artificial intelligence initiative would integrate health care data into an actionable app.

The expectations were high hoping this division would drag up IBM from its long period of malaise.

IBM bet big on this division ploughing more than $15 billion into it from 2010-2015, predicting this would be the beginning of a new renaissance for the historic American company.

This game changing move fell on deaf ears and has been a massive bust.

IBM swallowed up three companies to ramp up this shift into the AI world - Phytel, Explorys, and Truven.

The treasure trove of health care data and proprietary analytics systems these companies came with were what this division needed to turn the corner.

These three companies were strong before the buy out and engineers were upbeat hoping Watson would elevate these companies to another level.

Wistfully, IBM Management led by CEO Ginni Rometty grossly mishandled Watson’s execution.

Phytel boasted 160 engineers at the time of IBM’s purchase and confusingly slashed half the workforce earlier this year.

Engineers at the firm even lamented that now, even smaller firms were “eating them alive.”

Unimpressed with the direction of the artificial intelligence division at IBM, many of these three companies’ best and brightest engineers jumped ship.

The inability for IBM to integrate Watson reared its ugly head in plain daylight when MD Anderson Cancer Center in Texas halted its Watson project after draining $62 million.

This was one of many errors that Watson AI accrued.

The failure to quicken clinical decision-making to match patients to clinical trials was an example of how futile IBM had become.

In short, a spectacular breakdown in execution mixed with an abrupt brain drain of AI engineers quickly imploded the prospect of Watson ever succeeding.

In 2013, IBM confidently boasted that Watson would be its “first killer app” in health care.

Internal leaks shined a brighter light on IBM’s subpar management skills.

One engineer described IBM’s management as having “no idea” what they were doing.

Another engineer said they were uncertain of a “road map” and “pivoted many times.”

Phytel, an industry leader at the time focusing on population health management, was bleeding money.

The engineers explained further, chiming in that IBM’s management had zero technical experience that led management wanting to create products that were “simply impossible.”

Not only were these products impossible, but they in no way took advantage of the resources these three companies had at their disposal.

Do you still want to invest in IBM?

Fast forward to today.

IBM is being sued in federal court with the plaintiff’s, former employees at the firm, claiming the company unfairly discriminated against elderly employees, firing them because of their age.

The documents submitted by the plaintiff’s state that “IBM has laid off 20,000 employees who were over the age of 40” since 2012.

This prototypical legacy company has more problems than the eye can see in every nook and cranny of the company.

If you have IBM shares now, dump them as soon as you can and run for cover.

It’s a miracle that IBM shares have eked out a paltry gain this year. And this thesis is constant with one of my overarching themes – stay away from all legacy tech firms with no cutting-edge proprietary technologies and stagnating growth.

 

 

 

 

A Sad Story of Mismanagement

________________________________________________________________________________________________

Quote of the Day

“Some say Google is God. Others say Google is Satan. But if they think Google is too powerful, remember that with search engines unlike other companies, all it takes is a single click to go to another search engine,” said Alphabet cofounder Sergey Brin.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2018/09/IBM-man-image-4-e1537302569878.jpg 295 400 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-19 01:05:132018-09-18 20:52:05IBM’s Self Destruct
MHFTR

September 17, 2018

Diary, Newsletter, Summary

Global Market Comments
September 17, 2018
Fiat Lux

Featured Trade:
(THE MARKET OUTLOOK FOR THE WEEK AHEAD),
(AAPL), (CBS), (EEM), (BABA), (UUP), (MSFT), (VIX), (VXX), (TLT),
(TUESDAY, OCTOBER 16, 2018, MIAMI, FL, GLOBAL STRATEGY LUNCHEON)

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MHFTR

The Market Outlook for the Week Ahead

Diary, Newsletter, Research

Talking to hedge fund managers, financial advisors, and portfolio managers around the country de-risking seems to be the name of the game. It’s like they expect a category five hurricane to hit the markets tomorrow.

Even my friend, hedge fund legend David Tepper, says that the stock market is fairly valued and that he is cutting back his equity exposure. However, he is hanging onto his position in Micron Technology (MU), which he believes is deeply oversold. Will the last person to leave Dodge please turn out the lights?

