The Weekly Selection
133: Do You Have Money on This Game?
Investors,
Welcome back to another iteration of ‘The Weekly Selection’, where I cover my thoughts on the market, what’s upcoming and some other little nuggets for your enjoyment.
Check out the latest Podcast at the link below, as well as some other socials:
Indices
Well… last week was a doozy. Thursday and Friday brought the largest two day decline for the stock market, with over $5 trillion in value being erased from markets in what seemed like an instant.
I think this type of reaction to news that was discussed by the Trump administration even before he got elected speaks to the froth that was in the market, as well as the amount of uninformed participants in it.
Tariff wars were always on the table for Trump. They are simply a tool in the larger strategy which I have laid out below:
Reduce government spending (DOGE)
Reset global trade deals through tariffs (and reshoring manufacturing in the process as it becomes worth doing so)
Sell gold cards (drive income)
deport excess participants (help housing market + job opportunities)
This balancing of the scales is done in the hopes of realigning our checkbook. Deficit is a nasty debt accelerant and if left unchecked it can lead to hyper inflation, and the effective end of a financial system. If anyone would like a further explanation on this topic, here’s Marc Andreessen to explain.
The short term impacts of this are immense. Tons of uncertainty which I cannot fully workout just by sheer volume, as well as uproar in the populous as communication has not been as clear as I think many would have hoped. Have a look on impacted markets below:
SPY 0.00%↑ heads towards the 2021 high, with a 17% decline from the current ATH in just a few months. For anyone who has been paying attention to the work here over the last few months, a decline of significant magnitude was outlined early this year, and is now coming to pass.
GLD 0.00%↑ Gold continues to grind higher amid uncertainty, showing its true colors as a hedge to nonsense in the market.
A little side note here: My gold trade from the last 2 years is the first time in my career ive really used an investment vehicle as a hedge to uncertainty in the market, and although I had significant size through the first half of 2024, it has tapered off since then. As I go back and study my thesis and where I took size off of the trade, I should have done a better job seeing Trump as uncertain with his tariff policy. The conflicts around the globe were expected to subside after his election which was my main reason for taking off size. Looking back, I should have recognized his deeper plans with economic policy and kept a large position on. Solid for my first time really using a vehicle like this, but notable for the future.
Above is an annotated chart with early commentary in late 2023.
Positioning
Most of the top groups/themes that I liked are selling off into oblivion, eclipsing even what I deemed to be high quality spots to buy based on valuation.
With this in mind, I have kept my book fairly light, only owning VST 0.00%↑ RKLB 0.00%↑ POWL 0.00%↑ and a smaller speculative position in DOMH 0.00%↑.
I am still looking to get involved in names like GEO 0.00%↑ and AXON 0.00%↑ for the deportation trade, however the opportune buys may still be a ways away.
The market in the short term is a voting machine as we know, and given the amount of protesting and uproar I am seeing recently I think the vote is pretty clear that the pain is not quite finished.
That being said, for my long term book I did put in an order to add to my VTI in my IRA come Monday morning. For my young folks out there: Time horizon is everything. As a 24 year old with a lot of runway left on my life, it is in my best interest to view events like this as another blip on the ride, which we have known to be long and upwards sloping for the last 120 years.
Unless this changes, I have no reason to be hesitant to buy when others are shaking in their boots. Growing up I watched my dad buy farm land after 2008, and then buy equipment and other assets all through the 2020 pandemic crash. He never quivered in the presence of uncertainty, and always told me the best time to buy long term assets was when others were struggling to afford them. I know ive mentioned this before, but it is a core thesis of my long term strategy and simply a truth of top performing market participants.