Weekly Paid Newsletter 02/27/2022
The market may soon find itself illiquid
We bring you two Announcements.
Announcements that will make you money and make the investor's life much easier.
Next week we will introduce you to a new project that we have been collaborating with for a few months, and that is, literally, blowing it up. For now, they won't let me tell you more, but I have used one of the techniques and have closed a critical deal in my company.
After several of you have asked us, we will make a guide with everything you need to make an asymmetric portfolio from scratch: broker, cold wallet, how to buy ETFs, tricks that allow you to make money during the purchase.
We will share this guide little by little. We will create it with everything we know so that the subscription price will seem like a gift to you.
Russia's invasion of Ukraine is sad news that has had a great impact on us and is creating a complicated situation in Europe and around the world.
The President of Russia has announced that he will carry out a military operation in Ukraine, and as a result, global markets have reflected this very negatively.
Major index futures were down 2-3% on Thursday at the time of this news. This has led to the Nasdaq being considered in recession for the first time since 2020. The most curious thing was that despite the bad start of the session, the main U.S. indices (not the European ones) recovered. We sent an email to our founding members, informing them of the actions we would take in case the indices went out of control, but finally, the VIX did not reach 40 (it will end up doing so).
This is why we always talk about one system for all scenarios. The market is TOTALLY irrational in the short term.
These declines have catapulted commodities. Inflation coupled with the fact that central banks are still increasing their balance sheets has made life for the average citizen even more expensive.
We continue to maintain our gold and silver position. We feel very comfortable with it. Moreover, in the case of gold, it is very close to touching all-time highs.
On the contrary, cryptocurrencies are still correlated with the market. During Thursday morning, many of them plummeted more than 10% before finally recovering. It can be an excellent option to increase our position a bit, but not yet.
But undoubtedly, the main problem that the markets have is LIQUIDITY. Liquidity is a problem for the economy both by excess and by default. Since 2020, we have encountered both sides.
On the one hand, an unprecedented $30T injection of liquidity. This has caused the price of most commodities to multiply x2-x3, and we are losing purchasing power at an unprecedented rate. Every day our money is worthless. And it is possible that in 3-4 years, it will be worth approximately half of what it is worth today.
On the other hand, when liquidity is radically cut, Mr. Market, the biggest beneficiary of Powell and company liquidity bonanza, will soon cry about too little liquidity. Investors forewarned.
We have repeated this an infinite number of times. But the most important thing is to have cash and liquidity when no one else does because people give away their stocks, crypto, houses… to get some liquidity.
What are the whales doing?
Buying PUTs like never before. We showed the record amount of puts being purchased, which according to Goldman have recently averaged to roughly $1 trillion per day...
In every crisis, there is always a trigger. We don't know if, in the case of the next one, it will be Russia's invasion of Ukraine. We know that when that crisis comes, we will be prepared with our Asymmetric portfolio.
It is already performing tremendously well, and absolutely nothing has happened yet.
The "55 Day Rule"
Most people don’t realize that the Crash of 1929 and the Crash of 1987 both occurred exactly 55 calendar days after the stock market had topped.
1929: the peak in the Dow was reached on September 3rd, when it closed at 381.17. 55 calendar days after September 3rd was (Monday) October 28th. That was the exact date of the Crash of 1929, with the Dow down 40.58 points, or 13.5%.
1987: the Dow topped out at 2722.42 on August 25th. 55 calendar days later was (Monday) October 19th when the Dow collapsed 507.99 points, or 22.6% in one day!
This year, the Dow topped out on January 4th, and 55 days later is Monday (!) February 28th.
In both 1929 and 1987, there was a sharp market decline in the week preceding the Crash, so that is something else to watch for. These Crashes just didn’t appear out of thin air.
Fibonacci fans like the fact that 55 is a Fibonacci number. There is probably something there with biometrics, too (remember that?). Of course, there is no real explanation, except for the fact that in both cases, 55 days of not seeing stocks go up was about all people could take. In both cases, most stocks had already started downward, just as they have over the last eight months.
Other “crashes” don’t line up so neatly. The Flash Crash of 2010 and the “Tech Stock Massacre” of April 14, 2000, both occurred far closer than 55 days to the previous market top.
In recent years, there have been only a few times where a market top has lasted for more than 55 days.
What will happen on Monday? (Nothing)
Now our portfolio in detail.