Global Market Comments
February 13, 2023
Fiat Lux
Featured Trade:
(HOW CRISPR TECHNOLOGY MAY SAVE YOUR LIFE)
(TMO), (OVAS), (CLLS), (SGMO)
CLICK HERE to download today's position sheet.
Global Market Comments
February 13, 2023
Fiat Lux
Featured Trade:
(HOW CRISPR TECHNOLOGY MAY SAVE YOUR LIFE)
(TMO), (OVAS), (CLLS), (SGMO)
CLICK HERE to download today's position sheet.
When I was a DNA scientist at UCLA 50 years ago, the team used to slack off whenever our professor was attending an out-of-town conference.
We used to take pure 200 proof ethanol the university kept on hand “for research purposes,” used it to bring our beer up to 100 proof, and then speculate about the future of our obscure, neglected field.
With the technology at hand, we predicted it would take 3,000 years to fully decode the 3 billion base pairs of a length of human DNA. It then might take another 1,000 years to manipulate our genes to accomplish something useful, like curing cancer.
Maybe it was our “enhanced” beer talking, but we were off on our bold forecast by only 2,970 years.
Dr. Craig Venter published a map of his own DNA in 2001 using sophisticated algorithms to vastly accelerate our own snail-like progress.
The second step, that of functional genetic engineering, took only another decade instead of a millennium.
Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR).
Memorize this term, write it in your diary, and put it on a post-it note on your computer.
It may save your life someday, if not add decades to your life. And it could also make you a multimillionaire if you play your cards right. More on that below.
And I count myself on becoming one of its fortunate users, once the technology goes retail, which should be soon.
If you are another DNA scientist, all I need to tell you is that CRISPR is used to manipulate segments of prokaryotic DNA containing short repetitions of base sequences.
Each repetition is followed by short segments of spacer DNA from previous exposures to a bacteriophage virus or plasmids. The protein fragments that identify and snip these crucial gene segments are called CRISPRs.
If you are the average Joe stock trader, which most of you are, suffice it to say that CRISPR technology is being developed that will enable you to edit your own DNA on a customized basis and then pass the changes on to your future generations.
This will eventually allow you to become immune to all diseases, increase your intelligence, and possibly live forever. Just cut out a bad gene and put in a new one and you and all your future decedents are fixed for good.
You only have to make it five or ten more years at the most with your current vintage DNA, and you can easily live another century.
Oh, and by the way, the company that successfully brings CRISPR products to market in an economical, cost affordable way should see its stock price rise tenfold, if not one hundredfold.
Interested?
Reading up on the research for this piece, one thought kept recurring in my mind: “I can’t believe they are already doing this NOW!”
CRISPR technology was first mooted by a Japanese researcher in 1987. It turns out that the Japanese have a huge head start in developing DNA technologies thanks to a 300-year track record in brewing potent rice wines, like sake.
By 2007, CRISPR went mainstream, attracting funding from a broad range of industries. There was initial heavy interest from the food producers, which sought to make plants and their seeds immune to common crop-destroying diseases.
Their work is partly responsible for the record crop yields that are presently crushing agricultural prices across the board.
As of today, there have been over 3,000 peer-reviewed papers published about CRISPR, each one taking us an infinitesimal step forward.
Currently, there are clinical trials underway employing CRISPR technology to fight multiple forms of cancer, herpes viruses, and advance immunosuppression in human organ transplants.
A legal battle broke out over who owns the rights to CRISPR technology, with Thermo Fisher Scientific (TMO) holdings several key patents.
OvaScience Inc. (OVAS) has started applying CRISPR to human embryos. It didn’t take long to ignite a firestorm of controversy over the prospect of permanently altering the human germline.
Will the wealthy buy their way into genetic superiority and immortality? Or will we accidentally create an organism that could wipe out the human race? Cries of “Social Darwinism” are everywhere.
Or worse, what if the Chinese make their own population immune to bioweapons which they then unleash on the rest of the world?
What if a gene treatment that cures cancer also makes individuals, aggressive, paranoid, or violent?
Talk about letting a genie out of a bottle while also opening Pandora’s Box!
Some leading scientific journals, like Nature and Science, have refused to publish some CRISPR paper over ethical concerns. Unsurprisingly, Chinese scientists have the lead in the most controversial applications.
It’s all way beyond my pay grade.
During my lifetime, I have seen science drop some real clangers.
While in Europe this summer, I saw a Thalidomide baby grown up, now in his fifties. The anti-morning sickness drug developed by a German company produced children with horrifying flippers instead of arms.
