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Dr. Fly

18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.

Control Your Beta

As a manager of your own money, it’s supremely important to assess the amount of risk you’re assuming with your holdings. For some of the more seasoned investors, we know just by glancing at the ticker symbols if XYZ is volatile or not. But for most, the unwashed masses, having a portfolio filled with all of the trending stocks is risk free, up until the inflection point of when those securities fall out of favor and collapse.

A little pro tip for you morons out there.

Affix a “beta” metric to your portfolios to see how insane you are and what level of drawdowns you’ll be subjected to during the next leg lower.

Inside Stocklabs, I create lists and indices to assess risk and keep on top of the tape, without having to dig too deep. These points of reference provide me with information that I use intuitively to base near term investment decisions off from. For example, this morning I had mentioned the High Beta Index was off by 3.6%. That single data point kept me long and provided me with the impetus to buy more. Because of it, I am 100% long and with this little rally going I’ve managed to reverse an earlier loss of 70bps to +25bps.

Look at the chasm between the high and low beta today. While it might be temping to dip buy into the high beta for the glory, the fact of the matter is — money is flowing into much larger and secure areas of the market. Even so, my portfolio now has a beta of 1.26. Into the close on Friday it was around 1.9x, something I was very eager to correct at the open of trade today.

The number one rule in trading is “never blow up” or take the proceeds of a divorce settlement and risk prison time with a YOLO option trade, short dated. Alas, I cannot force you mules to drink the water, in spite of the obvious fact that I have provided you all a reservoir of healthy clean water to consume.

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Why is Wall Street Pricing in a Renewed Spike in Inflation?

Once again, the US 10yr is soaring, +13bps to 4.17%, sending the small cap Russell swooning lower by 1.8%. The chasm between the large caps and small is wide and pervasive — 130bps for the session. Digging deeper into the tape you’ll find high beta stocks or stocks that were previously fashionable crashing lower by 3.6%.

It is because of this deep decline in high beta that I am directionally bullish now. I had traded out of $TZA for a profit earlier — but have since opted a long only portfolio, at least for now. I might switch it up the closer we get to the close.

I did, however, move rapidly out of risk this morning in favor of slower, larger capped names. My losses, at the present, stand at around -50bps for the session and fully admit to be in conflict with the market.

On one hand the earnings and general sense of the economy is status quo. This condition was fine all of last year for higher stocks. But on the other hand, the rapidly rising rate environment has me a little concerned about a renewed spike in the CPI. Is that what is being priced in now? I cannot think of any other reason short of just massive selling of US bonds by foreign shareholders.

For trades, both $DWAC and $RUM are attractive to me, especially with Trump +5 in national polls over Biden. I had $DWAC earlier and sold it — but still own Rumble.

Bottom line: Perhaps the market is diving back into bear market mode — but I am not going to risk going short here with high beta stocks already off by 3.6% for the session. However, into the waning hours of trade — I might hedge and attempt to freeze my portfolio until better clarity is achieved.

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Here is the Secret to Making Money in this Tape

It’s not all that difficult, once you’ve opened your eyes to the obvious trends.

Observe the losing areas of the market for 2024.

Imagine being focused in just those sectors, areas of the market which did fine towards the end of 2023. As a matter of fact, those are the areas of the market that people made most money in. If you’re gonna trade, you have to be amenable to change, able to bend in order to avoid breaking.

Acknowledging  the following trends is important, so shut up.

Median Returns YTD

All stocks: -2.8%

Market caps under $250m: -10.4%

Under $1b: -7.4%

Market caps $1-10b: -3.2%

$10-50b: -0.2%

$50-100b: +2.2%

Over $100b: +3.3%

The FAG 10: +10.4%

Now I know what you’re thinking because many of you grew up poor like me. You’re thinking “AHA — the trends are about to change and I’m gonna catch it before no one else does — because I’m a special boy and deserving of being right and rich.”

WRONG.

In real life the underdogs lose and the winners have already been chosen — the rest attempt to claw and fight for the scraps. Mentally, you need to accept this as the norm and embrace the people that you hate, like Mark Zuckerberg, in order to succeed in trading. If you commingle your feelings — you will fail — lest you’re entirely blue pilled and enjoy the globohomo.

The market is the composite of all human knowledge, constituting the thinkers and the morons. The easiest way to make money in it is by simply adhering to what is working and sticking with it.

Buy high market cap stocks that are technically strong, when in an up channel. If risk expands to other areas of the tape, assess it and allocate to it. It’s wrong to constantly attempt to anticipate a pivot, especially with the majority of your assets.

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Let’s Get Ready to Rumble

I was a strong risk day and all involved made some coin. I netted the week up more than 2.5% in what I consider sub par trading. My gains are above 6% for the year, so I am on pace to DOUBLE my account, which makes me happy, not for the money I am going to enjoy, but for the anger it will invoke in many of my enemies.

To be clear, I will never liquidate my account and spend it on things Mrs. Fly wants. The money I invest will outlive me and be domiciled in dynasty trusts, guided by me from beyond the grave.

