Global Macro Trading Journal

At this point in your trading, it is impressive how many people you are trying to understand on things such as BTC. There is way too much garbage and useless information to sort through. The past week I was trying to find some way to sort through news channels/papers/stock type to get some sort of information to give me confidence/or help dump my position.

Another good example is the vaccination stocks; MRNA, PFE, and NVAX. Each one is doing its own thing. PFE didn't have anywhere near the rally of MRNA which blew through its upper channels... Yet all I heard on the news was about PFEs vaccine? How anyone could interpret and use what was said on the media/news/radio to help their investing boggles my mind.

I'll just stick to the charts. I had to stop listening bc talking heads just throw out whatever is on their mind at the time... absolutely useless. I was clicking around in IB the other day and found that part of their "news" and stock ratings are random peoples tweets on twitter...
 
masterm1ne said:
At this point in your trading, it is impressive how many people you are trying to understand on things such as BTC. There is way too much garbage and useless information to sort through. The past week I was trying to find some way to sort through news channels/papers/stock type to get some sort of information to give me confidence/or help dump my position.

Another good example is the vaccination stocks; MRNA, PFE, and NVAX. Each one is doing its own thing. PFE didn't have anywhere near the rally of MRNA which blew through its upper channels... Yet all I heard on the news was about PFEs vaccine? How anyone could interpret and use what was said on the media/news/radio to help their investing boggles my mind.

I'll just stick to the charts. I had to stop listening bc talking heads just throw out whatever is on their mind at the time... absolutely useless. I was clicking around in IB the other day and found that part of their "news" and stock ratings are random peoples tweets on twitter...
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Absolutely. But I learned one thing in my life that I find it useful with regards to filtering out the noise. I listen to people that are especialists. If I have a kidney problem I listen to a kidney doctor, etc. The first thing I want to know before I listen to a person is 'who is this person?'. If they are a journalist, a pundit, a writer, politician, etc that alone makes me not listen to them. In finance, there are especialized areas like in Medicine and if you read or hear the wrong 'doctor' it will lead to mistakes and misunderstandings. Gundlach might be good on bonds but he sucks shit on stocks. Dalio might be good on macro but he sucks shit on tech. Buffett is good on stocks but sucks balls on tech or tail risk.
Taleb is good on tail risk but is crap on stocks, etc

The payoff matrix of different asset classes are completely different, what makes sense in one area (conservative discipline in the bond market) is completely stupid in crypto (there you want selective recklesness), and etc. But people's personality is only one so they can't be good at everything;
So I believe there is value in seeking input/data from especialists in their area of expertise but outside of that, they should be not be listened to. Not that by listening I mean making decisions, its an input, one piece of the decision, there needs to be more layers so the decision is robust. So, if my aunt asks me about BTC, its up 10x from the low and Marc Andressen says he sold his BTC, I will take his input into my decision of whether i sell or not. But if Charlie Munger says something about it, his input will be completely ignored
 
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BTC historical volatility

upload_2020-12-7_10-54-6.png


From all the talk about how crazy the volatility of 2020 has been, its actually bellow historical averages and the trend seems to be down
 
Daal said:
Its funny watching all these finance gurus and legends change their mind on Bitcoin. They claim to be so smart and to do their due diligence yet they are all changing their mind at the same time. What they were doing rather, was superficial analysis (full of biases) and now they are engaging in a herd like behavior

Larry Fink in 2017: "BlackRock CEO Larry Fink calls bitcoin an ‘index of money laundering’"
2020: "CEO of World’s Largest Asset Manager Says Bitcoin Can Possibly ‘Evolve’ Into Global Asset"

Goes to show not to rely on the opinion of others, even legends like Druckenmiller.
They didnt do ANY work in bitcoin in 2017, their "contrarian" biases wouldn't let them. The information was all for them to see, nothing has changed since them (except with a few upgrades on the Bitcoin Network, nothing material). Yes there is more QE, but so what, bitcoin went from 5 cents to 20K with the previous levels of QE anyway. Levels that didnt do that much for gold
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Well, until 2019 Bitcoin was following the normal bubble-crash-winter trajectory. What changed everything was when Powell did his panicked 180 in response to a two-month selloff in the SPX from tippy-top all time highs - abandoning not just years of blathering about "policy normalization" but decades of CB practice, and showing that the Fed will never again willingly raise rates. At least to me, that was the point where you had to throw the book out and assume that literally anything can become the object of speculation, even something as ridiculous and deeply flawed as BTC.
 
