Is the Fed about to give up on its fight against Inflation? Do not get overly pessimistic if you are a long-term investor.
Like this email if you are ready to do whatever it takes to survive until the Great Fed Pause
Note to my Friends here: Welcome back to another email letter. We have many new friends in our public email Community. I will continue to share the good Karma and do my best for you. I will be releasing my 2nd Half October Strategy Research Report (previously exclusive on Patreon) to all our friends here for you to read. The actionable opinions have already been utilized by our members, but I purposely share my exclusive research to you so that you can understand what we do inside our Community. This way, if you decide to join us, there are no surprises, and you fully know the depth of research our members use to navigate this highly uncertain market.
In return for me sharing our research with you, all I ask is that you share this email with friends and family to help them navigate the market. And if you enjoy what you read, then join us inside.
I also want to thank YCharts for sponsoring my public email post today. They provide institutional level data to help me fuel my investment research insights.
Dear friends from my Public & Private Community,
I will discuss Investment Strategy with you in just a moment. Long-time readers of my Public Letters know I have a deep interest in the parallels between literature, history, and public markets investing. I read about a lot of topics outside of finance, which has the effect of making me a much more well-rounded person.
In this email, I want to share with you the story of the Battle of Kohima, a key turning point in the Japan U-Go offensive into India in 1944 during WW2. This will help provide you with deep perspective, and I will help relate it to your personal investing perspective.
Many U.S. public high schools teach the nuances of U.S. History in an incredibly meticulous way. There are aspects of World History that are equally as important, and many of the freedoms and societal outcomes around the world that we enjoy today are due to key battles that are not often discussed in public schools.
I wish to help enrich your knowledge and your perspective and help you broaden your knowledge to become a stronger Analyst.
From April 4th to June 22nd in 1944, the Battle of Kohima took place in the now-capital city of Nagaland in Northeast India.
Although there were many important battles in the context within World War 2, this battle potentially changed the course of the battle in the Asia-Pacific region.
It is also one of the least discussed battles in classrooms in the U.S.
Here’s a good description of the pivotal battle from the BBC News Service:
Cut off by the Japanese, the allied forces were depending solely on supplies by air, and very few believed they could withstand the relentless onslaught. Japan's soldiers had marched to Kohima through what was then Burma - their aim to invade India.
The Japanese had already routed the British in Burma, but no-one expected them to successfully negotiate the mosquito-infested jungle hills and fast-flowing streams en route to Kohima, the capital of Nagaland, and Imphal, the capital of Manipur state in India.
When they did, the British-Indian troops tasked with defending the two towns were surrounded by more than 15,000 Japanese soldiers. They fought for weeks to prevent the Japanese moving through and capturing the strategic city of Dimapur, which could have opened the routes to the plains of Assam. Few believed the defenders could prevail.
The Japanese soldiers came in "wave after wave, night after night", recalled Capt Rowland.
The fighting was brutal and the British-Indian forces were confined to Garrison Hill, which overlooked Kohima. At one point the fighting descended into hand-to-hand combat, with only a tennis court separating the two sides dug in on the hill.
This major battle ended up being Japan’s first major defeat in the Far East during WW2.
Yet it is often dubbed as “the forgotten war” because this battle in North-East India never got the media attention that D-Day, Waterloo, or the other battles in Europe received.
According to BBC:
"It brought back many memories," said Capt Rowland, remembering how a group of 1,500 men had stood against the might of the entire Japanese 31st division. "It was a great military achievement."
Before leaving Kohima, Capt Rowland and his son stopped to lay a wreath at the base of the rough stone war memorial on Garrison Hill. As he put the wreath in place, he remembered eight fellow soldiers he had known who were lost.
He knew the battle had not entered the public imagination in the way more famous battles had, but those who were there would never forget.
"It was a great tribute to the resilience of human nature," he said.
What this has to do with your Investment Strategy
You may not realize it at this time, but this historical battle serves as a reminder that even in the darkest of moments, underdog forces can still persevere.
It is also a stark reminder that during the most stressful investing cycles (like the ones we are in today), you may be pushed to the brink of your limits (psychologically, emotionally, financially).
Individual investors who have attempted to overly actively trade the local tops and bottoms of the market most likely have experienced extreme frustration.
