(IBB) - Page 3 - Mad Hedge Fund Trader

October 30 Biweekly Strategy Webinar Q&A

Below please find subscribers’ Q&A for the Mad Hedge Fund Trader October 30 Global Strategy Webinar broadcast from Silicon Valley, CA with my guest and co-host Bill Davis of the Mad Day Trader. Keep those questions coming!

Q: Would you buy Square (SQ) around here?

A: I don’t want to buy anything around here—that’s why I’m 90% cash. Would I buy Square on a market selloff? Absolutely, it's one of our favorite fintech stocks for the long term. The fintech stocks are eating the lunch of the legacy banks at an accelerating rate.

Q: What's the best yield play currently, now that bonds have gone so high?

A: High-quality REITs—especially cell tower REITs. We’re going to get a significant increase in the number of cell towers, thanks to 5G, and there are REITs specifically dedicated to cell phone towers. An example is Crown Castle (CCI), which has a generous 3.45% dividend yield. The worst REITs are the mall-based like Simon Property Group (SPG).

Q: PG&E (PGE) has just had a huge selloff of 50%. Should I buy it now or is it a potential zero?

A: I wouldn’t touch PG&E at all—They’re already in bankruptcy, and they are now accepting responsibility for starting another eight fires this week, including the big Kincaid fires. You could have the state government take over the company and wipe out all the shareholders— the liabilities are just growing by the second, so I would turn my attention elsewhere. Don’t reach for new ways to get in trouble.

Q: Regarding Boeing (BA), it looks like you caught the bottom on the last dip—should I buy it here or wait for another dip?

A: Wait for another dip. The company seems to have an endless supply of bad news. That said, if we visit $325 a share one more time, I would buy it again. We caught about a $10 dollar move in Boeing to the upside. Keep buying the dips. The bad news story on this is almost over.

Q: Do you think the earnings season will be better than expected? If so, which sectors do you think will outperform?

A: It’s always better than expected because they always downgrade right before earnings, so everything is a surprise to the upside. Some 80% of all stocks surprise to the upside every quarter. And what would I be buying on dips? Big Tech. Especially things like Apple (AAPL), Facebook (FB), Alphabet (GOOGL), and Microsoft (MSFT) —that is where the only reliable longer-term growth is in the economy. If you want to buy cheap companies on dips, go for Biotech (IBB) and Health Care (XLV), which have gone up almost every day since we launched the Biotech letter a month ago. To subscribe to the Mad Hedge Biotech and Healthcare Letter, please click here.

Q: What does it mean that the Chile APEC summit is cancelled? What is Trump going to do now for signing on the trade deal?

A: There may not be a trade deal. It's another postponement and could be another trigger for a long-overdue selloff in the market. We've basically been going up nonstop now for 2½ months, and almost everyone's market timing indicators are saying extreme overbought territory here, including ours.

Q: Will there be a replay of this webinar posted?

A: Yes, we always post these on the website a couple of hours after it airs. Some 95% of our viewers watch the recordings, especially those overseas in weird time zones like Australia and India. You need to be logged in to access it. Just go to www.madhedgefundtrader.com, log in, go to My Account, then Global Trading Dispatch, then click on the Webinars button. It’s there in all its glory.

Q: Does Invesco DB US Dollar Index Bullish Fund ETF (UUP) make sense (the dollar basket)?

A: No, I'm staying out of the currency market because there are no clear trends right now and there are much clearer trends in other asset classes, like stock and bonds.

Q: How do you see General Electric (GE)?

A: There are a lot of people shouting accounting fraud like Harry Markopolos, the whistleblower on Bernie Madoff. Sure, they had a good today, up a buck, but their problems are going to take a long time to fix. So, don't think of this as a trading vehicle, but rather a long-term investment vehicle.

Q: Could the Saudi Aramco IPO push the price of oil up?

A: You can bet they're going to do everything humanly possible to get the price of oil (USO) up and to get this IPO off their hands—that's why you shouldn't buy the IPO. The Saudis are desperate to get out of the oil business before prices go to zero and are pouring money into alternative energy and technology through Masayoshi Son’s Vision Fund. When you have the chief supplier of oil rigging the price, you don’t want to be anywhere near the distributor and that’s Saudi Aramco.