Even today, Thalidomide is held out as an example of the need for enhanced drug regulation in the US.
In the early 1950s, one doctor developed the bright idea of giving newborn babies pure oxygen. Everyone who received this treatment went completely blind for life.
And then the CIA developed LSD as a potential weapon, testing it on its own unwitting employees, who developed an unfortunate tendency to jump out of windows from high floors. We all know how that one worked out.
We already know what genes people will choose when given the opportunity to do so, instead of using the ones they inherited, the old-fashioned way.
The unregulated human artificial insemination industry makes available genotypes of every race and nationality in abundance. More than 90% choose tall, blonde, intelligent donors, inadvertently creating a financial windfall from the UC Berkeley Men’s Water Polo Team.
It is an outcome Adolph Hitler would have been proud of, as more than 1 million of these children have been born in the US alone.
Some prolific water polo players have sired more than 100 children, which are now using websites like 23andMe and Ancestry.com to find each other and socialize.
It was not in the game plan.
As is always the case with new, cutting edge, groundbreaking technologies, it is hard to find a rifle shot investment that gives you a pure play.
Many such efforts are subsumed inside huge companies where a specific technology never moves the needle. Starts ups often go bust because they can’t keep up with rapidly evolving technology.
That’s what happened to the 3D printing industry, and I can’t remember how many hard drive companies and PC makers that have gone under.
Editas (EDIT), Caribou Biosciences (CRBU), Intellia (NTLA), CRISPR Therapeutics (CRSP), and Precision Biosciences (DTIL) have all gone public over the last five years. Here is your bite of the apple.
Cellectis (CLLS) is a $1.1 billion French company that is involved in both gene editing and cancer immunotherapy. The Company has improved the quality of crops for the food and agriculture industries.
And here is the really good news.
Many of these shares have dropped 70%-80% in the last year, thanks to the generalized biotech meltdown and the wholesale flight from profitless companies. Crisper alone fell 77% top to bottom, much to my own personal financial destruction.
Many will find the prospect of living another century enticing. I might be interested if I could get back the body I has when I was 25 but still know what I know now.
The possibility of finding a stock that could rise 10 or 100 times is MUCH more interesting.
Putting Another 100 Years on the Clock?
Global Market Comments
April 6, 2022
Fiat Lux
SPECIAL CRISPR TECHNOLOGY ISSUE
Featured Trade:
(HOW CRISPR TECHNOLOGY MAY SAVE YOUR LIFE),
(TMO), (OVAS), (CLLS), (SGMO)
Global Market Comments
November 2, 2018
Fiat Lux
Featured Trade:
(OCTOBER 31 BIWEEKLY STRATEGY WEBINAR Q&A),
(EDIT), (TMO), (OVAS), (GE), (GLD), (AMZN), (SQ), (VIX), (VXX), (GS), (MSFT), (PIN), (UUP), (XRT), (AMD), (TLT)
Below please find subscribers’ Q&A for the Mad Hedge Fund Trader October 31 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: I would like to keep CRISPR stocks as a one or two-year-old, or even longer if it is prudent. What do you think?
A: Yes, there is a CRISPR revolution going on in biotech—I’m extremely bullish on all these stocks, like Editas Medicine (EDIT), Thermo Fisher Scientific (TMO), and Ovascience Inc. (OVAS). If any of these individual companies don’t move forward with their own technology, they will get taken over. The principal asset of these companies is not the patents or the products, it’s the staff, and there is an extreme shortage in CRISPR specialists (and anybody who knows anything about monoclonal antibodies).
Q: Could you explain how to manage LEAPs? For example, the Gold (GLD) and the General Electric (GE) LEAPs. Sit and leave them or trade them short term?
A: You make a lot of money trading long-term LEAPs. Just because you own a year and a half LEAP doesn’t mean that you keep it for a year and a half. You sell it on the first big profit, and I happen to know that on both the Gold (GLD) and the (GE) LEAPs we sent out, people made a 50% profit in the first week. So, I told them: sell it, take the profit. The market always gives you another chance to get in and buy them cheap. You make the money on the turnover, on the volume—not hanging out trying to hit a home run.
Q: Why did you only close the Amazon (AMZN) November $1,550-$1,600 vertical bull call spread and not roll the strike prices down and out?
