BEAR MARKET TRADING: TAKE CONTROL OF YOUR FINANCES

This is more of a philosophical post on dealing with a bear market, rather than the usual self-aggrandizing OMG LOOK AT HOW AWESOME I AM post.

As you can see by the trading in 2022, both the rallies and slumps are strong. The gyrations are so extreme, it causes people to freeze and become catatonic about their investments, relegating them to long term holdings that needn’t be looked after. This is a disastrous mistake and you’d only be serving someone else’s interests rather than yours.

People ask me all the time what to do with this market. For the most part, I agree that dollar cost averaging once per month is a smart way of dealing with a down tape. However, for those who already amassed wealth and are looking at retirement within a decade, it’s important that you preserve your wealth —- rather than squandering it.

You should most definitely eliminate growth stocks from your holdings and replace them with staples. But the best option, by far, is to trade and hold overnight and sell everything each morning —- rinse and repeat.

If you’re only buying or shorting closes and closing out those trades in the morning —- your risk is low due to holding period. It goes against all of your instincts of buy and hold for the long term —- but it works and it works especially well in this tape.

A typical overnight trade for me would be to long whatever theme trending for the day, in hopes of a continuation. For 2022 I had been buying Ag and Oil. I would hedge those bets with 15%+ positions in inverse ETFs. Often times my oils went up with the inverse ETFs and I’d close them all out before 9:45, in order to avoid morning gyrations which can be confusing.

The key to all this is to invest smaller, most of the time keeping 30%+ in cash and always hedge. No matter how good the market looks, no matter how many times your overnight hedges lost money — ALWAYS BE HEDGING.

The reason why is the geopolitical tensions and of course the fucking economy. News can bust out at any time sending stocks sea-worthy making you rue the day you thought it was wise to just buy and hold.

I was thinking for months now that we were riding the 2002 timeline all over again, barreling into recession. If that’s the case, July looms, as we decedent -8.6% in July of 2002 following a 13% rout in June.

Aside from 2002, the only time markets fell in July was in 2006.

The numbers for July are eye-opening. We have risen 14 years in a row in the patriotic month —- and the returns are impressive.

Data via Stocklabs

For June, heading into the final day of trade, I am up roughly 5%.

I was flat for the session, 75% cash, UNWILLING to partake in the chicanery of a tape blessed with stupidity. I will have you know, the worst is looming and with it — SHARPLY LOWER STOCK PRICES.

It’s worth noting, I am being especially careful on purpose — since I do not intend to give back even more than 5% of my gains to Mother Market. It might BEHOOVE you to see me trading so methodically and without real excitement. But, this isn’t a fucking game and I’m not doing this for a likes or the subscribers. This is my fucking life you sons a bitches and the money I have invested will grow and my wealth will come from that — not from the bastards who run ads on my website.

There are times to press the envelope and times to take a step back. Take a step back pal.

WTI is still up on the day — but oil stocks are getting fucking poleaxed today, amidst all of the pomp and circumstance one is accustomed to when seeing a collapse.

Oils across the board are down in excess of 4%, which demands this question:

WHAT THE FUCK IS GOING ON HERE?

It can only be one thing: investoor liquidation based upon fears of a slowing economy.

The gains are quite egregious. This was an area of the market strewn with dead corpses, now enlivened by first MONKEY POX, and then abortion plays, and now whatever is moving. We’ve entered the arena of the ribald and this sort of risk never dies in a day.

Over the past two weeks, these FUCKERS have done best.

ALNA, EVFM, EPZM, MREO, FEMY, RAIN, FSTX, AEZS, LXRX, AXSM etc.

We are looking at gains upwards of 50% and we are also seeing it continue today, in an otherwise moribund/uneventful tape.

Today’s chicanery is taking place in BBI (+89%), ALNA (+211%), AEZS (+69%) and SLNO (+20%).

I am trying my hand at one: LXRX — not because I like the company — but because I’m a degenerate gambloor.

I sold it all, up 35bps for the session as a gentleman should in a dastardly tape, such as this. I have decided to work less today — due to UNFORSEEN events that have unfolded, which have, in large part, made me furious.

As a boy I had a sharp temper and once threw my best friend out from a tree, as a result. I’d get so mad I’d turn red (yes I am white) and use my anger to punch the faces of other people. As I grew older I fought less because it’s degenerate; and as an adult — I have yet to partake in a match of fist o’ cuffs. But sometimes I do feel like it. Deep down, we are all base creatures who fall victim to carnal desires. Although I am, admittedly, quite good at temperance and pretty much never fall prey to vice.

That being said, FUCK OFF.

I am in cash because this tape is dreadful. I am already up. I am in a bad mood. And lastly, I am suspicious of bulls wanting to pick up live grenades — because they’re assholes and deserve to get their limbs blown off.

All of the finest oils and Ags are running hot again, following several weeks of recession fears and sharply lower prices. It seems, at least for the time being, we are MOST concerned about the supplies of grain and energy, as the Russian war wages on — threatening the very existence of Europe.

I suppose the market thought the Middled East would pump more crude for us — but it now appears that’s not the case. The CEO of Shell said today the Middled East has barely any more capacity left — and that we should prepare for doom. That last part was a bit of paraphrasing on my behalf.

But what are we talking about in late June, as the warmer climes grace us with their pleasant presence. WE ARE LOOKING FORWARD to Autumn and Winter in Berlin with the Russian war machine potentially engaged with NATO at that time. I would dare say, me being bold and all, the Russians might not supply their enemies with fuel under such a scenario. Without NATO’s engagement into Ukraine, it’s over. The war has already been lost —- since Russia now controls territory in UKR that makes up 80% of their GDP.

On that backdrop, and any backdrop that doesn’t include immediate peace talks with Russia, both oil and grain are good bets heading into what arguably could be the last season of normalcy in Europe for sometime.

We crashed the fucking close and I finished at session highs +120bps. Are you surprised? Well you shouldn’t. This is standard stuff during market collapses. I quite literally cannot be stopped and even when wrong, I have tweaked my methods to reduce churn greatly and also risk. My variance is low and my sharpe is high.

In short, I have never traded better in my life and given the circumstances — +3.3% for June — I find myself calm and relaxed and in complete control of my fate. If you do not feeeel the same, you’re likely taking too much risk and not calibrated correctly with the market.

Are you seeing the market — or just seeing what you want to see?

You thought it was fun and games — but now you’re swimming in capital losses. I did warn you not to get involved with that. Early this morning you were ENTREATED to a strong market and now you are presented with a deleterious one. PREPARE FOR LOWER PRICES AMIDST BLACK CLOUDS AND WHISTLING CHARDS OF METAL.

With the NASDAQ down over 300, I have no desire to jump in now into the close, which will be crashed.

We are quite literally in the 2nd inning of this SELF IMPOSED energy embargo. The ramifications of such stupidity, plus the loss of PAX AMERICANA, cannot be priced in.

You’re all making ribald gains in your biotech piece of shit stocks, aren’t ya? The war rages and winter looms yet your appeal to risk aversion is zero — because you’re a spoiled little boy who has been coddled your entire trading career by the dicksuckers at the Federal Reserve.

But guess what?

The party is over pal and there is nothing you or your stupid friends can do about it.

As I wrote this, oil stocks are screaming higher, based off the very minor issue of EUROPE BEING WITHOUT FUCKING HEAT this coming winter.

The gig is up. Your schemes have been laid bare. The beginning of the end is now.

I’m long some refiners and still short banks, extra salty because that trade isn’t going my way.