“And who wants to be wrong?”
- Annie Duke
There are almost too many #behavioral process lessons in Annie’s decision-making book, How To Decide, but I will keep plowing through the always dog-eared pages of all the books I read. I can always improve at coaching the Full Investing Cycle process.
The aforementioned quote comes from a chapter she called “The Archer’s Mindset – All Guesses Are Educated Guesses.” I liked that, because I don’t make portfolio or trading decisions based on “feel. “ For a lot of people Annie says “guessing feels bad.”
“You know your answer won’t be right. And what is the opposite of right? Wrong. This way of thinking, that there’s only “right” and “wrong”, and nothing in between, is one of the biggest obstacles to good decision making.” -pg 81
Back to the Global Macro Grind…
Of all the differences in my decision making process vs. the Belief-Systems (from Perma Bears to Bugs and Maxis) and marketing schemes you’ll see on both Wall Street and in The Cloud, one of the biggest ones is having the ability and agility to go both ways.
Afterall, that’s what Sine Curves and Cycles do. They go up and they go down.
After an epic 2-day cumulative correction of -0.14% in SPY, both it and the NASDAQ closed at fresh all-time closing highs, again, yesterday. Gold was down another -1% on the day. Why? It’s The Cycle, stupid. Who wants to be wrong on that?
Here’s how I recapped it in this morning’s Top 3 Things (Institutional Research note that goes out at 6AM ET, daily):
- NASDAQ – all-time is a long time, and 14,025 was another all-time closing high for LARGE CAP GROWTH as a #Quad2 Factor Exposure too – so much for the “growth vs. value” narrative which seems to be long gone from the Old Wall Media’s daily talking points – The Rates Rotation (out of TLT, GLD, and Bond Proxies like Consumer Staples (XLP) and Utes) is where the alpha’s been had
- VIX – another day, another lower-high in Vol of Vol with my Risk Range on front-month VIX now at 16.91-24.66; what does your portfolio look like with the VIX in the teens?
- GOLD – down another -0.5% this morning, taking its drawdown to -13.5% from its #Quad3 Cycle Peak back in AUG of 2020 – for those of you looking for non-consensus shorts, plenty of alpha to be had on the short side in both the commodity and the Gold Miners (GDX)
One of our longstanding Hedge Fund clients was on a call with Darius and I earlier this week. He was frustrated but, as he always does, openly sharing his thoughts about markets so that we could help him improve his positioning.
We got him to a place where he agreed that the best place to be positioned on the short side was on long-term Rates Rising at a faster rate. This wasn’t a super-secret revelation, I say I think rates are going to surprise to the upside, daily!
When he asked me “what’s the biggest pain trade out there that people have wrong?”, I answered:
- On the short side, High Short Interest Stocks that are longs in #Quad2
- On the long side, Gold – it’s a short in this particular #Quad2
If you’ve seen my Twitter stream lately, you’ll see the anger from Gold Bugs. The Belief-System on what Gold “should be doing” during epic money printing and Dollar Devaluation is on tilt.
I guess that’s the next chapter lesson from Annie Duke. Don’t play The Game when you’re on emotional tilt! Play it dispassionately. And, most importantly, as long-time Millennium Hedge Fund Manager, Mike Taylor, says “don’t be right – make money.”
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.09-1.23% (bullish)
SPX 3 (bullish)
RUT 2155-2354 (bullish)
NASDAQ 13,450-14,232 (bullish)
Tech (XLK) 132.50-139.18 (bullish)
Energy (XLE) 39.16-46.17 (bullish)
Utilities (XLU) 62.01-63.84 (bearish)
Gold Miners (GDX) 33.66-35.90 (bearish)
VIX 16.91-24.66 (bearish)
USD 89.93-91.36 (bearish)
Oil (WTI) 53.98-60.18 (bullish)
Nat Gas 2.68-3.01 (bullish)
Gold 1 (bearish)
Copper 3.60-3.81 (bullish)
Silver 25.47-28.99 (bullish)
Bitcoin 40,196-50,903 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