I consider my Online Friends (you all) to be among some of the smartest people on the internet. Many of us are heavily invested in Equities or Real Estate, with only a fortunate 20% of friends in the poll below showing that they have minimal exposure to asset classes that have fallen significantly in value this year.
This data set, while not representative of all folks in the U.S., is enough to give us a sense of how people are feeling on a day-to-day level.
I have a lot of data to suggest how the crowd feels at this moment.
And the crowd is most likely extremely pessimistic about the future. Despite the recent recovery we have seen.
In markets, which is also a battlefield in my sincere opinion (just an economic one), our capital is our ammunition. Our mindset is our most valuable resource. Our energy is what separates whether we keep holding strong or we capitulate and sell to comfort our psychology.
We face no shortage of concerns not just in markets but also in our day-to-day lives:
High cost of living for every day items and needs
Excessively high energy costs
Falling asset values (the Home being the most important)
General unease surrounding future expectations
A sense of uncertainty when it comes to next steps in career progression during a recession
These seemingly-mundane battles that good folks fight every day are not forgotten.
If you’re reading this email, I want you to know that I know how you’re feeling.
I know things are not easy.
But just remember the Battle of Kohima - the Indian Army and British Army never gave up against incredible adverse forces. And they did eventually persevere.
You will too.
I see better days ahead, despite the chaos brought onto the Chinese Internet sector post 20th Party Congress and also the FAAMG earnings that torched nearly every FAAMG name (except for Apple).
I’ll discuss this more in my November Research to be released next week.
The fact that you’re reading my emails mean that you’re most likely good and strong at what you do.
I hope to help you get through the other side and emerge victorious.
A Recap of What We’ve Been Doing Inside our Community
Our Mid-Month October Research Conclusions (published on October 16th, and shared with you above) will be discussed below. Members have already taken advantage of all views shared, and now I will make the report public for you.
At time of publication: S&P 500 was at 3580 and Alibaba (Proxy of China Consumption) was at 73/share (USD).
Conclusions discussed:
In the report, we believed that we are still in a Lower Lows, Lower Highs market structure in the U.S. Lower lows represent a deeper low. Lower highs represent a counter-trend rally against the primary trend.
That said, we believed a U.S. equity counter-trend rally (S&P 500) in the advance size of 250-400 points may take place from 3580 on the SPX.
We discussed the narrative of Rate Pauses well before it became a central media narrative. Most investors were looking for an outright Fed Pivot. Not us. We were simply looking for a Rate Pause. We discussed this as early as our October report published on the 1st.
We discussed Republicans gaining momentum ahead of U.S. mid-term elections as a potential bullish signal for U.S. stocks (Read report to understand why. Join our Community inside to ask me directly why)
I tempered our Members expectations that any recovery rally in Alibaba has limits (even though it was already low/depressed at 73/share when I shared opinion)
I discussed my opinion on China PRE-20th Party Congress. This was written before 20th Party Congress concluded.
If you are a retail long-term investor and enjoy these insights, our Community could be a home for you to get strong clarity during moments of deep confusion.
If you are a Financial Professional, Asset Manager, or Investment Research service provider, email me directly at premium@larrycheung.com if you want to work together.
In 2023, I will create deeper and more sophisticated courses and programs that helps good folks with investor education. For now, I want to keep my best research globally accessible to anyone who wishes to properly navigate this market.
For investors who have experience in markets, our actionable research will help you identify proper risk/reward at favorable moments.
At some point in the future, I will grandfather the current pricing to all current members, and new members will join at a higher rate. All active members will also get preferred pricing on all future products/courses as well.
80% of our focus is on China internet, U.S. internet & software, Semis, or Consumer Discretionary. The remaining 20% is on Dow Jones type stocks such as Energy, Financials, and Consumer Staples. If you are invested in these areas, our research focus can help you navigate this market with much greater clarity.
That’ll do for this brief update. Add me on Instagram and Twitter below. On Youtube, I typically only get to post once per week. But I am able to be a bit more active on Twitter and Instagram.
Add me! 😊
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Best Investment Platform For HK-Listed Shares for Chinese Internet Companies: Interactive Brokers or Moomoo
❤️ this email if you enjoyed the read. And see you in my next Youtube Video.
Your Investment Strategist,
Larry