Mad Hedge Technology Letter
July 21, 2021
Fiat Lux
Featured Trade:
(THE TRUTH ABOUT AUTOMATION AND WALL STREET JOBS)
(AAPL), (SQ), (AMZN), (PYPL)
Posts
Global Market Comments
July 21, 2021
Fiat Lux
Featured Trade:
(AN INSIDER’S GUIDE TO THE NEXT DECADE OF TECH INVESTMENT),
(AMZN), (AAPL), (NFLX), (AMD), (INTC), (TSLA), (GOOG), (FB)
Mad Hedge Biotech & Healthcare Letter
July 20, 2021
Fiat Lux
FEATURED TRADE:
(A SNAPSHOT ON HOW TO LIVE A BETTER LIFE)
(DXCM), (CVS), (WBA), (RAD), (MDT), (ABBT), (SENS),
(TDOC), (AMWL), (AMZN), (AAPL), (GOOGL), (GRMN)
The routine medical check-ups we have today are primarily based on physical exams that were developed way back in the 1820s, utilizing tools that haven’t been upgraded for over a century.
More alarmingly, all we go through is a “comprehensive” health check once every year, offering us just a snapshot of what’s truly going on in our bodies.
If anything, we monitor the releases of new software for our phones and laptops more than we pay attention to our own bodies.
As we’ve proven with the COVID-19 pandemic, so much can happen in a year
Truth be told, our bodies can deteriorate at lightning speed and without any warning. That’s why it’s terrifying to think that we’re not doing as much to monitor our health.
So, what can we do to change this? How can we be more proactive when it comes to our health?
The COVID-19 pandemic has brought many changes into our lives, and this is one of the biggest transformations it has done: an exponential spike in demand for telehealth services.
One of the major issues between patients and doctors at the height of the pandemic was how to go through the physical exams without actual physical contact.
Clearly, it’s not possible to hear a heart murmur or irregular breathing over a video call.
This is where a lot of innovative companies come in.
For a more specialized exam, HD Medical released a credit card-sized device called HealthyU.
Patients simply touch it with their finger, and the device can instantaneously measure their heart rate and sounds, temperature, and even oxygen saturation.
All these data would then be sent to their doctors or health providers in real-time.
HealthyU also has a remote EKG, which effectively allows it to serve as a portable roadmap to a patient’s heart health and helps doctors monitor for signs of heart attacks and arrhythmias.
For example, there’s this handheld exam kit called Tyto that patients can use to perform their own guided medical exams.
This palm-sized gadget is linked to an app, so your doctor can monitor you remotely.
Patients suffering from a sore throat can use Tyto’s camera to let the doctors see the back of their throats, while those struggling from chest pains can easily use the stethoscope to help their physicians listen to their lungs and hearts.
And these are just for physical exams. There are more advancements in health monitoring, and this is where wearable technology comes in.
Wearable technology is considered one of the most promising growth drivers, largely due to the health sector.
The market size for this segment is estimated to rise from $116.2 billion in 2021 to $265.4 billion by 2026, showing off an 18% CAGR growth within a 5-year period.
Applications for wearables have expanded to areas including medical surgery as well as internables and implantables or sensors, which can be fitted into our bodies to help doctors observe various health parameters.
It’s no wonder brands like Apple (AAPL) with Apple Watch, Google (GOOGL) with Fitbit, and Garmin (GRMN) have been working overtime to try to cover as much of the wearable health market as possible.
So far, these products provide extensive data ranging from calories burned to our heart rates.
Aside from them, there are other wearables in the market today that could change the landscape of the health industry.
One of them is the Oura Ring, which was first introduced in 2013.
Designed to be worn 24 hours a day, this device measures the bodily functions of the user. It gathers data through infrared light sensors that touch the finger arteries.
One of the most impressive things it can do is monitor your sleep movements to help determine early onset of some neurodegenerative diseases like Parkinson’s.