So I was thinking about the "Lindy effect" that Taleb talks about. The idea that things that have survived for a period of time are likely to survive for another similar period of time. So if bycicle has existed for 200 years, its likely to exist for another 200 years. That is all fine and dandy and IIRC there is empirical proof for that theory. But what that theory does not tell anyone is that whether bycicles will be a good investment.

The typewriter was invented in 1868, when computers came along someone might say "typewriters have been around for a century, the idea that computers will drive typewriters away are ridiculous, its the lindy effect" and of course that would have been stupid. The thing is, typewriters still exist and to my knowledge they are still being manufactured (In China and other countries in Asia) but anyone who owned a factory or invested in a manufacturer probably lost a lot of money. Lindy says nothing about investment returns but existence, even if that existence is a shadow of its former self.

So when gold bugs take comfort in the fact that gold has been around as a monetary asset for thousands of years or its likely to continue to be around another thousand , they fail to take into consideration that this lindy like thinking says nothing about investment returns. I have no idea how much BTC will hurt gold (and I own both) but I think its naive to take comfort in the Lindy effect to justify dismissing BTC and favoring gold. Gold bugs need to buy BTC as a hedge for their gold positions, if they don't they might very well be confronted with poor investment returns under some scenarios
 
Specterx said:
Well, until 2019 Bitcoin was following the normal bubble-crash-winter trajectory. What changed everything was when Powell did his panicked 180 in response to a two-month selloff in the SPX from tippy-top all time highs - abandoning not just years of blathering about "policy normalization" but decades of CB practice, and showing that the Fed will never again willingly raise rates. At least to me, that was the point where you had to throw the book out and assume that literally anything can become the object of speculation, even something as ridiculous and deeply flawed as BTC.
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I disagree, I dont think the Fed's policy was crazy, in fact, I think it was underwhelming. Velocity of money went into a nose dive, they printed money to offset that but that offset was not enough. As a result nominal GDP went down. Its still bellow its peak even though its been about 3 quarters, this creates issues due debt deflation and sticky wages.

To me that's the smart way to measure monetary policy (NGDP), not through CPI's (which the BIS study I posted last week shows, doesnt matter much at all) and certaintly not through the level of interest rates. Interest rates were high in the 70's but monetary policy was loose (most economists would agree with that). In Japan in the 90's and 2000s, interest rates were low but monetary policy was tight (NGDP and inflation was low). You might want to read https://www.themoneyillusion.com/ blog

I would agree with you if you were referring to the US Treasury policy and all the fiscal packages. $3T deficits and so son. Lots of these programs will be much harder to reverse, and lots of debt have been accumulated. This adds a lot of fragility to the US sovereign debt position
 
I supposed some people are afraid of the Fed policy because of the size of the balance sheet, but that chart needs to be deflated by the drop in velocity. If you take the net result of the Fed's QE's, M2 (since bank reserves are just sitting with the Fed) and take into account the drop of velocity the net result is Nominal GDP, which is actually down from the peak in Q1
 
The drop in velocity shows that people are HOARDING cash, that is not the case in inflationary economies where money is a hot potato and people try to leave the next guy holding the bag (certaintly that was not the case in the Weimer Republic). If velocity rises, then its an interesting question whether the Fed will have the political will to sell assets, I happen to think that they will but I'm not sure where this velocity increase is going to come from
 
I suppose what can be said about the Fed policy is that it increases the tail risks. If velocity were to pick up and the Fed behaves like in the 1970's, the problem will be bigger due a bigger balance sheet (with bigger balance sheets comes bigger responsabilities). But if they behave like in the 1980's, then nothing significant will happen as they will sell assets to offset that. To the extend that this uncertainty increases, gold and other real assets go up

The Fed is increasing inflationary tail risks in order to avoid certain risks like debt deflation and excessively high unemployment (due sticky wages) so its a goal worth pursuing, but they are not doing enough probably due its conservative nature. But its crazy because they are stuck BOTH with the tail risks AND some level of economic underperformance
 
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