Q: What about selling the (SPG) (Simon Property) REIT?

A: It’s kind of too late to sell, but what you might think of doing is selling short just one deep out-of-the-money put, just to bring in a small amount of income. These things don’t crash, they grind down; so, it could be a good naked put shorting situation, but only on a very small scale. If you want to play REITs on the long side, look at the Vanguard Real Estate ETF (VNQ), which pays a handy 3.12% dividend. Guess what its largest holdings are? 5G cell tower REITs.

Q: Is General Motors (GM) a buy on the union detent?

A: Only for a trade, but not much; the auto industry is the last thing you want to buy into going into a recession, even just a growth recession.

Q: Have we topped out on Apple (AAPL) for the year at $250?

A: If we did, it’s probably just short term. Remember their 5G phone is coming out next September and I expect the stock to go to $300 dollars just off of that. Any dips in Apple won’t last more than a month or two.

Q: Could we get another leg up for the end of the year?

A: Yes, not much, maybe another 5% from here, and I wouldn't do that until we get another 5% drop in the market first which should happen sometime in November. If that happens, then you’ll have a shot at making another 10% by the end of the year, which is exactly what I plan on doing for myself. That would take our 2019 performance from 50% to 60%.

Q: Is the Fed’s printing infinite money going to lead to runaway inflation crashing the value of the dollar?

A: Yes, but it may take us a couple of years to get to that point. So far, no sign of inflation, except inflation of things you want to buy, like healthcare, a college education, and so on. For anything you want to sell, like your labor or service, the prices are collapsing. That’s the new inflation, the type that screws you the most.

Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

November 1, 2019/by Mad Hedge Fund Trader

October 28, 2019

Diary, Newsletter, Summary

Global Market Comments
October 28, 2019
Fiat Lux

Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or DON’T FIGHT THE FED),
(BIIB), (IBB), (TSLA), (VIX), (BA), (AMZN), (AAPL), (MSFT), (GM)

October 28, 2019/by Mad Hedge Fund Trader

The Market Outlook for the Week Ahead, or Don’t Fight the Fed

Diary, Newsletter

Don’t fight the Fed.

That was the overwhelming message of the market last week as it ground up to a new intraday all-time high. The economy may be going to hell in a handbasket. But as long as the Fed keeps lowering interest rates, stocks will go up, kicking and screaming all the way. It’s that simple.

America’s central bank will get its next chance to cut rates on Wednesday at 2:00 PM from the current overnight rate of 2.00%.

The big question is: Will the curse of the Fed continue? For the last two times the Fed lowered interest rates, substantial stock market selloffs ensued, the last one reaching a 7.5% haircut. We will know shortly.

The Mad Hedge Lake Tahoe Conference held last weekend was a blowout success, with a great time had by all. The weather couldn’t have been more perfect, with the lake waters calm and crystal clear. A day of market insights were delivered by me and Mad Hedge Technology Letter author Arthur Henry.

The only drawback was that several guests were prevented from going home by mandatory evacuations of several Bay Area cities and the closure of Interstate 80 going back to San Francisco. A handful (including me), had no electric power to return to when they got home.

I’ll share with you the most disturbing chart of the entire day showing the S&P 500 (SPY) has been grinding up to new highs, earnings forecasts have been absolutely falling off a cliff. Clearly, with the Volatility Index (VIX) back down to the lowly $12 handle, this is a market that is cruising for a bruising….someday.

Brexit failed again, taking the quagmire into its fourth year. An EC deal is postponed until January 31, but they’re really not interested at all. British pounds collapsing, creating a new “RISK OFF” leg worldwide. Prime minister Johnson has lost 5 consecutive parliamentary votes, an all-time record. When will he get the message?

US Capital Investment has ground to a halt, with business fixed investment down 1% YOY. No one knows where to put their money, inside the US or not, so they're doing nothing until it is sorted out. Call me when its over.

Biogen (BIIB) exploded to the upside on its FDA application for its new Alzheimer’s drug. Written off for dead six months ago, the company secretly kept working on Aducanumab until today’s blockbuster announcement. The drug reverses amyloid plaques thought responsible for Alzheimer’s. The stock is up an incredible 38% and has even dragged up the biotech ETF (IBB) 3%. Buy (BIIB) on dips.