The information is all sent to the app, which users can access via their smartphones. The Oura Ring is somewhere between $299 and $999, depending on your preferences in style and color.
Although it’s yet to be a mainstream product, the Oura Ring was provided to NBA players when they resumed their season amid the COVID-19 pandemic.
The device was used to help the basketball stars monitor their health.
In fact, a joint study with the University of California San Francisco showed that the Oura Ring was able to help detect the common symptoms of COVID-19 three days earlier and with as high as 90% accuracy.
Another impressive health monitoring advancement covers the glucose monitoring product line of Dexcom (DXCM).
The primary goal of Dexcom is to take away the guesswork that comes with finger pricking.
By offering a wearable sensor, people with diabetes can easily and accurately monitor their glucose levels.
What’s even more convenient is that Dexcom’s wearable is available in practically all large pharmacies like CVS (CVS), Walgreens (WBA), and Rite Aid (RAD).
To date, Dexcom’s biggest competitors include Medtronic’s (MDT) Guardian Connect, Abbott’s (ABBT) Freestyle Libre, and Senseonics’ (SENS) Eversense.
These are only some of the emerging technologies that could help us improve the quality of our lives today, with thousands more expected to follow suit in the years to come.
For an endlessly advancing world with smartphones, supercomputers, smart homes, and even self-driving cars receiving software updates virtually every week, it’s absurd to think that we only allot a single check-in on our health annually.
But with the advent of these technologies and the increasing popularity of telehealth services spearheaded by the likes of Teladoc (TDOC), Amwell (AMWL), and even Amazon (AMZN), it looks like we’re starting to finally pay more attention to our health.
Mad Hedge Technology Letter
July 19, 2021
Fiat Lux
Featured Trade:
(THE LARGEST SHADOW BANKER AND U.S. TECH)
(BLK), (AMZN), (MSFT), (AAPL)
In the top-heavy global media landscape, there seems to be this notion that the U.S. and its capital is the primary alpha male swaying asset prices.
The close to $6 trillion in recent stimulus chasing too few services demonstrably has an outsized vote on the matter of asset pricing.
But the dirty little secret about this stimulus is that U.S. private equity is spilling into Nordic and Western European markets effectively forcing a rapid Americanization of asset prices across the Atlantic.
Shadow banks finance financial transactions that are too risky for banks.
In the US, they already grant half of all loans.
In times of low or even negative interest rates for credit, fewer and fewer investors bring their money to a normal bank, but rather to a so-called shadow bank.
This is a term that has become established to describe a phenomenon for financial participants who are not a bank.
What a shadow bank is is not exactly defined, because there are no shadow banking licenses; but tech companies and the U.S. wielding of this critical function have changed the financial world.
In some cases, a few large private families who now have the means to invest in such funds are also focused on funding through these shadow banks and most of the time to buy American tech stocks.
And they deliberately invest not just in a single fund, but across all countries in the world, and shadow banks make up around a third of the financial sector.
In Germany, it is more than a third and on the EU average, it is almost exactly a third.
Pension funds and pension funds work like small insurance companies: employees of a company pay part of their gross wages directly, free of tax and social security contributions. At the end of their working life, they will then be paid a supplementary pension from the income generated.
The fact that “their” money is mandated to be invested in the global financial markets - at least if people hope to receive a pension after their active working life.
These European pension funds are also turning to U.S. branded shadow banking.
According to the Financial Stability Board, shadow banks had a total of $80 trillion in business in 2021.
Compared to the previous year, this was an increase of 8.5%. The FSB information is based on data from 29 countries. These in turn represent 80% of global economic output.
Many deals and transactions are outsourced from the banks now. That means: The financial business tries to circumvent the regulations and the largest shadow bank is BlackRock (BLK) - involved in 20,000 companies.
Many of these outsourced financial service providers are also nothing more than subsidiaries of BlackRock.
This outsourcing offers their customers the prospect of significantly higher interest rates.
