We have entered a more dangerous & wounded market (Please exercise caution)
The like button will tell the VIX to calm down and take a vacation.
Note: This is a very brief note to our community after last week’s chaotic market action. For more frequent, insightful, and tactical strategy on markets and career guidance, let me help you inside our investment community where our May 2nd Half Investment Research is now published.
Dear Public Investment Community,
I will write you a very brief note here, and catch up with you again later this week when appropriate. My public letters to you are purposely written at a general level so that anyone can understand it. More advanced strategy is provided inside my community.
In this email, I want to do the following things:
Share my thoughts on the market after last week’s roller coaster
Keep you updated on what we’ve been doing inside our investment community
Give you a recap on my latest Youtube Video
If you enjoy the read here, share my email newsletter to friends and family who you believe will benefit from my work. And if you are a new reader, make sure to join my list where I send thoughtful, periodic updates.
Views on the market: Exceptionally cautious at the moment.
We are objectively in dangerous territory for long-positioned investors (among them is me). Being proactive and having access to proper research from the right Strategists is absolutely essential right now.
Here are the 4 core risks that I’m actively monitoring:
Extremely stubborn high inflation in the U.S. and globally.
A Fed that is determined to restore price stability at any cost (via tightening)
China’s Zero Covid policy impact on supply chains that is now exporting inflation (where it used to export deflation)
Unrelenting escalation in the Russia-Ukraine crisis
I continue to believe that once any of these 4 issues start to improve, the market will see a very powerful bounce to restore investor sentiment.
However, there are a few considerations which I am actively analyzing: what happens if these 4 issues don’t improve, and even if one of them does, will the rally even be sustainable?
You see, the market has done so much structural damage to portfolios globally that a certain segment of the investor population (such as retirees or soon-to-be retirees) cannot afford to wait for the whole rebound to play out.
The market selloff has created new friction in the market, according to my analysis:
People who are turning themselves from investors into traders by trying to time short-entries upon market rallies
People who are trying to take maximum advantage of a rebound via leveraged ETFs or options
People who are ready to sell their holdings upon the next market recovery.
This is just a brief list, and I’m sure as you read this, you might feel that you fall in one of these 3 categories.
Remember that market selloffs and rallies and the impact they have on global portfolios will have an outsized impact on investor psychology.
Never forget that price can drive sentiment. People feel like masters of the universe when their portfolios outpace their day job incomes. People become toxic and bitter when their portfolios wipe out their hard-earned savings.
This is why we cannot expect the market to make a straight-line rally back to all-time highs without at least 2 -3 of the 4 issues I discussed getting confirmed resolutions. The people who are using leverage to take advantage of a bounce will cause severe bear market rallies while the people waiting to get out will serve as the market’s forces of selling at resistance.
Bottom line: this is a market where long-term forecasts based on historical events are unlikely to work and we have to proactively assess the situation with more updated analysis.
If you want to understand the market’s next steps, but are too busy to do it yourself and do not fully trust passive indexing (which is dangerous IMO) in this environment, lean on my research to guide you.
Things will improve, but how you take navigate the environment until things clear up is on you.
What we have been doing inside my investment community.
Let me zoom out a little bit, and walk you through the high-level opinions that I’ve shared over the last several months fueled by turmoil.
Below, I’ll share with you 3 of the most recent slides about my opinion on investment positioning issued at the beginning of March, April, and May (my Monthly Slide Decks are issued at the beginning of the month).
Going into March, we discussed opportunity in selective themes as Weak Buys
By April after the mid-March rally, I had reduced our investor positioning recommendations to Hold
And April as we know was a terrible month for SPX / Tech investors
Yet, going into May, I re-rated positioning to ALMOST weak buy because the risk/reward was still not fully there as we headed into May FOMC and the CPI figures
If you follow the markets closely, you would quickly understand the value of this type of commentary.
And this is just the tip of the iceberg in terms of research & strategy that I provide.
I’ve purposely created and designed an investment research service easily worth 50-75/month but priced at 20/month (less than 70 cents per day).
Why do I do this? I want to be able to have my work touch more, and more, and more people during a period of uncomfortably high inflation (where gas is $4.60/gallon in the U.S.).
I absolutely love it when members tell me my research has helped them think differently about markets and they become stronger analysts.
The marketplace (you) is smart, and understands value. Also, a recession is here, and I’m here to help people, and such important guidance at this critical moment in time should be accessible globally.
To my friends here in the U.S., in Canada, in Europe, or in Asia-Pacific.
I’m very well aware that the dollar is VERY strong right now (I mean, it’s a part of my analysis). Charging a high USD rate makes it harder for my global audience to benefit from my work (which I believe they very much need).
Inflation is destroying people’s lives. I don’t wish to participate in that. In fact, I want to counter that as best as possible.
I see a lot of investment research providers raising their prices while keeping their offers the same.
Reminds me of Netflix. NOT sure that’s the best idea.
I believe prices should change when the value proposition changes.
I’m committed to being the best research Strategist in the market while having my work be globally accessible.
Like the business philosophy of one of my favorite companies - Costco.
(Released March 1st 2022)
(Released April 1st 2022)
(Released May 1st 2022)
(What the last 3 months have looked like -not pleasant for passive investors)
Look folks, my community is not just about sharing my directional views on markets and companies inside my coverage universe.
I am also an educator (I run one of Massachusetts’ top companies in educational services where we help countless teens/parents achieve stronger academic results and college admissions by learning critical thinking).
I am relentless about helping our community through thoughtful education.
As a result , I also dedicate portions of my Bi-Weekly letters with a secondary focus on investor education as well. My goals are the following areas.
To equip retail investors with an edge in analysis (fundamentals/technical/macro)
To help retail investors separate facts from noise (critical thinking)
To ensure that my community members have the best & dedicated Strategist on their side when they need help the most
There’s a lot of noise out there. My research looks objectively at the facts, and for this reason, we make unemotional recommendations to our community (at a time when emotions run hot).
Take yourself to the next level and build lifelong skills by learning the art of analysis.
My latest Youtube Video
Here’s what my latest Youtube video is about:
Topic: Understanding China Real Estate and its impact on Chinese Internet Stocks as crackdowns start to dial down
Unique Angle: Walking through dynamics in the China Real Estate market to help my audience understand what is driving this market along with monetary policy considerations
Intended Audience: 1.) Investors interested in understanding the latest update in China Real Estate 2.) Investors who want to understand what are the drivers for Chinese Consumption (and therefore Alibaba/Tencent’s future)
Reason I made this video: To help our Youtube community understand that my LT conviction in China remains unchanged. I believe the real economy faces very strong structural challenges, but believe equities have more than accounted for this, and will benefit from any recovery later this year.
Other ways to support my work while also benefiting yourself (this is free):
Free research platform on the Art market by Masterworks: show them some love and get cool research in the art market by making a free account.
Free stocks: get up to 5 free stocks from Webull if you haven’t yet already by making a free account with a $1 deposit.
That’ll do for this short update.
If you’re looking to truly understand the investing environment we’re in, and want to support my research/work, let me help you inside my community. I’m on a mission to help people as many people as I can - hardworking, highly intellectual people like yourselves.
❤️ this email if you enjoyed the read. And see you in my next Youtube Video.
Until then, follow me on Instagram for some VISUAL commentary.
Your Investment Strategist,
Larry