Boeing soared on accelerated production timeline for 2020. Good thing I bought it just recently. The stock had been severely oversold on a $45 dive in two days. Buy (BA) on the dips.

The trade war is back in business with the Chinese demanding a total end to tariffs before any big ag buys. The rumors knocked stocks back on their heels. The Middle Kingdom also takes issue with recent Pence comments about basketball. Trump is definitely cornered. The trade war pain has gone global, with Europe taking the biggest hit. Some 40% of Germany’s GDP comes from exports. Growth will be on the skids for the next two years, even if a deal is done tomorrow.

Tesla shocked, bringing in a profit for only the third time in company history, and causing the stock to soar $55. The 100,000-unit production target within yearend looks within reach. Most importantly, they opened up a new supercharger station in Incline Village, Nevada! Tesla is now America’s most valuable car maker, beating (GM). The ideological Exxon-financed shorts have been destroyed once and for all. Buy (TSLA) on dips. There’s a ten bagger in this one.

Amazon put out a gloomy Christmas forecast on the back of a disappointing earnings report, crushing the shares by 7%. Looks like the trade war might cause a recession next year. Q3 revenues were great, up 24% to an eye-popping $70 billion. Good thing I took profits on the last option expiration. Poor Jeff Bezos, the abandoned son of an alcoholic circus clown, dropped $7 billion in net worth on Thursday. Buy (AMZN) on the dips.

The safest stock in the market, Microsoft, says it’s all about the cloud. Azure revenues grew a stunning 59% in Q3. (MSFT) is now up 37% on the year. Keep buying every dip, if we ever get another one.

Apple stock soared to new all-time high, taking the market cap just short of $1.1 trillion. iPhones are now less than 50% of total sales. The company is firing on all cylinders. My target is $200. Buy (AAPL) on dips.

Existing Home Sales dropped, down 2.2% in September to 5.38 million units. It’s shocking given the incredibly low level of interest rates. A shortage of supply?

This was a week for the Mad Hedge Trader Alert Service to stay level at an all-time high. With only one position left in Boeing (BA), not much else was going to happen.

My Global Trading Dispatch reached new pinnacle of +349.47% for the past ten years and my 2019 year-to-date accelerated to +48.42%. The notoriously volatile month of October stands at a blockbuster +11.91%. My ten-year average annualized profit held steady at +35.24%.

With my Mad Hedge Market Timing Index sitting around the neutral 62 level, it is too close to neutral to do anything dramatic.

The coming week is pretty non eventful of the data front. Maybe the stock market will be non-eventful as well.

On Monday, October 28 at 8:30 AM, the September Chicago Fed National Activity Index is published. Alphabet (GOOGL), and AT&T (T) report.

On Tuesday, October 29 at 9:00 AM, we get a new S&P Case Shiller National Home Price Index for August. Amgen (AMGN) and Pfizer (P) report.

On Wednesday, October 30, at 8:30 AM, the first read on US Q3 GDP is announced. At 10:30 AM, EIA Energy Stocks are published. Then at 2:00 PM, we obtain the FOMC interest rate decision. Apple (AAPL) and Facebook (FB) report.

On Thursday, October 31 at 8:30 AM, Weekly Jobless Claims are out. US Steel (X) reports.

On Friday, November 1 at 8:30 AM, the October Nonfarm Payroll Report is released. AbbVie (ABBV) and ExxonMobile (XOM) report.

The Baker Hughes Rig Count follows at 2:00 PM.

As for me, I’ll be driving back home from Lake Tahoe. I wonder if I’ll make it.

Good luck and good trading.

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

October 28, 2019/by Mad Hedge Fund Trader

October 23, 2019

Diary, Newsletter, Summary

Global Market Comments
October 23, 2019
Fiat Lux

Featured Trade:

(BIOGEN’S HUGE DISCOVERY),
(BIIB), (IBB), (NOVN), (ROG),
(PLEASE USE MY FREE DATABASE SEARCH)

October 23, 2019/by Mad Hedge Fund Trader

Biogen’s Huge Discovery

Diary, Newsletter, Research

It is the sort of development that most Biotech investors only dream about. It also shows what’s possible in biotech investing, which is occurring with increasing frequency.

