2004. I remember the photo diptych on the front page of the New York Times - George W. Bush on a mountain bike and John Kerry on a 10-speed. The implications were clear - Bush would win the culture war and the Presidency, Kerry was a flip-flopper on a bike that ‘Murrica would deem too French-Intellectual-Elitist-looking. All GW needed to do was call him the name: Flip-Flopper.
I admit - it’s undeniably appealing to appear right, smart and decisive. To have a strong opinion in general. And for traders, to have a strong opinion about where markets are headed.
The reality is that we mostly don strong opinions as our own because we have heard them somewhere else, we want something from whoever is listening or we want to appear in a certain way. Or because we feel threatened by our own uncertainty.
But markets don’t give care what you or I think or feel. They move, and have been flip-flopping wildly of late.
How do we balance the conviction required to stay in trades where the trend is intact but faltering — with the idea of cutting losers quickly?
Practically, we decide where we’re gonna get out when we initiate the trade. We set our stops and you respect them. We continue to ride the trends as long as they remain, based on weekly chart timeframes. Simple.
Philosophically, we give up on appearing cool or zeitgeist-y or strongly opinionated— we hold the always multiple molting manifold macro reality in mind. In all of its potential polyvalence.
There is no balance, no equilibria, no simple cause and effect in markets… only clouds in phase change.
This means that being wrong, relatively ignorant and uncertain is required to participate successfully.
We are on the non-conformist path of Siddhartha leaving his princely palace of assured paradigms— venturing out into the plural unknown.
Holding markets as manifold reality is reflective of another principle from a related system of thought - the Jainist principle of Anekāntavāda.
The etymology is informative:
The word anekāntavāda is a compound of two Sanskrit words: anekānta and vāda.
The word anekānta itself is composed of three root words, "an" (not), "eka" (one) and "anta" (end, side), together it connotes "not one ended, sided", "many-sidedness", or "manifoldness".[12][13][14]
The word vāda means "doctrine, way, speak, thesis".[15][16] The term anekāntavāda is translated by scholars as the doctrine of "many-sidedness",[17][18] "non-onesidedness",[19] or "many pointedness".[13]
In spite of constant geopolitical conflict, emerging market stocks, biotech, IPO’s - everything but Bitcoin on the most delicate branches of risk continue to move higher. This shows liquidity flowing. Literally flooding the banks.
But bond yields, though they have retraced some of their move higher, remain in a grinding uptrend, especially short duration bond yields. This tightens credit and liquidity.
The money supply, as measured by M2 - looks to have peaked back in April, but the long-term trend is higher.
Loan activity for everything is breaking out higher - that means credit is flowing — look at Commercial and Industrial loan activity over the last 5 years:
And financial stress - as measured by the Fed - is extremely low. This chart shows the last year:
Have a great week.
-Andy
ICYMI:
Friday 📸: Portfolio Review
·
Jun 19
Rod Serling: The place is here, the time is now, and the journey into the shadows that we’re about to watch could be our journey.
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