March 5, 2019

Global Market Comments
March 5, 2019
Fiat Lux

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March 4, 2019

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March 4, 2019
Fiat Lux

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March 1, 2019

Global Market Comments
March 1, 2019
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February 28, 2019

Global Market Comments
February 28, 2019
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The Stem Cells in Your Investment Future

I’ll do anything to postpone aging, as regular readers of this letter already know.

So when my doctor told me that she could extend the life of my knees by ten years with a stem cell injection, I was all for it.

You better pay attention too.

Stem cells, along with CRISPR gene editing, are two hyper accelerating medical technologies that promise to cure your ills, extend your life, and make you fabulously rich along the way.

Have I got your attention?

When my doc confirmed that she was already getting a spectacular result from her other elderly patients, such as the dramatic regrowth of knee cartilage, it was like pushing on an open door.

Yes, these are the famous well-worn 67-year-old knees you have heard so much about that hike and snowshoe 2,000 miles a year with a 60-pound backpack.

My doc is no lightweight. She is the orthopedic surgeon for the US Ski Team at Lake Tahoe, which is why I sought her out in the first place.

As a UCLA trained biochemist, I have known about stem cells for most of my life. They only left the realm of science fiction a decade ago.

Early sources of stem cells relied on stillborn human fetuses, creating a religious and political firestorm that led to severe restrictions, a funding drought, or outright bans.

During the 2000s, California was almost the only state that permitted stem cell research.

Since then, the technology has developed to the point where they can be easily harvested throughout the human body.

Easy, except when the source is the bone marrow in your own hip.

“You may feel a slight twinge,” said my doctor, as she flushed the air out of a gigantic horse needle the width of a straw. “I only have to hammer this needle into your hip bone 20 or 25 times to get the marrow I need.”

This was definitely NOT in the literature I had been provided.

I said, “Don’t worry, Marines are immune to pain.”

“Does that work?” she asked.

“No, not really,” I replied, grimacing.

I felt every single blow and tried to imagine myself on a faraway tropical island.

Once she obtained the 10cc she needed, she popped it into a small centrifuge to separate the stem cells (clear) from the red blood cells (red).

She then used an ultrasound machine to precisely inject my own stem cells at the exact right spot in both of my knees.

Being the true journalist that I am, I took pictures throughout the entire procedure with my iPhone 6 (see below).

The problem with advanced, experimental treatments is that they are not covered by your health insurance. Still, I thought $2,000 for ten years of extra life for both knees was a bargain.

Stem cells are undifferentiated cells that can transform into specialized cells such as heart, neurons, liver, lung, skin and so on, and can also divide to produce more stem cells.

You can think of stem cells as chemical factories generating vital growth factors that can help to reduce inflammation, fight autoimmune disease, increase muscle mass, repair joints, and even revitalize skin and grow hair.

Goodbye Rogaine!

When you are young, you have oodles of these cells, which is why kids so rarely die from dread diseases.

However, as you age, your exposure to too much sunlight at the beach, too many chemicals in the food and water you eat and drink, and natural background radiation degrades your DNA and reduces your stem cell supply.

Supplies of stem cells diminish as much as 100 to 10,000-fold in different tissues and organs. Welcome to old age, and eventually death.

The procedure I underwent is called Autologous Adult Stem Cells Treatment.

The great thing about it is that since you are using your own cells, the risk of rejection or infection is minimal. And they are free!

This approach has become the must-go-to treatment for the wealthy seeking to repair aging, sagging parts of their bodies.

They are often sold with vacation packages in exotic third world countries where regulation and medical malpractice suits are non-existent.

The fact that the treatments are now becoming widely available in the US testifies to its effectiveness.

Do any search on stem cell treatments, rejuvenation, or life extension and you will find hundreds and hundreds of private clinics offering to do so for high prices.

California leads the nation with 109 clinics (including 18 in Beverly Hills alone), followed by New York and Texas.

Just follow the money.

The market is now on fire and is expected to reach $170 billion by 2020.

As a result, a number of breakthroughs in longevity are just around the corner.

The industry is now branching out into fields considered unimaginable just a few years ago. I’ll cover some of the highlights.

Imagine using your own stem cells to repair not only your knees but any other organ. This is already being done in the lab with animal trials.

In Japan, they are growing human eyes from scratch, including lenses, and corneas.

At Stanford, stem cells are bringing dramatic improvements in stroke victims.

At USC, they are deployed to bring rapid repairs to those with severe spinal cord injuries.

A number of private firms have sprung up to facilitate banking of your own stem cells through cryogenic freezing, such as Lifebank. Just harvest them when you are young for future use.

Better yet, get born to wealthy parents who will pay to have your birth placenta and umbilical cord frozen, the two richest sources of stem cells known.

The key term to search for your investment strategy is Mesenchymal Stem Cells, the major stem cells for cell therapy, or MSCs.

These cells have the ability to differentiate into vital cells that can be used to cure autoimmune disease, cardiovascular disease, liver disease, and cancer.

There are now several hundred clinical trials involving these cells underway.

A more adventurous strategy is to buy the stem cells of others and have them injected into yourself, a procedure known as parabiosis.

A company in Monterey, CA named Ambrosia is doing exactly this for $8,000 a patient. The goal here is to reverse aging across every major organ system.

Of course, I’m thinking there’s got to be a trade here.

Not so fast.

Almost all stem cell efforts are now confined to the research labs of major universities or are buried inside of large biotech and drug companies.

A few pieces of research have spun off to set up their own private companies with substantial venture capital backing.

That said, there are a few peripheral listed plays.

Celgene (CELG) is one of my favorites and is an early entrant in the field. They are using placenta-derived cells to cure a whole host of diseases which you can find listed on their site, click here.