BlackRock is an influential major shareholder in all listed global corporations from Europe and the USA.
Although it was founded in 1988, BlackRock was unknown to most people in Germany for decades.
That only changed in 2018, when the politician and lobbyist Friedrich Merz announced his candidacy for the CDU party chairmanship.
At this point in time, Friedrich Merz had been head of the supervisory board of the German offshoot of BlackRock for two years.
This is a company that currently manages a fortune of over nine trillion dollars which is far more than what is produced in Germany, every year, in terms of goods and services - considerably more.
At BlackRock, they harness the smorgasbord of mechanisms that define this new area of shadow banking: hedge funds, VC, real estate, index funds, and money market funds.
BlackRock holds considerable blocks of shares through various subsidiaries, including in normal commercial banks - such as Bank of America, Citigroup, and Deutsche Bank.
But that’s not all.
BlackRock is by far the largest owner in the German share index - with a share of 15 to 17%.
That means: every sixth share of the 30 largest German corporations is controlled by one of the BlackRock funds.
That BlackRock's ownership structure rotates in circles. The asset management companies control themselves, or are actually not subject to any control.
It’s an almost incestuous system where you pursue your own interests through a network of participation. While banks are systemically relevant, BlackRock is still uncontrolled, and they refuse to classify this company as systemically relevant.
But that is BlackRock and that is part of what made them highly successful.
It is extremely well connected. It has long-standing, important politicians in its ranks. Friedrich Merz is just one example in the big picture.
French President Emmanuel Macron recently said he wanted to see the creation of at least 10 tech companies in Europe worth over 100 billion euros each by 2030.
While Europe is now home to many unicorns — start-ups valued at over $1 billion — it is yet to produce a company with the scale of American and Chinese tech giants.
But I am ready to argue that Europeans no longer have control over their own narrative in their own financial system, it is now U.S. private equity.
Assuming that this holds true, even if President Macron’s wish bears fruit, the owners of these “European” tech companies will of course be Americans who are dressed up as European pension funds and maybe even perhaps somehow a company starting with a B and ending with ROCK?
The oversupply of capital from the U.S. that has overcharged U.S. tech shares will get any piece of the action that Europe creates if they are to create a tech renaissance, which I highly doubt.
And the real truth is that any unicorn created in Europe will most likely go public in New York anyway.
The pandemic has also supercharged the influence of Blackrock in Germany and Europe as a whole and that cannot be diminished.
According to Blackrock’s 13F, 10% of their portfolio is Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) - holding $128 billion in AAPL, $123 billion in MSFT, and only $87 billion in AMZN.
Their largest 7 holdings are in U.S. tech stocks.
This is just a 13F in their main fund, and it wouldn’t be shocking to find out some of their European subsidiaries are also doing the same thing even if not with the same amount of capital.
The European financial system has effectively been gamed by Blackrock and its copycats, so next time you hear of a large Nordic or German equity fund making a big splash in U.S. tech shares, the eventual originator of that decision could be Blackrock.
This is the type of sophistication we are dealing with at this point in global markets and essentially nothing beats the eye test anymore because we have no idea what is happening unless we follow the trail of money.
Global Market Comments
July 19, 2021
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE DELTA CORRECTION IS HERE)
(AMZN), (AAPL), (FB), (MSFT), (TAN), (FSLR)
Right now, the fate of your investment portfolio, and indeed your life, is in the hands of a minority of anti vaxers in the Midwest.
If the surge in the delta variant burns out in weeks or a month, the current market correction won’t extend any more than 5% and you should be loading the boat with big tech stocks like (AMZN), (AAPL), (FB), and (MSFT).
The delta variant is becoming a big deal, with unvaccinated states like Arkansas (35% vaccination rate) and Missouri (40% rate) driving the resurgence. It is essentially an epidemic of the unvaccinated.
Unless checked, it could lead to a broader stock market selloff in August. Los Angeles brought back the indoor mask mandate on Saturday, although compliance is near zero. San Francisco may be close behind.