A: Well I actually did do the down and out strike roll out first, which is the super aggressive approach. By adding the November $1,350-$1,400 vertical bull call spread position on Monday at the market lows and doubling the size—we took a huge 30% position in Amazon and that position alone should bring in about $3600 in profits in two weeks, at expiration. And when I put on that second position I told myself that on the next big rally I would get out of the high-risk trouble making position, which was the November $1,550-$1,600 vertical bull call spread. So that’s how you trade your way out of a 30% drop in three weeks in one of the best tech stocks in the market.
Q: Is AT&T (T) no longer a good buy at these prices?
A: All of the telephone companies have legacy technology, meaning they are all dying. Basically, AT&T is about owning a bunch of rusting copper wire spread around the country. They haven’t been able to innovate new technologies fast enough to keep up with others who have. The only reason to own this is for the very high 6.56% dividend. That said, dividends can be cut. Look at General Electric which cut its dividend earlier this year. Whatever you make of the dividend can get lost in the principal.
Q: Do you think Square (SQ) is a good buy at this level?
A: Absolutely, it’s a screaming buy. It’s one of the favorite companies of the Mad Hedge Technology Letter and one of the preeminent disruptors of the banks. We think there’s another 400% gain in Square from here. It’s dominating FinTech now.
Q: When do you expect to close the short position in the iPath S&P 500 VIX Short-Term Futures ETN (VXX)?
A: If we can get the Volatility Index (VIX) down to $15, the (VXX) should crater. We’ll take a hit on the time decay and that’s why I say we may be able to sell it for 20 cents in the future when this happens. We’ll still take a 50% hit on the position, but half is better than none.
Q: What happened to Microsoft (MSFT) last week?
A: People sold their winners. They had a great earnings report and great long-term earnings prospects, but everyone in the world owned it. Buy the long-term LEAP on this one.
Q: If we want to double up on the iPath S&P 500 VIX Short-Term Futures ETN (VXX), how do you plan to do it?
A: Go out to further with your expiration date. When you go long the (VXX) you only buy the most distant expiration date. I would buy the February 15 expiration as soon as it becomes available.
Q: How do you see Goldman Sachs (GS) from here to the end of the year?
A: It may go up a little bit as we get some index money coming into play for year-end, but not much; I expect banks to continue to underperform. They are no longer a rising interest rate play. They are a destruction by FinTech play.
Q: Is it too soon for emerging markets in India (PIN)?
A: As long as the dollar (UUP) is strong, which is going to be at least another year, you want to avoid emerging markets like the plague. As long as the Federal Reserve keeps raising interest rates, increasing the yield differential with other currencies, the buck keeps going up.
Q: What are your thoughts on retail ETFs like the SPDR S&P Retail ETF (XRT)?
A: You may get lucky and catch a rally on that but the medium term move for retail anything is down. They are all getting Amazoned.
Q: Is it better to increase long exposure the day before the election?
A: No, what we saw starting on Tuesday was the pre-election move. That said, I expect it to continue after the election and into yearend.
Q: Any opinions on Advanced Micro Devices (AMD)?
A: Yes, this is a great level. It was extremely overbought two months ago but has now dropped 50%. It is a great long-term LEAP candidate.
Q: What about the W bottom in the stock market that everyone thinks will happen?
A: I’m one of those people. So far, the bottom for the move in the S&P 500 is looking pretty convincing, but we will test the faith sometime in the next week I’m sure. We got close enough to the February $252 low to make this a very convincing move. It sets up range trading for the market for the next year.
Q: How do you figure the inflation rate is 3.1%?
A: The year-on-year Consumer Price Index for September printed at 2.3%, and the most recent months have been running at an annualized 2.9% rate. Given that this data is months old we are probably seeing 3.1% on a monthly annualized basis now given all the anecdotal evidence of rising prices and wages that are out there. That is certainly what the bond market believes with its recent sharp selloff and why I will continue to be a fantastic short. Sell every United States US Treasury Bond Fund ETF (TLT) rally. Like hockey great Wayne Gretzky said, you have to aim not where the hockey puck is, but where it's going to be.
Q: Will rising interest rates kill the housing market?
A: It already has. A 5% 30-year mortgage rate shuts a lot of first time Millennial buyers out of the market. We are seeing real estate slowing all over the country. Los Angeles is getting the worst hit.
Q: How do you see the Christmas selling season going?
A: It’s going to be great, but this may be the last good one for a while. And Amazon is getting half the business.
Q: October was terrible. How do you see November playing out?
A: It could well be a mirror image of October to the upside. We are already $1,000 Dow points off the bottom. So far, so good. Throw fundamentals out the window and buy whatever has fallen the most….like Amazon.
Did I mention you should buy Amazon?
Good luck and good trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
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