Thermo Fischer Scientific (TMO) provides a range of tools and supplies scientists need to pursue stem cell research (click here for their site).

Regeneron (REGN) is using stem cells to pursue a broad range of serious medical conditions, including ophthalmology, cancer, rheumatoid arthritis, asthma, atopic dermatitis, pain, and infectious diseases. Visit their site here.

There is one problem with the entire sector. We have a new president who has opinions on drug companies, which on occasion have led to traumatic one-day declines in these shares.

So these may be next year’s investments, instead of next week’s.

And how are my knees doing? I knew you would ask.

A little swelling in my knees went away in a day. I sat funny for a few more days, thanks to my bone marrow extraction.

It will take about six months before any real growth in new cartilage in my knees can be measured with an MRI scan which I have scheduled. I’ll let you know those results in a future letter.

But you know what?

My knees have not hurt an iota, despite my regular tortuous exercise regimen. And I thank that, right there, it’s a win.

And if it works, my doctor wants to extract fat cells from my middle, known as Adipose Cells, and inject their stems cells, into my knees.

Talk about killing two birds with one stone!






This Won’t Hurt a Bit

June 21, 2018

Global Market Comments
June 21, 2018
Fiat Lux


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Biotech and Health Care Stocks to Buy at the Bottom

One has to be truly impressed with the selloff in biotech and health care stocks over the past year.

Since May, there were signs that life was returning to this beleaguered sector. Then Mylan decided to raise the prices of it’s EpiPen by 400% and it was back to the penalty box.

Let?s gouge poor small children who may die horrible deaths if they can?t afford our product. That sounds like a great marketing and PR strategy. NOT!

Once the top performing sectors of 2015, they went from heroes to goats so fast, it made your head spin.

What I called ?The ATM Effect? kicked in big time.

That?s when frightened investors run for the sidelines and sell their best stocks to raise cash. After all, no one wants to sell other stocks for a loss and admit defeat, at least in front of their clients.

It?s not that the companies themselves were without blood on their hands. Valuations were getting, to use the polite term, ?stretched? after a torrid five-year run.

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

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

It has been a performance for the ages.

If a financial advisor wasn?t in health care, chances are that he is driving for Uber in a bad neighborhood by now.

Then there was The Tweet That Ate Wall Street.

Presidential candidate Hillary Clinton made clear in a broadcast on September 21, 2015 that the health care industry would be target number one in her new administration.

Her move was triggered by an overnight 5000% price hike for a specialty HIV drug by a minor player in the industry.

Among the reforms she would implement are:

1) Give the government power to negotiate drug purchases with the industry collectively.
2) Allow Medicare to import drugs from abroad to encourage price competition (which I already do with my annual trips to Switzerland).
3) Ban drug companies from using government grants to pay for sales and advertising.
4) Set an out of pocket limit for drugs bought through Obamacare at $250 a month, thus ending customers? blank checks.
5) Set a 20% of revenue minimum which companies must spend on research and development.

She certainly got our attention.

Competition in the drug industry? Yikes! Not what the shareholders had in mind.

Raise your hand if you think Americans aren?t paying enough for their prescription drugs.

Yes, I thought so.

Drug company CEOs aren?t helping their case by flying to press conferences to complain about the proposals in brand new $65 million Cessna G-5?s.

And that Mylan CEO, Heather Bresch? She took home $18 million last year, and she?s just a kid.

Here?s the key issue for health care and biotech for investors. It all about politics.

Even if Hillary does get elected, the government is likely to remain gridlocked for another 4-8 years. The Democrats will almost certainly retake the Senate in 2016, thanks to a highly favorable calendar, and keep it for at least two years.

But the heavily gerrymandered House is another story.

With the current districting map, the Democrats would have to win 57% of the national vote for them to regain a majority in both houses.

That is a feat even Barack Obama could not pull off in 2008, when a perfect storm in favor of his party blew in.

A Hillary appointed liberal Supreme Court could bring an end to gerrymandering, but that is a multiyear process. Texas hasn?t had a legal districting map since 2000.

Even with Democratic control of congress, Hillary won?t get everything she wants.

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

That means few, if any, Clinton proposals will ever make it into law. If they do, they will be severely watered down and subject to the usual horse-trading and quid pro quos.

Beyond what she can accomplish through executive order, her election may be largely symbolic.

Therefore, the biotech and health care stocks are a screaming ?BUY? at these levels, provided you ignore Mylan (MYL), now the poster boy for corporate greed.

It?s a political call I can only make after spending years in the White House and a half century following presidential elections.

It?s easy to understand why these stocks were so popular, and are found brimming to overflowing in client portfolios and personal 401ks and IRAs.

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

Profit growth for many firms is exceeding 20% a year. Hyper accelerating biotechnology is rapidly bringing to market dozens of billion dollar earning drugs that were, until recently, considered in the realm of science fiction.

And we have only just gotten started. Cures for cancer, heart disease, arthritis, diabetes, AIDS, and dementia? You can take your pick.

Most biotech and health care stocks have given up all of their 2015 gains. Here is a chance to hoover up the fastest growing companies in the US at 2014 prices.

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

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

Gilead Sciences (GILD) ? Has the world?s top hepatitis cure, which it sells for $80,000 per treatment. For a full report, see the next piece below.

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

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

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

HCA Holdings (HCA) ? Is the world?s largest operator of for profit health care facilities in the world.

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

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

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

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

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

I?ll be shooting out Trade Alerts on biotech and health care names as soon as I think the coast is clear.

Until then, enjoy the ride!


Say You Were A Biotech Investor, Did You?