Everyone in my company worldwide is now vaccinated, with Australia last to get one. I’ll be first in line for the Pfizer booster out in the fall. Delta is twice as contagious, more fatal, with more permanent side effects than earlier variants. And it’s killing more kids.
But it’s not the delta you have to worry about. If a future epsilon or zeta variant emerges, that can overcome our current vaccines, bred in the Midwest, the economy would shut down again and you can kiss your bull market goodbye. That would lead to a 1918 style finish to this pandemic, the fatality rate would go up to 50%, and millions more would die.
I’ll stick to the optimistic case….for now.
Even if we get a new variant, we now have the infrastructure in place to sequence the DNA of a new strain in a day and have 100 million doses in the freezer in two months. But it could be a close-run thing.
If you want to stick with your long portfolio in the face of millions dying here is the argument.
The Fed is unable to stimulate the economy any further through interest rate cuts or more QE. It is like pushing on a string. Companies can’t hire the labor they need to increase production or obtain the parts to make things.
This ends in August when workers get their free childcare back in the form of the public school system. The ending of Covid benefits will also light a fire under them. This will lead to a collapse in the unemployment rate and a further rise in GDP from the current ballistic 7.0% rate. This will allow the Fed to raise rates, but not enough to hurt stocks, especially techs.
This is your Goldilocks scenario for H2.
Driving down from Lake Tahoe to Long Beach to pick up my kids from Scout Camp, I passed two huge wildfires. Half the vehicles on the road (US 395) were fire trucks and crews moving in from other states. It’s like being at war.
So, you might ask the question of when will Climate Change affect the stock market? The answer is that Climate Change is actually great for stocks. Money gets spent to put fires out, then trillions of dollars get spent to rebuild with insurance claims.
The biggest impact of climate change is the decarbonization of our energy infrastructure, out of fossil fuels and into alternatives. Solar will soar from 20% to 70% of total electric power output in a decade while nuclear stays at 20% and hydroelectric at 10%. Coal and oil completely disappear. This will enable a large cut in our total energy bill.
Yes, I know oil has rallied lately. I’m sure American Leather had rallied on the way to zero, the only Dow stock to ever completely disappear. It was wiped out by the transition from horses to cars, eliminating 97% of the demand for leather. (The horse population went from 120 million to only 3.8 million today).
There are ways to play this today. Solar growth will be massive, so you have to look at the Invesco Solar ETF (TAN) and First Solar (FSLR).
Here is the next market top, at least for the short term. That’s because, for the last year, stocks have a nasty habit of selling off after quarterly earnings reports, which are just around the corner. Announcement dates for the FANGS are below. For the short term, you want to sell days before the reports. For the long term, you want to keep them, as I expect all to double or more in the next three years.
Facebook (FB) is July 28, 2021
Alphabet (GOOGL) - Jul 25, 2021
Apple (AAPL) Jul 27, 2021
Amazon (AMZN) Jul 26, 2021
Netflix (NFLX) Jul 20, 2021
Microsoft (MSFT) - Jul 28, 2021
China’s economy is slowing, with the post-Covid bounce over. It just provided $154 billion in stimulus for its economy and cut bank reserve requirements by 50 basis points. If they slow there, we could slow here, especially for big exporters to China in the ags.
Core CPI jumps to 5.4%, the biggest gain in 13 years. Excluding food and energy, it’s the biggest print since 1991. The Fed is holding its breath that these large numbers are temporary. Used car and truck prices accounted for a third of the gain for the second month in a row. That is certainly not sustainable, or I’m going into the used car business. Tech took off like a rocket on the news.
Producer prices show biggest gain since 2008, the is index up a hot 1.0% in June against 0.8% in May. PPI is up 7.3% YOY. Higher commodity and labor costs against shrinking inventories were the big issues. Inflationary pressures are here, but for how long?
