“The best performers tend to have a flexible and adapting coping ability.”
-Steve Magness
That’s an excellent behavioral quote from an excellent #behavioral book I’ve cited, multiple times, since David Salem had the coaching experience and wisdom to put it on my desk: Do Hard Things.
In a chapter Magness titled “Turn The Dial So You Don’t Spiral”, he deals with bereavement, MAX performance pressure, etc. and goes on to explain that “the better you are able to turn up or down the volume on the emotion, the better your expressive flexibility.”
“Coping flexibility allows for adapting to adversity in a positive direction over the long haul. The best performers can bounce between different strategies, depending on the demands of the situation. Top marathoners possess this ability, as do the most resilient individuals who overcome grief and trauma.” (pg 216)
Back to the Global Macro Grind…
When I experience short-term performance problems, everyone knows about it. When that happens, I might get a little Mucker moody, but I don’t go on tilt and deviate from my discipline and/or #process.
In another excellent #behavioral book by Annie Duke called How To Decide, she explains why the #1 mistake professional gamblers make is going on emotional tilt and changing their decision-making process.
I don’t change my decision making-process – I change WHEN and where I’m making decisions.
Of all the competitive advantages my Full Investing Cycle #process has vs. the Old Wall and SPY Monkeys, the ability to Go Anywhere (any Asset Class in any country, Long or Short) is right near the top of the list.
Since I’ve made more #timestamped mistakes than anyone playing at the Highest Level of The Game in the last 15 years (I’m the only one who has #timestamped every move I’ve made in real-time, so the bar is low)…
Let’s review where my performance problems were at 4 trading days ago:
A) On Thursday JUN 15, 2023 my pile (Long/Short Book) was in the midst of a -3.1% correction from my ATH
B) My decision-making #process took me to a -13.3% Net Short Position by the close of trading that day
*Note: unless your hard-earned-capital (i.e. your pile) made a new ATH (all-time high) from NOV 2021 to local #Quad4 Cycle Lows in big exposures in DEC 2022 and/or MAY 2023, we’re playing a very different game.
While Real-Time (Coaching) Alerts isn’t a portfolio, it is a good proxy for which way my “net” is leaning, not only intraday, but intra-Cycle, when we have these big Counter @Hedgeye TREND moves, or bear market rallies.
At the close on Thursday JUN 15, I had 3 Longs and 15 Shorts in Real-Time Alerts.
Fast forward to yesterday’s close, this is where some of those positioning and performance metrics are at:
A) On Wednesday JUN 21, 2023, my pile is back to down -1.4% from my ATH
B) My decision-making #process took me to a -0.8% Net Short Position by yesterday’s close
C) I have 5 Longs and 9 Shorts in Real-Time Alerts
Now, as MJ properly said, “if you don’t want to play that way, don’t play that way”…
But that is how I played The Game and here are my Top 6 Longs and Shorts:
A) LONGS:
- FDRXX (with a 7-day Yield of 4.76% and relatively zero risk, that’s been my #1 position for many months)
- Gold (GLD), which I just took up to 5.5% from 4% in the last few days on red
- Long US Dollar (UUP) vs. Short Yen, which I took down from 5% to 3% in the last 2 days on green
- Silver (SLV), which I just took up to 2.5% on red in the last 2 days
- South Korea (EWY), which I just took up to 2% on red in the last 2 days
- Japan (EWJV, JPXN, SCJ, and EWJ), which has come down after selling-SOME on green
B) SHORTS:
- High Yield (HYG)
- Junk Bonds (JNK)
- Industrials (XLI)
- Australia (EWA)
- Russell 2000 (IWM)
- Oxford Lane CLO Exposure (OXLC)
I’m not giving you my sizing on those shorts because I don’t want someone’s center book squeezing me! But A) they are rank ordered from largest to 6th largest and B) my Shorts are ALWAYS SMALLER than my LONGS.
Not only do I Go Anywhere (sizing up Australia into last night’s -1.7% smack-down, for example, is where I’m at – I’m not short TSLA), but I can and do move both fast and slow. So good luck catching or squeezing me.
While my Core Longs and Shorts don’t change frequently, HOW they are SIZED and WHEN does.
And with that level of transparency and accountability, I’ll end my note for today. What I do isn’t what CNBC and Old Wall people do. I Do Hard Things because doing emotional things like chasing just isn’t what I want to do.
It’s taken me almost 24 years to build my pile. My #1 goal remains to preserve and protect my pile so that I can compound returns on top of it for my family.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.77-3.93% (bearish)
UST 10yr Yield 3.63-3.84% (neutral)
UST 2yr Yield 4.50-4.80% (bullish)
High Yield (HYG) 74.16-75.11 (bearish)
SPX 4 (bearish)
NASDAQ 13,105-13,803 (bullish)
RUT 1 (bearish)
Tech (XLK) 162-175 (bullish)
Industrials (XLI) 99.79-105.91 (bearish)
Financials (XLF) 32.43-33.60 (bearish)
Shanghai Comp 3177-3270 (bearish)
Nikkei 32,166-34,196 (bullish)
VIX 13.12-19.68 (neutral)
USD 101.58-104.28 (bullish)
USD/YEN 139.20-142.88 (bullish)
Oil (WTI) 66.89-72.98 (bearish)
Nat Gas 2.17-2.71 (neutral)
Gold 1 (bullish)
Copper 3.68-3.96 (bearish)
Silver 22.76-24.90 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