You can expect a real hurricane, Florence, to impact the coming economic data. The usual pattern is for GDP growth to take an initial hit when the big storms hit, and then make back more as reconstruction and government spending kicks in. The scary thing is that there are three more hurricanes on the way.

The big event of the week was Apple’s (AAPL) roll out of its new product line, which will beat the daylights out of competitors. Think better and more expensive across the board, with the top iPhone now costing an eye-popping $1,499.

If you are Life Alert, the private company that sells safety devices to seniors, Apple just ate your lunch. Welcome to the cutthroat world of technology investing.

The drama at CBS (CBS) played out with the departure of CEO Les Moonves. He basically generated virtually all the profits for the company for the past two decades. But in this modern age not keeping your zipper zipped carries a heavy price.

A happier departure was seen by Alibaba’s (BABA) Jack Ma, China’s richest man to focus on philanthropic activity.

Emerging markets (EEM) continued their relentless meltdown, only given a brief respite by profit taking in the U.S. dollar (UUP) on Friday.

A coming strike by the United Steelworkers may mark the onset of new wage demands by labor nationwide. In the meantime, the JOLTS report hit a new all-time high with 650,000 job openings.

For the final “screw you” of the week, Trump indicated he was going forward with tariffs on another $200 billion in Chinese imports. Consumer goods will dominate the new black list in the lead up to the Christmas shopping season. Beat the Grinch and shop early!

With the Mad Hedge Market Timing Index ranging from 50 to 78 last week the market keeps trying and failing to reach new all-time highs on small volume. Volatility (VIX) hit a one-month low.

Thank goodness I took profits on my iPath S&P 500 VIX Short Term Futures ETN (VXX) long. The January $40 call options have cratered from $3.60 to only $1.96. Still, there was enough price action to allow us to take nice profits on our bond short (TLT) and Microsoft (MSFT) long. Microsoft was the top-performing Dow stock last and we got in early!

Last week, the performance of the Mad Hedge Fund Trader Alert Service forged a new all-time high. September has given us a middling return of 2.42%. My 2018 year-to-date performance has clawed its way back up to 29.43% and my trailing one-year return stands at 41.35%.

My nine-year return appreciated to 305.90%. The average annualized Return stands at 34.65%. The more narrowly focused Mad Hedge Technology Fund Trade Alert performance is annualizing now at an impressive 29.41%. I hope you all feel like you’re getting your money’s worth.

This coming week is pretty flaccid in terms of economic data releases.

On Monday, September 17, at 8:30 AM, we learn the August Empire State Manufacturing Survey.

On Tuesday, September 18, at 10:00 AM, the National Association of Homebuilders Home Price Index is released. August Home Sales is out at 10:00 AM EST.

On Wednesday September 19, at 8:30 AM, the August Housing Starts is published.

Thursday, September 20 leads with the Weekly Jobless Claims at 8:30 AM EST, which dropped 1,000 last week to 204,000.

On Friday, September 21, at 8:30 AM, we learn August Retail Sales. The Baker Hughes Rig Count is announced at 1:00 PM EST. Last week saw a gain of 7.

As for me, the harvest season in nearby Napa Valley is now in full swing, so I’ll be making the rounds picking up my various wine club memberships. Screaming Eagle check, Duckhorn check, Chalk Hill check.

Good luck and good trading.

 

 

 

 

 

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 MHFTR https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png MHFTR2018-09-17 01:07:292018-09-14 21:29:42The Market Outlook for the Week Ahead
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)

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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

Diary, Newsletter, Summary

Global Market Comments
September 12, 2018
Fiat Lux

THE FUTURE OF AI ISSUE

Featured Trade:
(THE NEW AI BOOK THAT INVESTORS ARE SCRAMBLING FOR),
(GOOG), (FB), (AMZN), MSFT), (BABA), (BIDU),
(TENCENT), (TSLA), (NVDA), (AMD), (MU), (LRCX)

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MHFTR

September 11, 2018

Diary, Newsletter, Summary

Global Market Comments
September 11, 2018
Fiat Lux

Featured Trade:
(A NOTE ON ASSIGNED OPTIONS,
OR OPTIONS CALLED AWAY), (MSFT),
(TEN MORE REASONS WHY BONDS WON’T CRASH),
(TLT), (TBT), (ELD), (MUB)

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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
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