Ced H. on LinkedIn: 8 days after our post to warn of a potential July market correction on… (2024)

Talk less, stay humble and adapt to 'evolving weather' = great results - True class at "British" Open Championship 2024 at Royal Troon as yet another US golfer Xander wonCritics in media of another American possibly winning after 2023 in really bad weather in Scotland with wind and rain spurred Xander to keep grinding to win. The English and Irish golfers who led initially lost due to errors as Xander kept to his "process" and won by 2 shots. See video of 3rd round: https://lnkd.in/gNvKwKs9The US have dominated modern golf and no British golfer have won since Sir Nick Faldo in 1992 - that is 32 years! Faldo got hooked on golf after watching the greatest player of all time, Jack Nicklaus play golf on TV when he was 14, yes Nicklaus is from the US. See here: https://lnkd.in/g9SmpuHr).No other tournament demands resilience & adaptability more than Open Championship (Man vs Mother Nature vs Best players in the world - not like tennis squash badminton in a nice square man-made court) Look at the facts: British Open wins/winners since 1860 - statistically significant:(see link: https://lnkd.in/gcMuBfKJ) Nationality Wins Winners United States 47 32 Scotland 41 22 England 22 13 Australia 10 5 South Africa 10 4 (Jersey 2, Northern Ireland 3, Spain 1, Ireland 2, Argentina 1, France 1, Italy 1, New Zealand 1, Sweden 1, Zimbabwe 1) US leads with 32 individual winners and some were able to replicate, win 3x (test of consistency & authenticity), Scotland 22 and England 13 Why? Rise of innovative excellence and technological advancement (both factors required adaptation) that marked America's rise since 1900 and fall of British Empire, French/Spanish/Dutch/Italian Empires and ancient Chinese Empire. Thus, no surprise as US financial market has the largest and most dynamic innovative firms & stock market, Private equity / Venture Capital, insurance and banking in the world today.The world's top 10 performing hedge funds over the long run are mostly US based and are multi-strategy/global macro. See Barrons report: https://lnkd.in/ggeCQp9ZPro golf at its highest level requires "adaptability" just as in investing.Be like water 🌊 Multi-strategy 🎨 multi-seasons ⛈ ☀ 🌨

Why 'Uncertainty' Principle is important - it is important to stay away from OB line, be it business or investing(We are deeply aware as in our toolbox - our MW Spinning Top Theorem: shown in the video what happens when it crosses the line) 22 Jul 2024 9.45am ESTThe global IT outage due to Crowdstrike/Microsoft update over the weekend is termed the largest IT mishap in history by some as it affects airports, hospitals, retail etc. See CNN report tag possibly a $1bil cost: https://lnkd.in/ga5sXe7MThere are 6 phases in our ST theorem and relates to a company, stock, industry and economy. At certain point of time, momentum will slow or quicken depending on certain catalysts. How management executes or manage risks are key too - hubris tends to come from complacency.At the end of every trend, if large debt used or mishaps occurs, the top "Spin in Reverse" - losses are more than the company's intrinsic book value (Evergrande?). Crowdstrike stock fell 11% and Microsoft flat. Both stocks are above fair value esp CRWD with high D/E & low margins, basically waiting for a potential car crash or 'storm' to bring its stock down.As in the video, it ends earlier if it meets certain disruption or 'accidents' and often the growth is linear but the end can be violent with non-linear volatilityThus, as an investment manager, it is key to anticipate trends & risks and be adaptable.Be like water 🌊 Note - Post is not to advise on investing but for education, and not meant to make any forecasts on Crowdstrike or Microsoft.p.s our electronic devices constantly seek update, some are for protection against virus but others what for? Perhaps governments now would regulate IT firms forcing auto-updates and leave it to customers to decide when and how to do so. Cyber experts tell us to buy separate software to protect and as OS usually is not good enough. Thus, as they said - If it ain't broke why fix it?