Biogen shares (BIIB) have exploded to the upside on its FDA application for its new Alzheimer’s drug. Written off for dead six months ago, the company secretly kept working on Aducanumab until today’s blockbuster announcement.

The drug reverses amyloid plaques thought responsible for Alzheimer’s. This could eventually cure tens of millions of Alzheimer’s sufferers and maybe even myself someday. The stock is up an incredible 40% today and has even dragged up the biotech ETF (IBB) an impressive 3%.

Way back in March, we saw a huge flop for Biogen (BIIB) as the biotech company supposedly shut down research for Alzheimer's treatment: aducanumab (BIIB037) on the failure of a stage 3 trial. This announcement was a curveball for its shareholders as the drug was touted as a potential groundbreaking miracle treatment with sales pegged at the tens of billions.

Biogen has for some time made Alzheimer's experiments the epicenter of their new drug pipeline. It also offers a multiple sclerosis treatment called Tecfidera.

Generic competition has been hot on its heels and shareholders can expect a number of patent challenges in the next few years. This would undoubtedly lead to a fall in sales soon especially with the recent crackdown on the skyrocketing prices of meds.

To combat these looming challenges, Biogen has shifted its focus on Spinraza which has been beating expectations since its release three years ago. Set to exceed the $2 billion in sales mark, this spinal muscular atrophy drug has been dominating the rare disease market for quite some time.

This reign might not last long though as Novartis AG (NOVN) and Roche Holding AG (ROG) are gunning to release their own version of the drug by 2020 or 2021. This means Biogen would once again see another blockbuster drug go flat.

How does Biogen plan to deal with the backlash?

If history is any indication, then investors can expect Biogen to start looking into acquiring medium-size biopharma firms as soon as possible. Since the company closed 2018 with $3.5 billion in cash along with $5.3 billion in its free cash flow, a buyout is a viable solution at the moment. However, the biotech giant can only afford one.

The medium-sized biopharma firms speculated to be under consideration include ACADIA Pharmaceuticals, Biohaven Pharmaceutical Holding Company, and Alder Biopharmaceuticals. However, Neurocrania Biosciences and Sage Therapeutics are said to be potential frontrunners for a Biogen takeover.

While a lot of investors would understandably be wary of another risk from Biogen, Neurocrania and Sage could be promising targets for the biopharma giant.

Neurocrania has been raking in huge profits from their blockbuster tardive dyskinesia drug Ingrezza since gaining FDA approval in 2017. In fact, annual sales of this product has reached $410 million in 2018.

Aside from their success with Ingrezza, Neurocrine has taken the first step towards gene therapy via their collaboration with Voyager Therapeutics. Just this month, Neurocrine has invested $165 million to commence the process of coming up with a treatment drug for Parkinson's disease.

Another good option is Sage as the company also focuses on neurology, which means their goals could align with Biogen's. The recent approval of Zulresso makes Sage the first company to provide treatment for severe postpartum depression.

While the Alzheimer's debacle can be overwhelming, Biogen's fundamentals remain attractive. In terms of revenue estimates, the company is anticipated to report a 2.2% increase this year or up to $13.75 billion. Meanwhile, growth for earnings per share is projected to be at 9.4% or up to $28.67 from its current EPS of $21.58.

October 23, 2019/by Mad Hedge Fund Trader

June 8, 2018

Diary, Newsletter

Global Market Comments
June 8, 2018
Fiat Lux

Featured Trade:
(LAST CHANCE TO ATTEND THE TUESDAY, JUNE 12, 2018,
NEW ORLEANS, LA, GLOBAL STRATEGY LUNCHEON),
(JUNE 6 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (TTT), (TBT), (AMLP), (IBB),
(SPY), (SDS), (SH), (GS), (BAC)

June 8, 2018/by MHFTR

June 6 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers' Q&A for the Mad Hedge Fund Trader June 6 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: What does the coming Kim Jong-un summit with North Korea mean for the market?

A: It means absolutely nothing for the market. The entire North Korean threat has been wildly exaggerated as a distraction from the chaos in Washington. So, you may get a one- or two-day rally if it's successful. If it's not expect a one- or two-day sell-off, but no more. Whatever North Korea agrees to, we will not see any follow through; they won't buy the Libyan model of denuclearizing North Korea for fear of their leader meeting the same end as Libya's Khadafy (i.e. being hunted and shot in a storm drain.) North Korea will never give up its nuclear weapons.

