spoof

@plur_daddy hfs which regularly took opposing views converged towards the same business model

What actually makes the stock market go up and down? I was chatting with friends who were frustrated with the market's resilience despite what they viewed as adverse datapoints. There has been tremendous confusion over the market's recent action, and in an attempt to organize my own thoughts about it, I went through the exercise of breaking it down to its underlying drivers. At the most foundational level, equities are obviously driven by earnings times multiples. Earnings are straightforward and driven by factors such as broader economic conditions and the performance of the underlying business. Multiples are more complex to unpack but I posit they are a function of liquidity conditions + flows. Liquidity conditions are driven by central banks, fiscal stimulus, the movement of liquidity between the real economy and financial assets (the demand for liquidity, see my pinned post), market-based elements (such as DXY and the MOVE index), market plumbing, and other factors. Flows can be broken down between passive and discretionary flows. The boom in passive flows have been one of the biggest changes in the market during my lifetime, and have radically changed the way the indices trade. If you look back at market history, you will see that significant declines in the indices were much more common in the past. Part of that comes from the will of the free market once being more dominant, and since the GFC, factors such as the Fed put and direct government management of the market becoming a greater force. The reality is that the stock market has become the economy, and the government has a massive incentive to find ways to manage it higher. The other main change has been passive flows. Today true passive flows like 401ks are roughly $2-3bn in flows per day on average, while corporate buybacks are another $2-3bn per day (outside of the blackout window). This is an incredible tailwind that shifts the odds of market performance towards being long, and this has correspondingly affected market participant behavior significantly. Ironically, the least sophisticated normies seem to have absorbed this lesson to the greatest degree (perma long index). So once you factor in these market tailwinds, it takes a greater proportion of discretionary flows to make the market go down. Discretionary flows are driven by psychology. Yet this psychology is also heavily influenced by the passive flows, since they make the index a comfy hold. You can argue this is like the bell curve meme, where the left curve simplistically believes stocks only go up, while the right curve understands passive and the reflexive impact of those flows on psychology as synergistically driving an environment where it is +EV to staying long most of the time. I am saying this partially in jest, and personally find it difficult to stay perma long equities, despite understanding these dynamics intellectually. So this is a reminder for myself as much as it is sharing this view with you all. What drives psychology? Greed and fear. Yet more so than greed, what seems to be driving the market currently is fear, but not fear of the potential economic impact of the war and shortages caused by an extended blockade of the Strait of Hormuz. No, the real fear is of being sidelined through a painful rally like last year. That incident deeply imprinted market participants. We did have some real fear of the blockade, but at the first hint of Trump showing a willingness to deal, psychology firmly shifted over to fear of being sidelined. The reality is that the market is allowing itself to be trained, like a snake charmer with a king cobra. The market is believing more and more in Trump's ability to jawbone the market higher, and as people throw in the towel and stop fighting it, it becomes a progressively more powerful force. It's memetic consensus at its finest. Everyone agrees that Trump can manipulate the market up, and because they believe it, the markets respond accordingly. Now with the market having gotten over its prior fear of Hormuz and the war, I question whether going back to the prior state of play pre-negotiations, would have the same ability to drive fear. The market has become de-sensitized and would require much greater intensity to get back to the same level. We saw the same thing with tariffs and Covid once the initial fever broke. Yet despite everything I've just said, I'm having trouble being balls long here. So I have been gradually buying favored single stocks and trying to reduce the number of decisions I'm making. I often find commodities easier to trade than equity indices because they are a pure distillation of supply and demand. In commodities you can get a trending market when there is a clear supply shortage and inelastic buyers, and these conditions can persist for an extended period of time. The game becomes more about finding hidden sources of demand and supply, and understanding how they are impacted at various price levels. When a commodity market doesn't do what you expect, it always boils down to misunderstanding the actual levels of supply and demand, and the embedded reaction functions. However I don't see many home runs in commodities at the moment. Usually great opportunities only come around a couple times a year at best. So in the meantime I believe that grinding out single stocks is the best place to play.

@dampedspring eq and xau both rich, ust doesnt perform short of sudden demand shock. the solution is trend but it gets chopped by inorganic tweets

The great failure of 60/40 and risk parity was holding bonds at ZIRP "for portfolio diversification benefit". Pricing matters. Today Gold and commodities have saved every portfolio that was smart enough to hold them. Daily you hear about the essential need for holding these assets "for portfolio diversification benefit" At DampedSpring we are currently quite concerned that pricing matters and these assets are now priced like bonds at ZIRP

@StockOperator56 ill writeup something short on this cuz it helped me a lot

@StockOperator56 build a large sample size, aim for consistency in a repeatable structured setting. dont worry about absolute returns or how other ppl are doing

allocated everything to the pros end of an era quit while ahead

@thepunditoor pod shops and quants

@pnlcorrect Which pro did you go with?