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Nobody can beat the markets all the time regardless of who you are and where you work. Yet clients think big brands give them safety & advantage to make money.(GS CEO David Solomon at 2023 WSJ interview said: 'We want to be more cautious. One thing I know over 40 years of doing this, is markets are pretty smart but that doesn't mean always at any moment they are 100% right' - his humility is probably as in Great Depression 1929 & GFC 2008, both times GS was near failure) 14 July 2024 2pm ESTThis article by WSJ and GS CEO Solomon comments illustrates our belief in 'Heisenberg Uncertainty Principle' as in Einstein video: https://lnkd.in/g3NyYqS5Have a good read on the Feb 12, 2017 WSJ article on Goldman's top strategist Cohen aka 'Prophet of Wall Street' in 1998: https://lnkd.in/gNxnNdBa{- While she was tagged as a perma-bull, she did have some nuance to her calls. In 1999, she predicted a "much more difficult game" for the markets. She pegged the S&P 500 at 1275 and the Dow at 9850. Both indexes beat those predictions handily, with the Dow crossing the 10000 level for the first time that year- Later in 1999, shenoted that the market's big gains could not continue indefinitely, and advised clients to "take a little bit off the table," projecting a moderating growth rate. Of course, the market was not moderating, with the S&P 500 up nearly 20% that year- In 2000, shepredicted the S&P 500 would rise8-10%, based on expectations of strong earnings and economic growth. Instead, with the dot-com bubble bursting, the index fell 9.5%- In 2008, she missed the warning signs of the financial crisis (to be fair, just about everyone did). Shepredicted that the S&P 500 would hit 1675in 2008. It closed at 903, nearly 50% off from her prediction. After that, she was replaced as Goldman's senior forecaster by David Kostin.}The 2000 Dotcom Bubble-Crash (kind of like AI boom now)- led to sharp fall of many stocks but even big companies like Cisco, Microsoft, IBM, Oracle, Intel Apple fell >50% and took 5-10 years to recoup.- In fact, Cisco, top tech stock has not reach the Jan 2000 price even today. Same for Intel & Yahoo- S&P 500 stock index fell 50% & Nasdaq 75%- Warning for blind 'believers' of AI stocks or Magnificent 7Nobel laureate Einstein knows more Physics than most scientists besides 'playing the violin': Uncertainty.Global Macro investing legend Soros said: Markets are in a constant state of uncertainty and flux.Some HF managers including Soros made positive returns in 2008's uncertain market (despite WSJ's article of most missing it); fyi hedge fund Michael Burry made big gains short via IBs in 2008, see Big Short: https://lnkd.in/gyp4SskFMacrowaters🌊: Uncertainty is a constant, be like water Note - post is not to promote investing or any service but for education. (Why are markets in a state of uncertainty? This is proprietary knowledge for selective PI investors, welcome any pm)https://lnkd.in/gNxnNdBa

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Why resilience & agility matters for golf's British Open: It is not what you can do but "what you must not do"; and for investing11 July 2024 3.38pm EST (S&P 500 new all time highs 5642.45/S&P 500 index futures 5707 hitting our final target zone of 5600-5700, see: https://lnkd.in/gr7gRN7T)As 19th century US stock & commodity trader, Livermore said - you have to learn "how not to lose money" to make money - 'consistently'.The Open Championship is the oldest golf tournament since 1860 will be held at Royal Troon, Scotland on 18 July 2024 and one of the toughestSee a nice scenic Golf Digest video preview: https://lnkd.in/gX5vntGJEven Tiger Woods in 2004 couldn't win the Open Championship at Royal Troon despite being World No. 1 then, demonstrating how tough the Royal Troon course is.With uncertainty of weather next week of rain, strong winds, thick rough & unforgiving terrain - its Man vs Nature (not just Man vs Man). It is not squash, badminton or tennis on a nice square court. Todd Hamilton won in 2004's Open playoff against Ernie Els with a superb chip with a "hybrid" club to get near the final hole vs Els's traditional wedge shot. "Hybrid" golf clubs were invented as an innovation to handle difficult ⛳ course conditions &"Hedge" funds were invented to handle difficult 💹 market conditions.Ability to be accurate, avoid dangers and strong winds with creative flair -essential ingredients to win tough golf Open championships - Much like investing in rising uncertain markets getting overvalued - with geo-political winds;Something else is needed besides "same old BAU textbook"Agility, Creativity & Adaptability - a must.Be like water 🌊 Macrowaters🌏 Global Macro - Multi-strategy 🎨 Indeed, the 2008 GFC 'economic storm' showed the resilient strategies of "Global Macro -2.8%, CTA +12%, Merger Arbitrage -1% and Short-Selling +24%" vs World MSCI stock index -40% & S&P 500 stock index -37%. *Any storm in US can blow to EU UK....Asia.100 year old Dow Theory 'sell signal' could be imminent of troubles ahead in coming 6-12 monthsFamed British Nobel economist John M. Keynes said - When the facts change, I change my mind, what do you do sir?(Much like the clients of PwC, after an audit mess of Evergrande, who can blame them to leave - much like collapse of Enron and Arthur Anderson)