Senate agrees to $3.5 trillion spending plan, providing great news for stocks and terrible news for bonds. No Republican support is required. This is in addition to the $579 billion infrastructure deal reach with opposition support. It’s enough dosh to keep this stock market percolating for years. Buy FANGS on dips.
Any tightening is a ways off, says Fed governor Jerome Powell in his congressional testimony, sending bonds soaring. The comment was in response to the superheated 5.4% CPI print on Tuesday. The $120 billion a month in Fed bond buying continues. Big tech loved it and continued with its non-stop rally. The rocket fuel for share prices continues unabated.
The four biggest US banks deliver spectacular earnings, posting a combined $33 billion in profits, triggering the predictable selloff. That is $9 billion above analyst forecasts, which seem to be a permanent lagging indicator. Consumer spending is exceeding pre-pandemic levels, credit quality is soaring, and credit card spending is through the roof. Buy (JPM), (BAC), and (V) on dips.
US retail sales come rocketing back, with customers spending those stimulus checks hand over fist. The 0.6% gain in June came on the heels of a 1.7% drop in May. Vaccinations are driving buyers back into the stores. Electronics stores, clothing, and restaurants saw the biggest increases.
Bank of America lowers US GDP from 7.0% to 6.5%, still the whitest hot numbers in history. 2022 is looking like 5.5%, still double the pre-pandemic rate. Personally, I think these numbers are low, and the stock market thinks so too. Keep buying dips in the good names.
Investors pouring out of bonds and into stocks, according to a survey of mutual fund flows last week. I couldn’t agree more. The Fed can’t keep holding on to zero rates forever, and when their turn comes, its will be brutal.
My Ten Year View
When we come out the other side of pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The American coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 240,000 here we come!
My Mad Hedge Global Trading Dispatch profit reached a 1.84% gain so far in July. My 2021 year-to-date performance appreciated to 70.44%. The Dow Average is up 13.35% so far in 2021.
I spent the week running my two last positions, a long in (JPM) and a short in the (TLT) into the July 16 options expiration. Both expired at max profit. I then immediately strapped on a new short in the (SPY), my first since the pandemic began. That leaves me 90% in cash. I’m keeping positions small as long as we are at extreme overbought conditions.
That brings my 11-year total return to 492.99%, some 2.00 times the S&P 500 (SPX) over the same period. My 12-year average annualized return now stands at an unbelievable 42.56%, easily the highest in the industry.
My trailing one-year return exploded to positively eye-popping 108.94%. I truly have to pinch myself when I see numbers like this. I bet many of you are making the biggest money of your long lives.
We need to keep an eye on the number of US Coronavirus cases at 34.1 million and deaths topping 609,000, which you can find here.
The coming week will be a weak one on the data front.
On Monday, July 19 at 11:00 AM, the NAHB Housing Market Index for July is out. Johnson & Johnson (JNJ) and Verizon (VZ) report.
On Tuesday, July 20, at 8:30 AM, Housing Starts for June are printed. Haliburton (HAL) and United Airlines (UAL) report.
On Wednesday, July 21 at 11:30 AM, EIA Crude Oil Stocks are announced. Netgear (NTGR) reports.
On Thursday, July 22 at 8:30 AM, we learn the latest Weekly Jobless Claims. At 11:00 AM, we get Existing Home Sales for June. American Airlines (AAL) and Biogen (BIIB) report.
On Friday, July 23 at 2:00 PM, we learn the Baker-Hughes Rig Count. American Express (AXP) reports.
As for me, we all had to rearrange our budgets in the last year, dumping old spending habits and adopting new ones.
As for me, my electric scooter bill with Lime (click here for the site) has gone through the roof. They neatly fill the gap between walking and Uber in major tourist areas like Long Beach.
It’s a lot of fun, provided you don’t kill yourself on your first ride. The scooters go fast, some 20 miles an hour. Each one has a 13-mile range. When you’re done, you just drop it, take its picture, and then Lime picks it up and recharges it overnight.