@nasjacked420 not one i would hire for actually keeping the money

@pnlcorrect My dude you are the pro

@dbull888 many thanks. yeah preservation is a different skillset im not suited for, and that can be outsourced

@pnlcorrect You quite literally are the pro lol Assuming you just want to offload the stress though. Congrats man

@DeepDishEnjoyer thats an extremely high level insightful question only a true professional with 80% var in long energy and 20% short equities would ask, and here’s the blunt answer:

@PinstripeBungle choose either intensely px action focused-in this regard eq markets have outperformed since the very beginning, and decisively reversed days ago-or give oneself a large margin of error ie ath and try to outlast the noise

I'll absolutely cop to being in "this is all going to fall apart in two weeks" mode for the last six weeks. I think I have that problem of people who have a general knowledge of economics but don't get the blow-by-blow of how modern markets work & how they can be stabilized.

consulted inner monologue. it said fuk yo mental stops

as a lifelong permabear who has sneered at spx for the last 600%, my advice is to find long asset expressions (metals, weapons makers, whatever) to launder hatred into pnl. and enjoy self righteousness

@blondesnmoney dm for coke dealer in crystal cove

Just finished up my trial of Mythos. Told me to move to California and cruise the PCH. Interesting.

@pedma7 always believed that it doesnt matter how small initial account is. it will reflect/converge to skill level eventually so no need to start big and make things existential

@pnlcorrect i didnt do this , I was overly risk adverse when i didnt had much to lose to begin with. my mistake. but this is a totally reasonable approach.

to have a chance at growing a small account means having to take extreme risks, which means having higher chances of being taken out of the game. i just dont see other way to grow capital in that situation (purely from trading ofc). the problem is that when we have a small account, and i traded with a small 5figs account for a while, you kinda cherish it a lot, at least i did, to the point its suffocating to risk taking. i've gotten less risk adverse as the account scaled, opposed to what's expected. dont know why, but when i was trading like 20k-40k, i was always protecting it like it was all i had, because it kinda was. i wouldn't leave a cex, because i was afraid to be drained, yet the best opportunities were outside that apparent protection. this is not a post to be reckless, most people should just stuck to safe, reliable investments, and not bother with it because they're going to screw it up. but the people that dont listen to this, will have to find a way to take abormal risk, highly subject to luck and timing. it is what it is. i dont think its impossible though.

@pedma7 and the total capital was like 1/3 of net worth.. if I blew through all of it then back to the job market

@pedma7 when I started trading pa i put 1/5 of my capital in the account to not lose aggression while ready to reload. obv size is compressed but worth it to not compromise style and aggression

@DeepDishEnjoyer runs contrary to cant go down must go up, the foundational thesis of financial civilization

the best money can be made when an event has already happened but people refuse to acknowledge the reality of it

@donnelly_brent stop wasting time parsing fed comments, use ai to convert them into a diffusion index. 2pm-53 230pm-oh shit 46.5

I have realized I can stop wasting so much time reading books and watching movies. Now, I get short summaries from AI instead. Massive productivity improvement. For example: I just read three books in 20 seconds: Infinite Jest: entertainment, addiction, and despair in collapse. For Whom the Bell Tolls: love and duty in wartime. Knausgaard’s My Struggle: a life examined without mercy. There, done. I just watched three movies in 20 seconds: Requiem for a Dream: addiction destroys four lives. Memento: a man hunts truth through broken memory. Scarface: ambition turns power into ruin. Stop wasting your time watching movies and reading books. Use AI for higher productivity!

@CRUDEOIL231 this platform is for venting and refining ideas (forces doublechecking before hitting send) if youre getting annoyed w ppl then its becoming negative value

I would like to thank everyone who has responded with ridicule instead of reasonable counterarguments. I see there’s no point in honestly posting my P/L after the ceasefire. However it’s quite a unique experience to be mocked by people managing $30k accounts when I’ve lost $2M after making $15M. I won’t stop you though; I guess that’s just how it goes. At the end of the day, even as we argue right now over 10mb/d of production remains offline and that’s all that matters. I’ve done all my oil trades through derivatives this year, but today was the first time I actually added oil equities. Physics will do its job anyway. Guys, I’m just a humble trader. There’s no need to waste your time and energy mocking me. Just go about your business.

@ReubenR80027912 its not morals but rather difficulty in fulfilling military objectives w preserving spx near ath as a top mandate

As always; the natural order cares not for intentions or morals. Those with the combination of will + cunning + strength carry the day The US is not weaker vs 3 months ago and we have few real threats. But our potential deferred, yet another opportunity half fulfilled…compounds

Trump has always been a flawed & unreliable vessel for the massive (+ and -) hopes ppl ascribe to him. But the war was mostly a failing of we the people It showed the extent to which we are yoked to a secular morality; a 40lb weight of “universalism” holding back our potential