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Φ To be or not to be - July: Don't be complacentWhy we use geo-political economic analysis to seek contrarian α returns (no event photos - no use for investors) 9 Jul 2024 1.23pm EST4 July 2024, UK elections - US Independence Day yet UK's PM Sunak call & lost, forgot GB lost the war to US - July 2, 1776? (declared independence July 4 - "no longer subject to themonarch of Britain, and now united, free & independent states")Whereas new UK PM Starmer - took advice from ex-US President Obama-an irony (see: https://lnkd.in/gnUyRqv6)7 July 2024 French elections - President Macron gambled election, lost as far left won-hung parliament. Macron forgot 1st French Empire ended 7 July 1815/Napolean surrendered 15 July 1815/July 1830 Revolution? 14 July 1789, 'Storming of the Bastille' led to French Revolution 1789-99 (seize fortress, Bastille - symbol of monarchy's abuse of power)95 years of July market 'Exit' signs?φJuly 1929 pre-Great Depression: Dow 350 high from 150 in 1927, good traders like Livermore sold before Oct 1929 CrashφJuly 1980 Gold 2nd chance to exit: ~ gold fell $680 to $280 Apr 1982 as inflation fell, Gold had rose from $101 in 1976 to $800 high Jan 1980φJuly 1981 Inflation end: Fed chairman Volcker raised interest rates to 20%/prime rate 21%/US 10 year bond 15% and fell for next 40 yearsφJuly 1990 Japan Nikkei 225 32421 before final crash to 8200 in 2003. If sold 1990 not 1989 39k still good as took 33 years, 2023 to recoverφJuly 1997 Asian Financial Crisis: Thai baht/market fell 50% - spread to Asian countriesφJuly 1999 pre-Dotcom Bust: US stocks new highs & fell for 3 months & rose higher in Mar 2000 then a final crash. July 1999 fall - bell to exit! φJuly 2000: Hong Kong HSI rose post-correction to 18k (sign to sell) but fell to 8331 low Apr 2003 φJuly 2007 Japan Nikkei 225 18238 - then crash to 7568 in Feb 2009φJuly 2007 US Subprime Crisis: House prices fell, global investor demand for mortgage-backed bonds dip July 19:Dow Jones hit 14,000 for 1st timeJuly 30:IKB Deutsche Industriebank, 1st bank bust, bail by German public institutionKfWJuly 31:Bear Stearns2 funds failφJuly 2008 Global Financial Crisis Oct bust: July 11:IndyMacfail. Oil price high $147.50July 30: 2008 Housing & Economic Recovery Act - US unemployment 6%φJuly 2007: Shanghai stock index high 5560 - fell to 1664 by Oct 2008. Till now, not back (stock market-leading indicator of economy, now far from 2007 GDP)φJuly 2015: Shanghai index top 5178: 'By 8–9 July 2015, Shanghai market fell 30% in 3 weeks - Wikipedia'. Now 2959φJuly 2020 Covid China Evergrande 3333HK high $28, July 2021 $10: sell sign as bust now $0.163φJuly 2022 Crypto trouble/crash: Celsius Vauld Coinbase eToroφJuly 2024 US S&P 500 5588 & JP 41769 stock indices new highInterest rate 5.25%BOJ rate hike?What's next?Anticipate not react - our golden ruleBe like 🌊Post - not to give advice for trading/promote services - for education