Q: What do you do at market tops?

A: Well, hopefully if you're reading this letter you're long up the wazoo, so you sell everything you have. Then, wait for a double top in the market (which is clear as day) and falling volume. You start looking at things like the ProShares Ultra Short S&P 500 ETF (SDS). That's the -2X version (there's the (SH), which is the -1X short S&P 500) and you just start buying outright puts on a lot of different things, particularly the overbought sectors of the market, which are generally pretty obvious. It's also good to look for a stock that has made a new high and has negative money flow.

Q: Why are the banks doing so poorly?

A: I believe they fully discounted all of this year's interest rate hikes last year when the stocks nearly doubled. We just talked about a technical setup; Goldman Sachs (GS), Bank of America (BAC), and other stocks had those bear setups. At this point, I believe they're coming down to a place of support and probably getting a decent dead cat bounce. They've had their sell-off, they had their run, and it was triggered by one of the best technical short setup patterns you'll see.

Q: Would you buy financials here?

A: Absolutely not. It's unclear why they're doing so badly, but I would not buy it with anyone's money. Their earnings growth is nowhere what you see with technology stocks.

Q: Is crude oil poised for the next leg up?

A: No, it's not. The oil game may be over if they rush to overproduce once again. It's clearly been artificially boosted to get the Saudi Aramco IPO done. After the end of the quota system, you can get oil back down to the $50s easily. I don't want to touch it here; if anything, I'm more inclined to buy it if we get down to the $50s, which would essentially be the February low.

Q: Is the U.S. dollar overbought here?

A: Yes. The dollar has had a great run all year, which is evident from the rising interest rates. It's done a 10% move up in a fairly short time, which is a lot for the foreign exchange market. It's way overbought; you could easily get a round of profit taking in the dollar, either going into or right after the next Fed interest rate hike in two weeks. I'm staying away from the currencies. There are too many better fish to fry in the equities.

Q: Can you expect Tech to keep going up after this next run?

A: Yes, I expect us to break out to a new high and give back some ground in a retest of the old high. The old high will then hold and then I expect a sort of slow grind up. Tech could well go up for the rest of 2018.

Q: If the S&P 500 is in a trading range, would you sell any rally?

A: Yes, but I'm going to wait for the rally to come to me; I'm not going to reach for any marginal trades. When the (SPY) gets to $280, I'll be looking very closely at the $285-$290 vertical bear put spread one or two months out. So, that peak should hold for the summer and you can make a good 25%-30% on that kind of spread.

Q: Would you buy Biotech here?

A: Yes, the chart setup here is looking very positive, and it's natural for people to rotate out of Tech to Biotech because the earnings growth is so dramatic. That's why I sent out a Trade Alert to buy the NASDAQ Biotechnology ETF (IBB) yesterday. They have been unfairly held back by fears of drug pricing regulation, which has nothing to do with biotech, but it affects their share prices anyway. But so far, it has been all talk from Trump and no action. I think he's busy with North Korea and the trade wars anyway.

Q: My custodian won't let me sell short the United States Treasury Bond Fund (TLT) so I bought the ProShares Ultra Pro Short 20+ Treasury Fund (TTT). Is that alright?

A: You definitely want to be short the Treasury bonds market for the next several years going forward, so you have the right idea. If the 10-year U.S. Treasury bond yield jumps from 2.95% today to 4% in a year as I expect, that takes the (TLT) down from $119 to $97. If you can't make money shorting bonds in that environment you should consider another line of work.

The problem with these 3X leveraged funds is that the cost of carry is very high. In the case of the (TTT) it is three times the 3.0% 10-year bond coupon you are shorting plus a 1% management fee for a total of 10% a year. For that reason, the 3X funds are really only good for day trading. You run into a similar problem with the 2X (TBT). This is why I use non-leveraged put spreads or outright puts for this asset class.

Q: Why are we seeing strength in the Alerian master limited partnership (AMLP) when oil prices are falling, and interest rates are rising? Shouldn't it be going the other way?

