Blogging from a Most Unnecessary Quarantine

I tested NEGATIVE for COVID but admittedly felt sick. Everyone in my house has had COVID but my paranoid daughter, so I chose to quarantine last week just in case. I’m down here in this dark cold walk out amidst the couches and the boxes (I’m moving soon) watching Coen Brothers movies. I had never known about how good of a film maker those two fuckers were until now. I saw Burn After Reading and then Hail Caesar, both masterpieces. I will continue with another one today. Aside from that, I haven’t been doing much of anything. Quarantine isn’t bad actually. Food and coffee is sent down and my responsibilities to the outside world is zero. I haven’t had a fever the whole time, a slight cough and minor congestion. If this is COVID, I like it. I’d get it again, willingly.

NASDAQ futures are +95 and I am now listening to Basque music, an odd sounding genre of music in a language that is completely unfamiliar to me.

The news is grim — shooters all over the country in crazy as fuck America. As for the fucker in Buffalo worried about white people going extinct: how about making some babies you piece of shit? Every life is precious and if we begin to believe it isn’t — we become subhuman animals. If you are concerned about your community, do constructive things to help them not destructive things to destroy others. We all love the sounds of summer, the sweet scents of flowers and how the sun sets on a perfect day. Don’t rob that from others just trying to live and be happy on this god damned prison planet.

On the war front, same old same old. Russians fighting Ukrainians and NATO is sending every single weapon in their stores. On paper, NATO should prevail here. It doesn’t look great for the Russians now. But if they pull it off, NATO is fucked. Honestly, the evil empire is too strong to be defeated. We have trillions at our disposal and our people aren’t all trannies yet. Perhaps if Russia attacked in say 30 years — they’d steamroll right into Kiev unopposed. Alas, late empire Pax Americana is violent and viscous and will not cede power without killing all of the Ukrainians first.

On the issue of Finland and Sweden joining NATO — poor choice for them but I can see why they might want protection. At this point, Russia doesn’t have many strategic allies in Europe and will be hard pressed fighting everyone, even with the indomitable Alexander Lukashenko at their side. If NATO can pull it off and drive Russia out of Ukraine, which I doubt, then this market will celebrate in a big way higher. I have no context as to when we might learn when the war will end, but I suspect it will last through the Summer and perhaps even into the winter. It might even end up being Syria 2.0, as NATO attempts to drain Russia of resources by making the war expensive.

I’m sure Ukraine won’t mind.

Pardon yesterday’s blog — I must’ve had COVID of the brains to speak in such a manner. Those aren’t my true feelings, as I do enjoy helping others achieve financial independence. What more can I say, other than I believe Mr. Hyde is back in his cold basement cage now.

I was perusing NASDAQ returns for 2002, as it is my analog for 2022, and came upon May 6th, 2002 a day which saw the NASDAQ +10.7% for the session. By the way, it should be noted that all of the very biggest one day gains have occurred in the worst of markets.

May 6th, like May 13th, was a Friday so the next trading day was May 9th.

Date/Returns

5/9: -2.58%

5/10: -4.5%

5/11:  +4%

5/12: +5.8%

And then we went on with a slew of small gains followed up with larger losses, making for a miserable tape.

This is precisely what I expect to happen now. We will likely dump out Monday and Tuesday, providing enough fear and panic to get another mean reversion trade and then up we go again and that’s it — bear market trading the whole way. The best word to describe bear markets is “cruel.” It never seems fair and you’ll always feel as if the game is rigged against you.

The truth is, markets are trying to discovery a price that can be called a “bottom” based upon valuations. Presently the market s trading 14.5x earnings on a median basis. This is not including the potential 40% decline in earnings. If we factor that in, the market would need to trade about 35% lower in order to be considered “cheap” on a historical basis. This of course is predicated on recession and high unemployment, none of those things are present today. If the economy doesn’t slow to a degree that would reduce earnings by 40% (I am using CSCO’s earnings drawdown in 2002, 2008 as my base case) then markets are 25% cheap right now.

So which is it? I have my assumptions, but like you, I haven’t the slightest fucking idea.

SIRS —

I remain in the cold basement quarantined from the world in spite of a negative COVID test. My existence in the world is now limited to only the interwebs, where I cavort, digitally, and boast about my victories. It gets old and awfully tiresome, but it must be repeated again.

“The Fly” wins again.

How did I do it? Fuck off. I’ll never teach any of you ingrates a single thing. My journey into the blackened world of FINTECH has left me jaded to the point of knowing no matter what I say or do — you’re gonna do your own thing anyhow. Do not bother me with questions or emails concerning your shitty portfolios. I have better things to do with my time in this dark basement.