I think I broke all seven of their mandatory rules (no driving on sidewalks, driving without a helmet, drinking while driving….). Hey, the great thing about being my age is that there are no long-term consequences to anything.
Stay healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Check Out My New Wheels
Here is the Problem
Global Market Comments
July 16, 2021
Fiat Lux
Featured Trade:
(JULY 14 BIWEEKLY STRATEGY WEBINAR Q&A),
(JPM), (MS), (GS), (TLT), (TBT), (CRSP), (AAPL), (TSLA), (QS), (SPCE), (AMZN),
(FCX), (FEYE), (PANW), (HACK)
Below please find subscribers’ Q&A for the July 14 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Lake Tahoe, NV.
Q: Which banks are best?
A: JP Morgan (JPM), Morgan Stanley (MS), and Goldman Sachs (GS). That's the trifecta. If you look at the charts, the brokers Morgan Stanley and Goldman Sachs are overwhelmingly outperforming everyone else. They will continue to do that, as the bull market in stocks is a money machine for them.
Q: What has caused interest rates to continue to drop so much in the last 1-2 months? Why are you confident you will see them rise from here on?
A: The reason they've dropped so much is there is a bond shortage (TLT). There is more demand for bonds and reach for yield around the world than the US government is able to supply. Therefore, the US government should do more borrowing and issue more bonds. That's what the market is telling them to do. When your 10-year yield goes to 1.2%, the message is that you're not borrowing enough, not that you're borrowing too much. How does this end? Eventually, the sheer volume of bond issuance will reach global demand. And we will also see some inflation, not much but some, and that will be enough to take us back up to the 1.75% yield that we had in March. I think we will see that by the end of the year, especially if the Fed tapers and cuts back at least the mortgage bond purchases, which is $40 billion/month. Why subsidize housing when there are nationwide bidding wars?
Q: Are you positive on CRISPR Technologies (CRSP)?
A: Yes, but it is a long-term play and I recommend the LEAPS on those that go out to 2023. That said, we did just have a big rally up to the 140s from the 100s so that 40% was pretty good. But that's the way these small biotech’s trade you get long periods of no movement and then sudden explosive moves to the upside when they make a breakthrough.
Q: Are we going to see inflation?
A: We will have some inflation; but the major component of inflation now is used cars and rental cars, which are up 100% year on year, and that is totally unsustainable. That means a year from now, increase in used car prices will be zero, and will actually be a big drag on inflation. So that's what the Fed means when they say that any inflation will be temporary as we go through these tremendous YOY comparisons when demand goes from zero to near infinite. And that's happening in many sectors of the economy right now. You never get rich betting against a 40-year trend, and for inflation that is down.
Q: Has the market peaked for the short term?
A: My bet on a short-term peak is the last week of July when all the big tech companies report. And then we classically get reasonable selloffs after that—buy the rumor, sell the news. That's our next entry point for long positions in this market. Since the presidential election, the index has been unable to drop more than 4.8% as there is so much money on the sidelines trying to get in.
Q: Should I be max long ProShares Ultra Short Treasury Bond Fund (TBT) LEAPS?
A: Just make sure they’re long-dated LEAPS—at least six months to a year or longer. That way you have plenty of time for them to work. The current return on the (TBT) June 2022 $17-$19 vertical bull call LEAPS at $0.75 is 166%.
Q: What’s the chance of Biden’s budget passing?
A: 100%. It’s just a question of how much will be in there—we’re at $597 billion on infrastructure and $3.5 trillion for the rest of spending. That gives you a $4.1 trillion budget for the next fiscal year starting October 30, which is the biggest in history and biggest since WWII on an inflation-adjusted basis. That will go through and keep the stock market percolating for several more years. Dow $240,000 here we come!
Q: Would you sell calls against Apple (AAPL) today?