A: How about more buyers than sellers? There are so many retirees out there desperate for yield they will take on inordinate amounts of risk to get it. With an 8.0% dividend yield you always have an underlying bid for this ETF. That's why we have been recommending this since April. An 8% dividend can cover up a lot of sins, even when interest rates are rising and oil prices are falling. Also, the U.S. is infrastructure constrained now that production is approaching 11 million barrels a day. That is great for the kind of energy projects (AMLP) finances.

Q: What's the next support price for NVIDIA (NVDA)?

A: With the stock going straight up there is little need for support. Our 2018 target is $300. If you recall, we have been recommending this cutting-edge GPU manufacturer since $68, and people have made fortunes. Those who bought long dated deep out-of-the-money leaps $100 out made 1,000% on this Trade Alert 18 months ago. That said, the 200-day moving average at $213 looks rock solid.

Good luck and good trading to all.

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

June 8, 2018/by MHFTR

Biotech and Health Care Stocks to Buy at the Bottom

Diary, Newsletter, Research

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: https://www.spdrs.com/product/fund.seam?ticker=XLV.

The other classic play in this area is the Biotech iShares ETF (IBB) issued by BlackRock (click their link: https://www.ishares.com/us/products/239699/ishares-nasdaq-biotechnology-etf ).

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?

September 2, 2016/by Mad Hedge Fund Trader

Celgene Will Make a Comeback

Diary, Newsletter, Research

It was known as the ?Tweet that sank Wall Street.?

When presidential candidate Hillary Clinton attacked the drug industry last summer, the entire pharmaceutical and health care industries were taken out to the woodshed and beaten like the proverbial red headed stepchild (my apologies in advance to red heads).

One of the principal victims was cancer drug maker Celgene (CELG), which dropped some 24.6% from top to bottom.

Never mind that Clinton is unlikely to get what she wants, even if she wins the election.

For that, you need a congress in your pocket, a probability that is at least 5-9 years away.

That is, unless Donald Trump continues his campaign for the Republican nomination.

However, in this nervous, twitchy, gun shy trading environment, it is shoot first and ask questions latter. So Celgene shares sank, whether it was warranted or not.

Celgene is really all about one drug, Revlimid, a blood cancer treatment that accounts for 75% of its sales. Last year, the company sold $7.6 billion worth of this complex molecule.

To wean itself off of its overdependence on a single drug it has embarked on a number of aggressive initiatives.

Since the spring of 2012, it has increased the use of its Abrazane drug to treat late stage pancreatic cancer, the disease that killed Steve Jobs. It has won regulatory approval for the psoriasis drug Otezla.

It has also pursued the mergers and acquisitions road to growth, picking up some two-dozen small drug makers in recent years. The $7.2 billion purchase of Receptos was a big one, which manufactures Ozanimod, a drug used to treat ulcerative colitis and multiple sclerosis.

Celgene also picked up Juno Therapeutics for $1 billion a few months ago, a maker of innovative cellular immunotherapies.

If this ambitious strategy works, Celgene?s net earnings should continue to grow at a 25% annual rate for the next five years. That means the shares should triple by 2020.

This is why the company?s shares command a lofty multiple of 18 times 2016 earnings, the higher end of the range for this industry.

So the next time Hillary opens her mouth, use the dip in (CELG) shares to load the boat. It would also be helpful if stock investors shift their focus from value back to growth.

Looks Like a ?BUY? To Me

Loose Lips Sink Ships

October 29, 2015/by Mad Hedge Fund Trader

How Far Will Biotech Run?

Diary, Newsletter, Research

Long-term readers of this letter have prospered mightily from my addiction to biotech stocks in recent years, one of the most reliably top performing sectors in the stock market.

But have we visited the well one time too many times? Is biotech turning into a bubble that will eventually deliver the same grievous outcome of other past bubbles?

Not yet.

Still, one has to ask the question. No less a figure than Federal Reserve governor Janet Yellen has indicated that she thought valuations in the biotech sector were getting ?substantially stretched.? The Fed doesn?t single out stocks for commentary very often.

Biotech certainly has been a money-spinner for followers of my top performing Trade Alert service, which delivered a 30.5% profit in 2014.

Readers made three round trips in hepatitis C drug developer Gilead Sciences (GILD) in the past four months, adding 5.77% to the value of their portfolios. I believe the company?s blockbuster drug will become the most profitable in history. So do a lot of others.