I closed the session with a high risk profile, a portfolio with a beta in excess of 1.8. I do not fear drawdowns because I am a highly skilled, highly competent, highly professional trader of the very first magnitude. You should know, and I hope you now believe it, “The Fly” always wins and during the rare occasions when he doesn’t — things are about to swing back to the upside for him — lavishing House Fly with the many comforts and accoutrements one expects from a man of such standing.

GOOD SIRS —

I stand before you once again at RECOURD HIGHS. Nothing can stop me from manifesting my life from bottom left to upper right.

On a closing note, I am very bullish on shares of Rumble and have clear visions of the future with this one — laying waste to the shorts — cutting their heads off and placing them on pikes as a warning for all others to fuck off and leave he free speech platform alone.

Have a good weekend.

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RATES FUCKING SKYROCKET

The other day when Google collapsed after earnings rates fell hard. Now with good numbers out of $AMZN and $META — rates are going bonkers to the upside, +16bps to 4.02%.

Are we really doing this? Wall Street is assessing the chances of rate cuts based upon earnings releases, based on the assumptions of the overall economy?

I’ve seen it all.

In other words, since the economy is good — the chances of a rate cut have lessened, even though inflation has been defeated and the banks are struggling to manage through the elevated rate environ.

Ok.

I sold everything in my trading this morning, after being wantonly disappointed with the action. I’m up 1%, but expected to be +3%. I took the 1% and stepped aside and now wonder if everyone else has gone crazy for continuing to bid up stocks with rates doing this.

Are you even looking at the bond market bro?

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FREE TRIALS ARE HERE

I’m a bit rudderless on the tech side of things at iBankcoin. But in the meantime, I can offer you poor folks of the curious nature a free trial to Stocklabs. I’d provide a free trial link — but the one I have isn’t sufficient in allowing you to set up an account. So the work around is this (you’ll just need to trust me on this one, some anonymous lunatic online)

Sign up here.

Submit payment and I will refund it (promise) and you’re good to go for 10 days of free service. I’d just let anyone in but the problem with not requiring payment credentials is it attracts mountebanks and people of ill repute.

I strongly suggest the Pro plan at $99, not just because I receive more money, but because you’ll get the full suite of tools inside the platform.

Good day.

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Congrats to All Involved

We started off the day with bank collapses and ended with fucking melt ups in $AMZN and $META. Ladies and gentlemen, the evergreen nature of the market is a religion. We place faith in it, blindly, based off assumptions disconnected from logical thinking. I almost always revert back to selling short, only to quickly be reminded of the realities on the ground — that nothing really matters and stocks going down is a mirage, a temporary phenomenon that is always met with unfettered buying.

I traded poorly today, but fixed myself entirely long into the bell — ginned up with a doubled sized $FNGU position — because fuck you.

Into the AH’s, I am once again STEAMING into RECOURD highs.

How constant are my gains?

Take a look at this pal.

See pal, that’s who I am and you’re nothing.

We have to be bullish because that’s the trend. If and when it changes, I will be the first person you know to sell short with massive vigor and tenacity.

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No One Gives a Shit

I should’ve known better than to expect some sort of downward path for stocks just because BANKS WERE COLLAPSING. As always, markets have managed to asses the risk and say ‘fuck you’ and simply sprint higher.

I got a little bogged down in $TZA and $FAZ but have since parted ways with those dastardly bad ideas I had and have now rejoined the soirée, fully expecting grandiose ballroom dancing amidst plumes of Champagne showers.

I have reserved 25% cash for eventualities.

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BANKS COLLAPSE

Last year this time banks were utterly collapsing into the floor boards and western finance as we knew it was over. It was merely a matter of waiting before bearing the fruits of the coming apocalypse were to be digested. Since then the magicians at the Fed and treasury managed to paper over the catastrophe of higher rates and absolutely ruined balance sheets via tricks.

Well, one year later these issues seem to be reoccurring, with shares of $NYCB cut in half over the past two days and a series of regionals crashing.

$WAL -13%
$FFWM -12%
$VLY -11%
$AFL -10%
$BKU -9%
$ZION -9%

Here’s a look at the regional bank ETF, down 11% YTF.

BOTTOM LINE: We are living in fantasy land with stocks obstinately higher as everything burns around us. Whilst I’m not fixated on selling it short into the grave, I am cognizant of the fact that a shoe is going to drop, at some point, and really want to avoid being on the wrong side of the trade.

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Closed the Month +5.4%

Good Sirs —

I have an appointment and cannot stay long. I only post this now to inform you that I performed at the very top of quartiles amidst the cadre of professional managers of coin in America — for the month of January. I closed the session +12bps and +544bps for the month, 50% long into the deleterious close without any hedges.

I am not assuaged by the bears today because the bond market says “fuck you.” I halfway expect a large spike in markets tomorrow. I say half because my convictions are low in just about everything but shares of $RUM. By summer, I envision $RUM north of $15.

At any rate, if you lost month for January — you have only yourselves to blame. There are men are here, specifically me, who are well equipped, both intellectually and emotionally, to deal with the horrors and the pangs of latter stage Pax Americana.

All of my trades are broadcasted live inside Stocklabs. Feel free to mirror me and quit being such pathetic losers.

Good day.

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