If you want to do better than what you’ve managed — join Stocklabs. For those of you too cheap to invest in your own investment “experience”, fuck off.

Yours disrespectfully,

Fly

Having said that, we can still run higher from here, even after this big lift. With stocks up 4% for the session and the speculative juices going, we could see a continuation into next week, perhaps a short squeeze or two because fuck you.

Nevertheless, you should be using these rallies to REDUCE your long term exposure, since it’s very likely we are to resume lower at some point soon and then dive back into the crevasse at new lows.

My algo account, which is based solely off the Stocklabs oversold signals, is up 12% today, fully long TQQQ. Just yesterday this looked like a suicide account; now it’s the best thing going. My Quant was also in agony, now +5.3%. In my trading, I went to cash first thing this morning and left a lot of cash on the table in exchange for safety. I am +3% there.

My best guess is a RAMPING of the close. I would not be surprised to see us completely revoke these gains on Monday, as bear markets tend to truly disappoint investors to the point of misery. This is why it’s important you listen to me now: lighten up.

Shares of TWTR are off by 10% today after Elon sent this tweet out.

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

Frankly, it was only a matter of time, given the market conditions, for Elon to impose some hardball tactics with the Twitter board. If it weren’t for the Elon bid the stock would be in the 20s now for sure.

Some believe Elon will pay the $1b break up fee and walk away. I don’t believe that is the case and think the market is assessing correctly the new buyout price, around $40.

Just yesterday most of you were contemplating life without money and here we are today, with stocks screaming higher, you’re now looking at stocks and once again believing they can go so much higher. Fuck all of that, I sold out of my trading account for +300bps and called it a day, having achieved excellence in a week where I resided on a couch in a cold dark basement listening to old jazz tunes — quarantined because I felt sick.

I took some Ivermectin last night and all of a sudden I feel much better! Perhaps there is something in the horse medicine that makes us get better right away.

On the issue of markets: everything is reflating and even cryptos are running. It’s not that I’m bearish per se, but I’d prefer not to play the intra-day swings for the time being and will likely re-apply longs towards the end of the day.

I still have my algo and Quant accounts fully long, one up +600bps and the other +400bps, so it’s not like I’m “missing out.”

Congrats to all involved.

It was at the very bottom of today’s tape the lads inside Stocklabs Pelican Room started to discuss the delicacies of bugs and how one might serve, for one’s family, pancaked made from cricket flour did the market bottom.

I’ve been doing this a long time and never have I bore witness to such desperate men craving for the meal to come. It is my opinion, at least in the short term, the market has bottomed.

Sick on the couch all day, I traded on instincts and not based upon what I was seeing, a playbook in my head based off of years of stock market excellence. I closed +12bps, 27% cash, 10% hedged via FAZ.

Tiger Global is blowing up and your favorite hedge fund manager might have to work this summer, taking a break from his cocaine fueled beach house galas.

Whatever is going on, one thing is for certain, someone is BLOWING THE FUCK UP.

The pin action is becoming grotesque again. However, stocks like SHOP, SE, and UPST are still up nicely. After the bell the canary in the BNPL racket, AFRM, reports. Expect a 30% move in either direction.

I can only offer instinctive analysis since I’m half dead on a couch in a cold foreboding basement.

Markets collapsed at the open and have since recovered. This is a textbook capitulation trade and I see many hard hit stocks, like my SE, ripping.

I also see the Ruble at new highs vs the dollar +6%.

I also see Finland is concerned that by joining NATO Russia will turn off their gas. This leads me to believe the best trade here isn’t the beaten down techs but the beaten down commodities. Stocks like MOS have 20 points in them.

It’s also good to see ETH back above $2k. The whole thing looks good, but I’m not buying.

I’ll keep what I have and if I’m around by 3:30, I’ll allocate for tomorrow.

Presently I’m up 25bps for the session.

I’m feeling terrible this morning, but grateful for not being vaccinated.

Last night cryptos just completely liquidated. Most are now worth zero. This morning stocks are tricking people left and right into believing a bottom is in. The sell off is once again ORDERLY and I ended up selling my hedge for profit and several longs at a loss. As of now I am half cash and half refiners, ag, and SE.

SE is the perfect stock to embody this market, always has been. It went from $40 to $400 in the recent bubble and now back into the 50s, clownishly. There are major institutions who own it and buried by it and it’s the perfect stock to bounce, if there even is such a thing.

Since I’m not feeling well, perhaps it’s allergies or perhaps something a bit more, I’ll be trading light, but checking in every now and then in between nightmares.