Longer-term investors bought the Biotech iShares ETF (IBB) on my advice, which gained an impressive 45% last year, and is still rising.

However, biotech has long been a hedge fund favorite.

That means many shareholders are only dating these stocks and are not married to them. The hot money regularly flows in and out, giving the sector more than double the volatility of the main market. A 10% correction in any other stock is worth at least 25% in biotech.

This also makes biotech stocks great to buy on a dip. My last foray into (GILD) occurred after cautious guidance took the shares down a heart stopping 10% in a single day.

This is a great example of how unusually sensitive biotech stocks are to headline risk. I?ve ridden stocks to tremendous heights, watching them pour billions into a single treatment, only to see them crash and burn on failed stage three trials.

That is just the nature of their business. It?s all about all or nothing bets.

It?s just a matter of time before one of the major companies gets stuck with a hickey like this, flushing billions down the drain. That could herald a generalized sector selloff that could last months, or even years.

Biotech is a high-risk sector that should only be held within a well diversified portfolio. You may notice that in the Mad Hedge Fund Trader?s model trading portfolio I never have more than 10% in biotech at any given time. I figure I could handle a total blow up and lose the whole 10% and still stay in business.

When I speak at conferences, strategy luncheons and on TV, I tell listeners of my lazy man?s guide to long-term investment. Only follow three sectors, technology, biotech and energy, and ignore the other 97. You?ll save yourself a lot of time reading pointless research.

Biotech currently accounts for a mere 1% of US GDP. It is on its way to 20%, about where technology is today. That means that a disproportionately large share of earnings growth will spring from biotech over the coming decades.

One way to protect yourself is to stick with the big caps, which are undervalued relative to the sector, and are expected to haul in 20% earnings growth this year.

Many smaller companies prices are assuming a total certainty of the success of their drugs. The reality is that this only happens about half the time.

If you do go with small caps, I would take a venture capital approach. Buy a dozen with the expectation that many will go under, a couple do OK, and one goes through the roof. Never put all your eggs in one basket.

It also helps that you have someone with a scientific background making your picks, like me. Because drug companies promise such amazing results, like curing cancer, the sector has always been prone to hype and over promotion. I never met I biotech CEO who didn?t believe his company was about to deliver the next panacea, taking his shares up tenfold.

One plus for biotech is that it has unusually strong patent protection, which usually extends out 20 years for new products. There are not a lot of Chinese companies that can imitate their drugs.

That means earnings can be predicted far into the future, and are largely immune from the economic cycle. If you?re sick, you want to get cured regardless of whether the GDP is growing or shrinking, or whether interest rates are low or high.

Make sure that your investments have plenty of new developments in the pipeline. Expiring patents on past winners with no replacements can spell certain death for a stock price.

Publicly listed drug companies are now venturing into research fields that were only science fiction when I was in the lab 45 years go. ?Gene editing? whereby genes can be repaired, edited and then turned on and off at will, is now becoming a burgeoning new science.

It promises to cure the whole range of human maladies, including heart disease, cancer, obesity and a whole range of degenerative diseases (including some of mine).

Expect to hear a lot more about TALENs (transcription activator-like effector nucleases) and CRISPR (clustered regular interspaced short palindromic repeats). You heard it here first.

What is truly fascinating is that hybrid computer science/biochemical scientists are now taking algorithms developed y the National Security Agency hackers and using them to decode human DNA. (I hope I?m not speaking too much out of school here.)

Gene editing is the natural outcome of the discovery of recombinant DNA technology developed during the 1970?s by Paul Berg, Herbert Boyer, and Stanley Cohen, all early heroes of mine.

Since none were the equity participants of private companies, the initial rewards for the breakthrough were minimal. I remember that one received a new surfboard for his efforts.

Berg went on to found Genentech (GENE) in 1977 and got rich. If I hadn?t gone into the stock market, that is almost certainly where I would have ended up.

How things have changed.

The short answer here is that biotech does have further to run. A lot further.

The rate of innovation of biotechnology is accelerating so fast that it will continue to spew out fantastic investment opportunities for the rest of your lives. So expect to receive many more Trade Alerts in this area in the years to come.

But it is definitely an ?E? ticket ride. So fasten your seatbelt on your path to riches.

As for me, I?m thrilled that I got to live so long to see this stuff happen. At times, it was a close run race.