Time in the Market
               Not Timing the Market

WE’RE GOING TO ZERO

For those deeply immersed in financial markets daily, multiple narratives are surfacing across media channels. Notably on social media, there’s a biblical narrative suggesting we’re on a trajectory to hit ZERO.

Many argue that equities are significantly overvalued (with which I concur). Speculation also abounds that US rates have further adjustments ahead (I also concur). Metals are plummeting due to China’s economic downturn, and cryptocurrencies, along with major indices like SPY and QQQ, seem poised for a downturn. Some even predict a historic collapse of fiat currency, triggered by a globally recognized ‘blackout event’ culminating in a natural ‘RESET’ (I’ll reserve judgment on that one).

Suddenly, it seems everyone is a trader or analyst. While I value diverse opinions, I often feel many are echoing sentiments they’ve picked up elsewhere.

Discussing assets like BTC, ETH, LINK, or any top 100 cryptocurrencies is one thing. But delving into these subjects without familiarizing oneself with their ‘white papers’ or dedicating research time can misguide those seeking genuine insights, especially in a market burgeoning with newcomers. It’s paramount that your commentary is grounded in ‘FACT’ rather than ‘FUD’, or you risk coming off as uninformed spreader of FOMO, which drives me bonkers, especially since I’ve invested the last 8 years within this ( crypto )space.

To genuinely understand your chosen market, it’s vital to recognize the interplay of other markets and discern the liquidity rhythm. Grasping ‘Liquidity’ is to truly comprehend the market’s nuances.

I often equate this with appreciating Bob Marley’s music. You might hear one of his songs, but are you genuinely listening? Similarly, merely being aware of market shifts isn’t as valuable as actively LISTENING TO THE MARKET.

Liquidity is key. Track its movement across various markets, especially if cryptocurrencies are your wealth-building avenue. Understanding the equities market—which I believe has been overinflated for the past six years—can demystify many misleading narratives. In contrast, the bond market often reveals genuine insights.

It’s also crucial to be versed in global debt and geopolitical shifts, not just from a singular continental lens. Grasp the developments in Asia, for Western perspectives might surprise you, and vice versa regarding the US and India. A macro viewpoint on economies and diverse asset classes equips you for informed decisions, especially concerning the TOP 100 cryptocurrencies.

Reading this, you might question my credentials, as to why I’m a voice which should be heard. While I value privacy in my investment endeavors, my expertise springs from three decades of managing my own personal portfolio (the last seven years in crypto) , coupled with representing major Trading Houses across a multi asset class. Trading and risk management are intuitive to me, as evident in my blog . Hence, my latest piece, “We’re Going to ZERO.”

Admittedly, it’s a clickbait title. Yet, it serves to emphasize that if you’re trading a private portfolio without a keen understanding of macroeconomics and global politics, you might be on the precipice of an unforeseen crisis, which the The Simpsons couldn’t even predict. We may be on the brink of a financial upheaval that’s been building for a while, and when I say building, I mean planned.

But this narrative isn’t new. As we’re about 5 chapters in of a 8 chapter book, but like those Dungeons and Dragon roleplay books of yesteryears, your positioning before getting to the next chapter is vital.

Historical perspectives offer invaluable insights, especially when navigating the complex financial markets. When I cast my mind back to September of ’81, the closing yield of the UST T-Bills nearly touched a staggering 16%. Such anniversaries, in my opinion, shouldn’t be ignored; they often serve as markers, helping us discern potential patterns. The interplay between historical highs and lows, like that dizzying 16% and a contrasting low of around 1%, offers a guide, a kind of ‘straight and narrow’ path if you will. But more than merely fixating on these spikes or drops, it’s the hierarchy of these fluctuations that can be truly enlightening.

Now, if you pushed me to forecast where the 10-year treasury rates might land in the upcoming seven years, I’d venture it could hover around the 13.5-14% mark. It’s ambitious, I know, and I’m not suggesting it’s a certainty. But one thing’s for sure: diving headfirst into this tumultuous sea without a clear strategy could be treacherous.

How do we fathom where inflation is steering us? The answer, in part, lies in the enormous government expenditures. The market’s unease, the increasing clamor, seems to be a reaction to the perceived fiscal recklessness, with deficits approaching $2 trillion. It’s almost as though the market is sounding a clarion call, urging Washington to sit up and take note.

Let’s also remember the significant shift ushered in by QE32. Will the Fed, whoever is at its helm in the coming decade, really sanction a rate surpassing 13%? The continuous quantitative easing has muddled many market signals. Now, as efforts are made to reinstate them, we face another challenge: many global economies are sailing in these troubled waters together, casting doubt on the future buyers of these UST T-Bills.

The 1987 scenario taught us a lesson from the pits: when equities face turbulence, the treasury complex tends to stabilize. However, distorted signals might alter this dynamic, requiring a graver situation to attract the bond market’s attention. This bond market ‘rescue’, if you will, might arrive, but perhaps later than anticipated.

The puzzlement many express when dissecting the markets may stem from the Fed’s prolonged suppression of rates – a virtual decade of near-zero percentages that seemed almost unnatural. The eventual ‘pop’ we’re witnessing now is merely the market reasserting itself.

While I anticipate a temporary halt in rate hikes and a possible consolidation phase, I’d strongly advise against attempting to predict the zenith in yields. In this intricate dance among the raindrops, let the market lead. And as I pour over long-term monthly charts, this narrative grows ever clearer.

To tie it back to the title of this article, “We’re Going to ZERO,” the fluctuating story of the UST T-Bills is but one chapter in the grander saga of the financial markets. Recognizing the patterns, understanding the cues, and most importantly, heeding the warnings, might be our best shot at ensuring we don’t spiral down to that ominous zero.

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