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Anticipate not react ~ our golden rule: Macy's pre-4th of July fireworks (stock price at $17.93) - imminent breakout <July 5, 9.21am EST) Merger arbitrage (M&A) is a viable way for us multi-strategy hedge fund to invest in an 'expensive AI/pharma slimming drug market'. Macy's is definitely one besides some other 'select ones' which we won't reveal hereWe once said PE buyout bid for $21/share, then up to $24/share won't be enough for 166 year old brand worth its gold that Jefferson will say no. A new suitor will raise valuations - potential upside is huge, we have some numbers :) We been bullish on Macy's an iconic brand for few years now (proving hedge funds are not all short-term speculators) - was our top trade in 2021. See our recent post a month ago: https://lnkd.in/gEFqtyDjMark Twain said - History does not repeat but it often rhymesOften catalysts help - for those who recall Chemistry lab class. If you see from our chart attached, Oct 2023 the 5 wave 1-2-3-4-5 resulted in a nice explosive reaction from $10 to $16 and then $21. In finance, we call it a non-linear expansion of volatility or gamma :)The second diagonal stock correction A-B-C-D-E with E ending on July 4, 2024 at $17.93 when I recorded the chart to be posted here. Could we be wrong? Of course, but about $17.13 be a very viable support to cut loss The catalysts: 'Fireworks by Macys in NYC' a few hours ago and more astute institutional investors rotating out of expensive valuation of technology stocks A look at Nvidia which our earlier post showed an inverted chart - profit-taking as price fell from high of $140 to $128 - the show is not over yetPeter Lynch Fidelity's best fund manager talks about 10 baggers, we won't try to beat him but inspired as a hedge fund to look for assets that will have an imminent turning point or if use Physics - a thrust due to an explosive combustion "fundamentals/market dynamics/sentiment"Just out news from Reuters saying the PE firm raised its bid to $24.80 from $24, a meagre +3% (not earth shattering or attractive to Macy's board?): https://lnkd.in/gx_eDJhwNumbers aren't bad: Revenue $23B EPS $5.59 P/B 1.2 EBITDA 2.15B (+ value in its real estate)See 8 hours ago, Macys 4th July fireworks: https://lnkd.in/gmkHZpNuIf you study fundamentals, Macy's had challenges over the years and the stock declined from $40-50 in last 10 years due to less traffic to malls & rise of online shoppingBut post-Covid humans want to get out and re-innovation by Macy's board online and improve the premium brand offerings, thus even bad things will past & turn better Do not marry to bull or bear sideBe like water 🌊 Post - not to promote any investing but for education - Happy 4th July I-Day!

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Tuesday Jazz Notes - advice by the author of famed book The Great GatsbyIf we think about this for a second. Is this even applicable?If you want to launch a rocket to the Moon, you need to hold the view you may succeed and you may fail, so you take steps to reduce the odds of failure.If you want to run a cafe on an island, you may succeed as city-guys like to see the sun and beach but you may fail as most cosmopolitan people are too busy, so you need to take steps to prevent failure.If you want to invest in AI stocks and ride its 'bullet train' gains like Nvidia, you may succeed, but you may also fail if you buy too late/too high or fail to get off the train and stock falls when 'regulatory', 'competition' or 'geo-political' road blocks appear.Most long/short equity & commodity/FX hedge funds would not disagree with Fitzgerald.F. Scott Fitzgerald wrote The Great Gatsby, a critically acclaimed book on the "Roaring 1920's" which is quite similar to today as 1918 Spanish Flu ended, read here: https://lnkd.in/ghBhQgfP2013 film trailer with Leonardo DiCaprio: https://lnkd.in/gADCmjxaFor the scholarly ones, this article from Harvard Business Review on 8 Essential Qualities of Successful Leaders, link: https://lnkd.in/gSYC3RbD - Comfort with ambiguity : Managing ambiguity is about "holding conflicting ideas in your head" and dealing with "competing priorities" that feel equally important- Adaptability : It allows you to be able to swiftly respond to different dynamics, pivot when needed, and embrace new opportunities and challenges.To invest well, hold bullish🐂 & bearish 🐻 views at same time Be like water 🌊Do not marry to bull or bear side

50th anniversary of iconic film Godfather II: Why saying No is important in business, life or investingThe Francis Ford Coppola film won 7 Oscars including Best Picture - completed in June 1974 - made $47.5mil with $13mil budget, 3.6x gain for Paramount Pictures.Video shows a crooked senator asking for $250,000 & monthly gross 5% for a Las Vegas gaming license when it's less than $20,000. Godfather Michael Corleone was insulted but stayed cool & said "No" right away.We all learn "What to do/Yes" in school but not the value of "No"Good examples on saying No or what not to do:🈺 Business:People think focus means saying yes to the thing you've got to focus on.Innovation is saying “no” to 1000 things - Steve JobsNot doing your own work but recognize the best person to do it -Andrew CarnegieDon't waste effort on a thing that ends in a petty triumph unless you are happy with a life of petty success -John D. RockefellerNo rules here, we're trying to accomplish something. No substitute for hard work - Thomas EdisonYou don't lead by hitting people over the head - that's assault, not leadership - Dwight D. EisenhowerI don't want to be 80 years old...thinking back over my life & cataloging a bunch of major regrets - Jeff BezosNo 1-on-1 meetings rule for his 55 direct reports - Jensen HuangWithout strategy, execution is aimless. Without execution, strategy is useless - Morris ChangNever took a day off in my 20's. Life is not fair, get used to it - Bill GatesSaying No to a Google job & Yahoo $1bil buyout - Mark ZuckerbergNo PhD required. No A-holes policy at SpaceX -Elon Musk 🌻 Life:Don't waste your love on someone who doesn't value it - ShakespeareOur greatest glory is not in never falling, but in rising every time we fall - ConfuciusThose who speak don't know, those who know don't speak - Lao TzuDon't accept everything you hear as truth - AristotleDon't expect honesty from cheap people - Warren BuffettNo plan survive 1st contact with enemy - Navy Seals💹 Investing:When you know what not to do in order not to lose money, you begin to learn what to do in order to win.- Jesse LivermoreRule 1 – Don’t lose money, Rule 2 – Don’t forget Rule 1 - Warren BuffettDon't buy companies with bad managers - Charlie Munger & Warren BuffettNot partners but big markets - Don ValentineMustnotbury your failures buttalkabout them openly & analyze what went wrong so you can learn new rules for decision making - StephenA.SchwarzmanDon't lower the bar or compromise (to be great) - Ray DalioDon't average down - Dickson G. WattsDon't follow the pack - Jim SimonsDon't bet on the obvious but the unexpected - George SorosMore examples in life, business & investing that's not coveredBut we end with our take ~ Sun Tzu's Art of War:"Don't attack the enemy on high ground (markets at high valuations)" Don't marry to bull or bear side: Be like water 🌊 Be balanced with both Yes (buy) & No (sell)As life is ☯

