Regrets, He’s Had a Few

Regrets, He’s Had a Few

“I’m not going to lie about it. I wake up at night thinking about my regrets,” Paradigm’s AI and crypto authority James Altucher confessed to his readers in 2023.

James is perhaps unique among newsletter editors in that he wears his foibles and failures on his sleeve. He can do so with confidence in light of his many professional successes — in a hedge fund, in private equity, as an early internet entrepreneur. Not to mention writing an essential scientific paper on the subject of AI in 1988.

One of his regrets: Bitcoin.

True, James was in the vanguard recommending Bitcoin at $114 in 2013. He was all but laughed off CNBC for doing so. “The anchors looked at me like I was pitching them magic beans,” he recalls.

But before that, he’d tweeted that Bitcoin was a scam and a Ponzi scheme. That’s when Bitcoin was a mere $10.

It took a friend — “an actual genius,” says James — to set him straight. “He walked me through everything. The white paper. The code. The use cases. The philosophy.”

And at the end, James was all in.

Yes, his initial Bitcoin purchase is up 730x. But if he’d bought at $10 instead of $114, he’d be up 8,247x.

Regrets.

“I just made the exact same mistake with quantum computing,” James confesses now.

If quantum physics blows your mind — the idea that, say, a particle can be in two places at once — quantum computing is much the same. Rather than bits of 0s and 1s, the building block of quantum computing is qubits that can be 0 and 1 at the same time.

“The last time I’d heard this much hype,” says James, “it was about Segways replacing cars.

“Then I spoke with guys actually building quantum tech. Not 10 years from now. Now.

They flipped my brain again. Because quantum computing isn’t just a new kind of computer. It’s a new kind of thinking.

“These machines aren’t faster. They’re something else entirely. Parallel universes of processing. Trillions of times more powerful than what we’re used to.

“That kind of power doesn’t just move the needle — it breaks the gauge.

“Suddenly, medicine gets rewritten. Financial systems evolve. Cybersecurity gets disrupted. Disease detection. Protein modeling. Military defense. Material science. All of it.

“So here’s what I’m doing: using AI to detect the best opportunities in quantum,” says James.

“There’s a $1 billion company almost nobody is paying attention to. It’s small. It’s weird. It’s in the business of hybrid chips — the kind Nvidia desperately needs if they want to lead the future of AI.”

The system that sniffed out this company is the same AI-powered signal detector that flagged nearly 85% of the biggest buyouts in the last five years — before they were announced.

How does it work so well? “It doesn’t look at headlines,” says James. “It looks at the anomalies under the hood — legal filings, IP transfers, hiring patterns, options activity, cash positions, supply chain shifts, dark pool trades. Stuff no one bothers to notice… until it's too late.

“And recently? It lit up like a Christmas tree on this obscure quantum company.”

If you subscribe to James’ premium advisory True Alpha, you know exactly what we’re talking about. If you don’t, we urge you to watch this message from Paradigm vice president of publishing Doug Hill. For reasons that will become obvious when you click, we’re taking this message down at midnight tonight.

End-of-Quarter State of Play

The U.S. stock market is on track to end the first quarter in a worse place than it was six months ago.

Checking our screens this morning, the S&P 500 rests at 5,519. That’s a hair lower than its closing low of 5,521 on March 13. It’s 10.2% lower than its record close on Feb. 19. And it’s no better than it was in mid-September — or, for that matter, in early July.

The mainstream has latched onto “tariff uncertainty” as the proximate cause for both today’s sell-off and the market turbulence of recent weeks.

For once, the mainstream explanation probably holds water. Less than 48 hours before a new round of tariffs takes effect, no one knows who will be affected or to what degree. And we won’t waste your time speculating.

As the saying goes, companies can handle bad news but they can’t handle uncertainty. You can’t decide whether to expand your operations or hire new staff if you don’t know what the rules will be and the costs those rules will entail.

Are the tariffs just a negotiating tool to achieve goals outside the realm of trade (fentanyl, migrants, etc.)? Or are they a years-long policy aimed at encouraging a revival of U.S manufacturing?