A: I would, I would do something like the August $165’s. Even then, it’s a high-risk trade because Apple has been on such a parabolic move for the last 2 months. So do that at your own risk; notice I’m not putting out trade alerts telling you to short Apple in any way shape or form. My target for the yearend is $200.
Q: Will Tesla (TSLA) use QuantumScape (QS) batteries to make their own solid-state ones?
A: Tesla will make their own solid-state batteries They are far ahead of QuantumScape with their own technology and eventually, they will wipe them out. So, I am not recommending QuantumScape—they are 10 years behind Tesla. Sorry, I didn’t make that clearer in my research piece.
Q: When do you expect the 7% drop in the market?
A: August/September is usually when the market bottoms. Let’s see if we get it this time. Predicting down moves has been somewhat of a fool's errand in a market when you have infinite QE, infinite fiscal stimulus, infinite monetary stimulus, and the highest economic growth in history. And again, I am upgrading my 10-year forecast for the market; I’m not looking for a Dow 120,000 by 2030 anymore, I’m looking for a Dow 240,000, and when you’re still at only a measly 34,933, you don’t get many 7% drops. In fact, we’ve had none since the election.
Q: Could Tesla make an all-time high by the end of the year?
A: Yes, especially if they make progress on the solid-state batteries. Tesla (TSLA) tends to have sideways periods that can last years and then explosive moves to the upside. It almost trades like a biotech stock.
Q: Is Virgin Galactic (SPCE) a buy here off the back of their successful rocket launch last week?
A: No, any business dependent on retail sales of tickets at $250,000 each has absolutely no chance of ever making a profit in its life. As much as I like Richard Branson, who I used to fly with, the fact is that this business will never make money. It's more of a public relations vehicle for all of the hundreds of Virgin Brands. They’ll never get the cost low enough to make this economic for the average person. Spaceships aren’t cheap, and they don’t sell them at Costco. In fact, you notice that after the rocket launch, the stock dropped 20%. However, if they do drop the price to $100,000 even I might buy a ticket but only if they let me fly the thing.
Q: What is your favorite FANG stock other than Apple?
A: It is Amazon (AMZN). I think it hits $5,000 by the end of the year. If they try to break it up it’ll be worth $10,000, which it will get to eventually (in like 5 years) anyway. They just have absolutely everything working there.
Q: Why is Alaska the worst state to do business in?
A: Well, first of all, it’s only habitable for like 6 months of the year, and otherwise it’s too cold and heating bills are enormous. Also, nothing is produced in Alaska besides tourism and oil, which is subject to enormous volatility. They actually canceled the oil payouts for Alaskan citizens last year. Anything else you want to do in Alaska requires transportation costs from the US. So essentially there are 49 other better states to bring business ideas to.
Q: Will Amazon ever split their stock?
A: No, there's no reason or net benefit to it. Jeff Bezos has never been prone to financial engineering because he never needed to. Natural earnings growth was always so enormous he didn’t need to bother with any of these side games to jack the stock price. So, I would say “no” on a stock split.
Q: In a two-year LEAPS, you’re taking a long position, yes?
A: When you do a LEAPS spread, you're buying a 1-2 year call and you’re selling short a 1-2 year call against it. That cuts your price by ⅔ and increases your leverage by a factor of 3 and is a far greater risk/reward than just buying the 2-year call outright. If you want to learn more about LEAPS, send us an email about the Mad Hedge Concierge Service that is by application only.
Q: When is the recording up?
A: About two hours.
Q: Do you still love Freeport McMoRan (FCX)?
A: Yes, it’s taking the inflation vacation right now with the rest of the commodities, but I expect it to come roaring back by the end of the year. Electric vehicles need 200 pounds of copper compared to only 20 pounds for internal combustion cars.
Q: Thoughts on FireEye (FEYE)?
A: Yes, we love FireEye along with the rest of the cybersecurity plays, so buy on the dips. Hacking is a growth market and will never go out of fashion. BUY (PANW) and (HACK) on dips.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH or TECHNOLOGY LETTER, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