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"Anticipate" not react ~ our golden rule: Review of our 3 & 1/2 years US S&P 500 index forecasts, all targets met except 5600-5700 (What happens when facts change): S&P high 5490/ES futures 5562, 18 Jun 2024, 642pm ESTφ No one rings a bell at the top: famed 19th century trader Livermore said ~ 'There is a time to go long, time to go short and time to fishing'.Recap of our calls:Jan 2021 : Rally breakout to 3980-4404 from 3519Mar 2022 : Correction to 3980 & rise back 4845, 5027, 5372Jan 2023 : Rally to 4150 from 3839, 4404 to 4600Jan - Apr 2024 : Rally to 4859/5037, 5250, 5450 and 5600-5700And Nvidia $135 hit our earlier targets with final one at $145-150, YTD gain +173% 2024 banks call: 4300 JPM, 5300 Barclays & RBC, 5535 Wells Fargo, 5400 BOFA, May 20 U-turn: MS 4500 to 5400, Evercore 4750 to 6000New calls: 5600 GS, 5600 UBS, 5600 BMO & Citiφ 2 Biggest Wall Street 'bears' flip from bearish to bullish view of US equity index - warning signal euphoria near (180% deg turn from bearish to bullish as markets rise to all time highs)φ When facts change, I change my mind - John Maynard Keynes, famed Nobel economistDec 2023 Fed meeting: Powell said inflation fell significantly, estimate federal fund rates to fall to 4.6% by end 2024- expectation of 3 interest rate cutsbank analysts expected 7 & gradually fell to 3June 2024 Fed meeting: Powell said inflation readings still high, estimate fed fund rates to fall to 5.1% by end 2024- expectation of 1 interest rate cut (we anticipated 1-2 cuts in our Jan 2024 report due to wars, inflation & oil prices)If interest rates hold at 5%?- Fed chair Powell said housing impacted & lower income masses- big stock rally based on a) AI & b) interest rates cuts Perception can diverge from realityWhat if US labor market stays strong?- Powell said take longer to cut rates- wage inflation cause prices to stay high for some goods- prices of imported goods high (war cause higher freight, raw materials/oil prices)- big fall in jobs to cut rates but last US labor report was strong with 272k vs 185k expected- if jobs stay firm, chance of rate cuts fall- may lead to wage inflation & rate hikes, Powell said hikes are not off as Fed "data dependent"What's next?φ Be neutral anticipate a peak & correction (black swans?)φ Diversify to commodities (gold), currencies (USD) & get hedged with put optionsφ 'Expect the unexpected' as George Soros saidφ Just like our post on D-Day June 6, 1944, anticipate 'bad' weather φ Eisenhower said June 4, 1944, weather was fine yet meteorologists anticipated a storm & they were rightWisdom:φ Those who live by crystal ball will eat shattered glass - Ray Dalioφ Don't follow the pack - Jim Simonsφ I made a fortune getting out too soon - J.P MorganBe like water 🌊 Do not marry to bull or bear sideNote: post not to promote investing or any service but for education (if keen to see our reports or need help - email us but only for AI/PI investors)

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