Jim Rickards’ chief analyst here at Paradigm, Dan Amoss, says companies face two choices now…

1. “Reshore” their operations currently overseas and hope the tariffs aren’t just a temporary negotiating tactic — because if they are, those companies will be stuck with costly and uncompetitive plant and equipment

2. Keep doing what they’ve been doing and hope the tariffs won’t become a permanent feature of the landscape — because if they do, those companies will be stuck at the end of a long line to build new U.S.-based plant and equipment.

“Hopefully we get clarity and consistency on April 2,” says Dan.

In addition to the tariff announcement on Wednesday, the March job numbers come out on Friday. Whatever Mr. Market does this week might well set the tone for the entire second quarter.

“If you want this market to bottom out, I think a final whoosh lower here will be the answer,” writes Greg Guenthner at The Trading Desk.

“If we get a little panic and some follow-through lower today, I could see some buyers stepping in to help the averages bottom out today and tomorrow…

“On the other hand, if we don’t see much direction this week or a slower move lower, I think there will be more pain before a bottom is in place — simple as that. What this market really needs is some climax selling… something that’s been lacking during this steady, orderly drawdown.”

War Drums

The price of oil is now its highest in over a month as the war drums beat ever louder.

• Donald Trump says he’s “pissed off” at Russia’s Vladimir Putin because Putin wants new elections in Ukraine before there’s any peace deal. He’s threatening “secondary sanctions” on Russian oil. “That would be that if you buy oil from Russia, you can’t do business in the United States. There will be a 25% tariff on all oil, a 25–50-point tariff on all oil,” he tells NBC.
  
  Hmmm… Seems what Trump is actually “pissed off” about is that he has zero negotiating leverage with Putin at this stage — or as he said in a different context a few weeks ago, Trump doesn’t “have the cards.” Meanwhile, Putin is content to press on methodically toward his goal of destroying the Ukrainian army.

• Also in the NBC interview, Trump threatened to bomb Iran: “If they don’t make a deal, there will be bombing. It will be bombing the likes of which they have never seen before.” It’s his most explicit threat yet — and Washington is sending more bombers to the island of Diego Garcia in preparation for airstrikes.
  
  Trump sent a letter to Iran’s Supreme Leader Ayatollah Ali Khamenei earlier this month — proposing nuclear talks and setting a two-month deadline, although Trump left it unclear when the two-month clock begins

• Meanwhile, The Washington Post reports that Defense Secretary Pete Hegseth has fired off a memo ordering the Pentagon to keep its focus on preparing for a war with China. “Denial of a Chinese fait accompli seizure of Taiwan — while simultaneously defending the U.S. homeland is the Department’s sole pacing scenario,” Hegseth wrote.
  
  Exactly how Taiwan’s independence is relevant to the freedom and security of everyday Americans was left unsaid.

With that, oil is up 2.5% on the day and over $71 for the first time in about five weeks. The buying has been nearly nonstop for the last 10 days.

On the Way to Gold $4K

Meanwhile, gold has pushed over $3,100 for the first time.

At last check, the bid is up $37 to $3,122.

“For the record,” says Paradigm macroeconomics maven Jim Rickards, “gold has outperformed the S&P 500 stock index since Jan. 1, 2000 and is the best-performing major asset class in the 21st century. That’s 25 years of outperformance by gold relative to stocks, something that the mainstream financial media rarely cares to mention because they are totally devoted to promoting stocks day and night.

“Why the surge in prices? One, central banks as a whole went from net sellers to net buyers of gold in 2010 and have increased their net buying since then. Two, global gold and other mineral mining output has remained flat for the past six years. Flat supply combined with growing demand is a classic recipe for rising prices.

“Other drivers of higher prices include geopolitical uncertainty, demand by BRICS nations for an alternative to the U.S. dollar, and concerns about a global monetary reset (sometimes called the Mar-a-Lago Accord) that would try to devalue the dollar as happened at the Plaza Accord in 1985.”

