“When we’re facing a daunting task, we need both competence and confidence.”
-Adam Grant
Is writing an Early Look strategy note (with explicit positioning across Asset Classes) to all of Wall Street every day for 15 years a “daunting task.” A: not really. It’s my job.
The #team just informed me that I’ve written 2,774 of these bloody things since 2008. That clocks in at 2,344,452 words, so thanks for reading my rants. I do appreciate it.
In terms of style, I generally don’t get criticized for lacking “confidence.” I’m ok with that. It’s who I am and I don’t have enough time on my clock left to try to be someone else.
Back to the Global Macro Grind…
I’m not confident that I’m the “smartest” strategist in The Game. I am confident that I can outwork anyone I play against. I’m also confident that I can learn and evolve. I can always #GetBetter.
The Adam Grant quote about competence (doing this for almost 25 years from a market practitioner’s perspective) and confidence comes from a solid #behavioral book I’ve recently cited called Hidden Potential: “The Science of Achieving Greater Things.”
In that book there’s a section that really resonated with how I think about my relationship with all of you: “Schooling Each Other.” One of the major competitive advantages I have is I get your feedback, immediately, when I’m wrong.
When I’m wrong, I don’t want to stay wrong. That’s when I am losing money.
Rule #1 by The OG (Buffett): “Don’t lose money.” And while that’s been cyclically replaced by “yolo” and “only invest what you can lose” (it’s a Millennial Reddit Moon thing), my hard-earned capital is in this for the long-term.
Yesterday, this tweet (I have > 256,000 of those too, lol) was #liked:
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"People who didn't understand the #process and cancelled on us in July of 2023 (one of my worst months in 24 years) are missing out on a LOT of alpha." |
This is Wall Street. People love to hear about other people’s losses. That will never change. And neither will the Old Wall’s inability to change what they do.
Imagine you’re still in an Old Wall 60/40 Portfolio?
A) That thing got smoked yesterday
B) That’s what happens when you’re still Long Duration Bonds (TLT) and consensus US Equities
Do you know what a 60/40 Portfolio is still down since the US’s #Quad2 Cycle Peak in 2021? A: DOUBLE DIGITS (drawdowns depend on the date of your “target date” funds).
In other #timestamped news, my family office’s Long Only Account (that I show daily now via Portfolio Solutions) hit an ATH (all-time high) on Monday and corrected -9 basis points from that 25-year high yesterday.
Oh, some people #like hearing about when I lose but that part sounds too “confident” for them, eh?
While The Score of the long-term Full Cycle Investors game may generate “feelings” from the other teams and strategies out there, it doesn’t make “sounds.” It’s just in our accounts.
We’re also on a heater of a run in Real Time (Coaching) Alerts where 29 of our last 30 closed positions have been booked gains. I took the 1 loss of -0.19% in PM just to make a major point: “don’t anchor on cost basis.”
Of all the lessons I’ve enjoyed learning over the years, that’s a big one. DCA’ing is a joke. If you’re losing money in something because you’re wrong, cut the loss before it becomes a bigger one. And ride your winners.
Why is Dollar Cost Averaging (DCA’ing) a joke? A: because I’ve tried it with my own money and it doesn't work.
In addition to it being part of the marketing message of Vanguard and whoever is telling you they can’t time markets (believe them), what does that do for you WHEN your hard-earned capital crashes by 20-25%?
*See the year 2022 that many conveniently forget (but is still part of the 60/40 Double Digit Drawdown)
Why is the #GoAnywhere Full Investing Cycle #process a much better way?
A) Unless you don’t obey The #VASP (Volatility Adjusted Signaling Process), you don’t crash, ever
B) By losing less when you lose and riding winners as they’re winning, you compound capital over time
If you lose 15%, 25%, or 35% of your hard-earned capital, how much do you need to be up (from those crash and drawdown levels) to get back to break-even? A: +17.6%, +33.3%, and +53.8%, respectively.
If you don’t want to play The Game my way, don’t play that way…
But the only reason why I only lost 9 basis points of my hard-earned capital yesterday when the Russell 2000 was down -1.8% and TLT got tagged (2 major components to many 60/40 Porfolios)…
Is that I’d gone from #out of big Asset Allocations like Chinese Equities (FXI and KWEB) and Commodities (UGA, CPER, SLV, etc.) and Energy Stocks (XLE and AMLP) for ALL of 2023 to their Global Cycle Lows to Long of them.
That’s called having asymmetry in your #GoAnywhere Portfolio. We #like that!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.36-4.55% (bullish)
UST 10yr Yield 4.19-4.41% (bullish)
UST 2yr Yield 4.51-4.75% (bullish)
High Yield (HYG) 76.81-77.52 (bullish)
SPX 5185-5275 (bullish)
NASDAQ 16,155-16,496 (bullish)
RUT 2044-2133 (bullish)
Tech (XLK) 205-211 (bullish)
Insurance (IAK) 113.85-117.71 (bullish)
S&P Momentum (SPMO) 79.05-81.20 (bullish)
Healthcare (PINK) 29.74-31.10 (bullish)
Shanghai Comp 2 (bullish)
BSE Sensex (India) 72,035-74,258 (bullish)
DAX 17,990-18,520 (bullish)
VIX 12.21-14.92 (bearish)
USD 103.59-105.23 (bullish)
Oil (WTI) 80.61-85.78 (bullish)
Nat Gas 1.68-1.95 (neutral)
Gold 2184-2295 (bullish)
Copper 3.98-4.15 (bullish)
Silver (SLV) 24.83-26.75 (bullish)
Bitcoin 65,917-72,561 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
