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Global Macro Trading Journal
- Thread starter Daal
- Start date
A key part of my skepticism is Dalio's short and long-term debt cycles. When the long-term debt cycles ends, it aint pretty for certain markets. Last time that happened in the US you had rising inflation and rising interest rates. Needless to say, this market could not withstand a rise in interest rates (which in the 40-70s it could). So, if somehow all these debt issues were solved by surprising growth that might do it. I'm not even sure a Beautiful Deleveraging 2.0 would do it because for the US government, things aren't beautiful. Debt to GDP will be at 150% after the corona crisis in all likelihood, that with entitlement spending starting to rise. How the 30y rates stay at 1%ish for the next 10 years, I just cant see. Once that train leaves the station, I dont want to own US assets. That and the need for higher corporate taxes as class warfare takes place. So yeah, I might be 5 years too early, maybe even 10 but I'm not 'playing' this like my old self (avoid risk, go to cash) but rather by looking at ALTERNATIVES. In cash you miss out on gains exponentially (like cash vs SPY in the last 10 years) but in alternatives, you MIGHT miss relatively but you also might gain.
I happen to think that the stage in the debt cycle of China is much more attractive, and stocks are still 50% bellow their all-time highs there. Valuations are still attractive. And their government have the "Rooseveltian Resolve" to solve any problems might surface
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I would say that this current period has made me consider that wealth preservation should be a factor in my decisions. I had a good run investing and day/swing daytrading in the past decade. I want to keep what I have. Just last week I decided to take a break from daytrading, probably a long break (I promised myself not to daytrading until Jan 1 2022).
Not because I wasnt making money, I was having a pretty good year (much better than last year) but I feel that daytrading is bad for me for many reasons:
-I hate it, it just doesnt make me happy
-It handicaps my investing. I feel that I could have hedged/protected myself a lot better in this corona crisis if I had the entire day to research/read and analyse different scenarios. I didnt and was hit with a -14% drawdown. So even though I did well daytrading, I lost that and a bit more as a result of poor hedging in my investing account.
-I want to get into real estate investing which I find a lot more appealing than day trading. There, you have TRUE freedom. You hunt for deals when you want, if I want to take a day off to play volleyball, fine, you probably wouldnt find any deals that day any way. And at some point you run out of RE capital anyway and need to just wait for the properties to sell.
In daytrading, in THEORY you have freedom. But in reality you dont, you become a SLAVE to the markets. Every daytrading you miss you think 'shit, I probably missed $500-$1K profit' just so I can be in this family gathering (the holiday schedule in Brazil is different from the US). Most of the good daytraders I know are trading addicts, they are slaves to money and the markets. They dont seem to be happy people, some smoke and on blood pressure medication, others are ALWAYS online and trading. They almost dont miss a trading day. Whatever 'freedom' they seem to get from daytrading they dont seem to be enjoying it. But they do reinforce their slavery to money everyday. I know some that are worth $10M but are still getting pissed at missing out a few grand in profits. I dont want to live like that
Maybe they love trading and they 'tap dance to work' or something. I certaintly dont, the thought of watching stocks for 7-8 hours a day (pre market plus regular session) sounds extremely boring or just downright depressing.
So I'm moving to long-term investing/macro trading + real estate investing (buying properties at auctions)
I'm not necessarily taking less risk in investing, I'm just a unsure what will happen in the US and rather be in places like China. Plus I own Fannie Mae preferred (3-4% position or so), if the US does great, I will make multiples of my capital there.
And I will be taking some decent risk in real estate, I'm reading most books by John T Reed as well as local Brazil law books that deal with auctions, I'm also getting a real estate license so I dont have to pay for brokers/agents. If anyone in the field got any suggestions I would love to hear
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A coronavirus vaccine solution seems to be more and more a pipedream
"But the history of vaccine development shows that it can be a long, frustrating process. For instance, the mumps vaccine holds the record for fastest development time, which was four years. Most vaccines have taken much longer, often more than a decade."
https://www.vox.com/2020/6/3/21258841/coronavirus-vaccine-covid-19-testing-usa-china-moderna
"But the history of vaccine development shows that it can be a long, frustrating process. For instance, the mumps vaccine holds the record for fastest development time, which was four years. Most vaccines have taken much longer, often more than a decade."
https://www.vox.com/2020/6/3/21258841/coronavirus-vaccine-covid-19-testing-usa-china-moderna
I'm not the greatest fan of Grantham but his arguments make a lot of sense here
https://www.zerohedge.com/markets/i...c-reversal-granthams-gmo-goes-short-us-stocks
"The Covid-19 pandemic “should have generated enhanced respect for risk and it hasn’t. It has caused quite the reverse,” Grantham told the Financial Times. He noted that trailing price-earnings multiples in the US stock market were “in the top 10 per cent of its history” while the US economy “is in its worst 10 per cent, perhaps even the worst 1 per cent”, echoing what he said in his quarterly letter.
https://www.zerohedge.com/markets/i...c-reversal-granthams-gmo-goes-short-us-stocks
"The Covid-19 pandemic “should have generated enhanced respect for risk and it hasn’t. It has caused quite the reverse,” Grantham told the Financial Times. He noted that trailing price-earnings multiples in the US stock market were “in the top 10 per cent of its history” while the US economy “is in its worst 10 per cent, perhaps even the worst 1 per cent”, echoing what he said in his quarterly letter.
In my view, US equity ETFs are no longer an investment in this landscape. They are merely a trade, a fed driven momentum greater fool game. There are better countries to invest in the next 5-10 years
If it wasn't already clear before, the civil unrest and political chaos in the USA means the equity rally is on borrowed time. Assuming that we avoid outright social breakdown and civil war, it seems certain that the spotlight will soon swing to profits and capital - leading to much higher taxes, higher min wages, much stronger regulations and mandates, and massive increases in govt spending.
Nevertheless I'm sticking with my view of a 2-4 year (and maybe longer) blow-off rally with NDX at least doubling. We're getting into the true mania phase now and equities are perceived as a risk-free asset. The train will just keep going until one day inflation breaks out and the Fed is forced to raise rates off the zero bound
Yes and a potential way to play this is through long-term OTM QQQ calls. I might even join you if there is some kind of correction for better entries. I would avoid ETF or stocks outright because as the corona sell off has shown, risk can happen very fast and I would hate to second guess myself everytime there is a correctionIf it wasn't already clear before, the civil unrest and political chaos in the USA means the equity rally is on borrowed time. Assuming that we avoid outright social breakdown and civil war, it seems certain that the spotlight will soon swing to profits and capital - leading to much higher taxes, higher min wages, much stronger regulations and mandates, and massive increases in govt spending.
Nevertheless I'm sticking with my view of a 2-4 year (and maybe longer) blow-off rally with NDX at least doubling. We're getting into the true mania phase now and equities are perceived as a risk-free asset. The train will just keep going until one day inflation breaks out and the Fed is forced to raise rates off the zero bound
Nevertheless I'm sticking with my view of a 2-4 year (and maybe longer) blow-off rally with NDX at least doubling.
Just a double? I have NDX projected at 25k.
I kid but on the topic of govt spending, it's not unreasonable in this climate to have the Fed ease again and massively. Daal pointed out that corps are likely deleveraging this round, well guess who can pick up the tab and much more of it this time.