[Editor’s note: We’ll hear much more from Jim in the coming days about the Mar-a-Lago Accord.]

“Still, this gold price rally is just beginning,” Jim goes on.

“The demand by central banks has not been matched by retail demand. Institutions still hold almost no gold in their portfolios. There has been no gold frenzy as there was in January 1980 when gold hit an earlier all-time high of $800 per ounce. (It later retreated to a low of $250 per ounce in 1999).

“That kind of frenzy or super-spike may be in gold’s future. For now, we expect a steady climb of gold prices to new milestones including $4,000 per ounce by late 2025 and significantly higher not long after that.

“Don’t worry if you haven’t participated in the gold rally so far. Buy some gold now. The rally has just begun.”

➢ Lest we overlook crypto as the week begins and the quarter ends, Bitcoin is staging a furious rally — up from about $81,500 to nearly $84,000 in only a few hours. But that’s still down from early Friday’s $87K.

Mailbag: Catching Up

“What an atmosphere of hate you work in. I can barely read your vitriolic words,” says a reader’s brief note.

I’m not sure if that was in response to Thursday’s edition unpacking the “Tesla takedown” protests… or the reprise of my post-election edition of Nov. 12 in which I invited readers to assess how much I got right or wrong.

(Or maybe it was Emily’s “Les Miserables” lament?)

In any event, we have some catching up to do from last week…

“Dave, I feel President Trump has made some positive gains (closing the border) but I think like most politicians he is forgetting the major problems needing to be addressed in this country, while he tries to run the world.”

“Your suggestion that a U.S. attack on Iran’s nuclear facilities backing up Israel

will result in bad times for us is not supported by any facts,” counters a reader who seems very content for Trump to try to run the world.

“It is the only way peace returns to the Middle East. It would bring about a change in the Iran leadership and cut off the weapons supply to Hamas, Yemen, and all other dependent terrorist organizations fighting Israel at the present time. Israel’s previous flights into Iran have proven that their air defense is less than effective.

“Look forward to hearing from you as to why you are against this action. Thank you.”

Dave: You seem to have forgotten all the people who predicted a “cakewalk” for the United States in Iraq a little over two decades ago.

It’s not our fight. America first. ’Nuff said for now.

Readers’ responses to the Tesla Takedown protests largely blew off the concerns I raised last week.

“Don't get your panties in a premature twist,” said one about the feds stepping into the case — even as I allowed that if evidence of cross-state coordination emerges, then it’s fair game for the feds. But that evidence has yet to emerge in an indictment, Elon Musk’s protestations notwithstanding.

Another got all Manichean on me, seeming to deny that any of the Tesla protesters are peaceful. “One group of people are Republicans, the other group of people are Democrats. This is the difference in America now. One group praises God, the other group is inspired by the devil. Which group do you belong to?”

God forbid there be any independents left, right?

“Your thoughts about balkanized commercial zones made me think of Irish whiskey, specifically Jameson and Bushmills,” writes our final correspondent.

“Many readers may be familiar with the historical divide between the two brands that reflected Ireland's political and religious divisions. Historically, Jameson was favored by Irish Catholics and Bushmills by Irish Protestants, especially those in unionist communities. Thankfully, however, in more recent years, it seems that this divide has softened and these whiskeys are enjoyed by many regardless of background.

“I won't ask the controversial question about which one is better; I don't want a fight breaking out on the pages of the 5. However, as it does seem that we are moving toward a possible balkanization of the commercial markets, I was wondering if you or any of the readers could go into more detail if they are, indeed, seeing something similar to ‘balkanized whiskey’ with any brands in the U.S.

“Keep up the great work! Love the 5!”

Dave: Interesting inquiry. Nothing really comes to mind right now on deadline, so I’ll throw it open to the readership: feedback@paradigmpressroom.com.

And I should probably revise and update my civil war musings, complete with a recounting of The Troubles in Northern Ireland, sometime during the second quarter…

Best regards,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets