Postcards & Republic Risk Letter
Nice squeeze today, huh? Today’s pop was largely due to a sharp decline in selling.
We’re still negative…
Dear Fellow Expat:
A few days ago, I received a text from one of my closest friends.
His words dramatically improved my mood.
He said my recent article on the energy sector had made him think twice about buying oil stocks over the last two weeks.
Remember – everyone’s been bullish. And the headlines rang about $125 per barrel crude by the end of the year.
But… and this is important – I noted a similarity between June 8, 2022, and recent price momentum moves in recent weeks.
After our energy sector signal went negative on Monday, October 2, oil has cratered, taking names like Exxon Mobil (XOM) and many others much lower.
He said I’d saved him a lot of money.
This validated much of the academic and market work I’ve done for the last decade.
I’m a very defensive-minded person.
I played goalie in every sport that had one. I had more control of the game by playing defense.
I feel the same way about the financial markets.
I like to take what the market gives me, focus on a high probability of success, and enjoy my life while the market is in turmoil.
When our readings are red, I’m not sitting around staring at screens.
I’m working on other projects. I’m researching books that I’d like to write. I’m paying attention to tomorrow’s playoffs in Baltimore (getting that 5:35 a.m. flight). I’m enjoying my life while the markets burn down.
The Wire Season 4
I was watching The Wire, Season 4 when a scene caught my attention yesterday. Proposition Joe holds a copy of a warrant authorizing a raid of a local drug dealer’s home.
Joe knows the raid will happen, but he hasn’t told the other dealer because that man isn’t a part of his business consortium. He says that maybe he’ll tell the man for a fee.
“What do you think a man with a whole lot of money would pay for his freedom?” he asks.
Apply that to the market…
What would a person who has winning positions pay to know the moment that the equity markets are about to go against them?
As a behavioral economist, I know the power of loss aversion.
The average person feels nearly two times the impact of a loss compared to the joy of a win in the same value. It’s just how the mind is wired.
Nothing more.
Much of the content I have written in recent weeks isn’t so much about opportunity as it is about assessing risk in the market.
After all, I’ve recently explained how the shift in momentum has preceded major events in the market. And I’ve noted that we’ve avoided selloffs simply by getting out of the way.
Yes, there are things we can do when a sector turns positive – or our readings turn positive. We’ll discuss the sectors to buy and the funds you could use to make sizeable gains.
But today – as the world burns in high-interest rates and equity uncertainty – isn’t it good to know when these signals happen, rather than waiting for the news two weeks later? (Remember… it already happened!)
So – I’ve decided.
We’re turning the taps on a little earlier than expected.
And we’re launching the Equity Outpost concept I provided everyone the other day.
But we’re changing the name right away.
This will be the Republic Risk Letter.
Each morning, subscribers will have access to all the data I study before the market opens. And I’m charging very little for it to start because I want to get the initial subscribers’ feedback.
I’m taking a different approach to the traditional newsletter business with this subscription. As I have said in previous letters - there isn’t a gimmick or a trick.
This is all the data and information I follow… what’s critical to me.
This is defensive-minded research. ?
It’s not going to center on long-term trading ideas.
This will center on ideal periods when investors should consider hedging, education on how to hedge long-term positions properly, and ways to trade when/if our readings turn positive or negative.
You’ll have all the signals. All three indices and the 11 sectors. You’ll learn how to use them properly.
This is the framework to show how I think and approach the markets.
I hate to lose more than I like to win… and starting in these ugly market conditions is the ideal way to get started… largely because I’ll show you the breakout potential in the market as most people flounder and sell.
When the A-Ha moment comes, motivation follows. When you know what you want to do with the rest of your life, you want the rest of your life to start as soon as possible.
I assure you, once you see the framework to which I view the markets, you will never unsee it.
So, step in the goal, and let’s start on Monday.
Stay positive,
Garrett Baldwin
Secretary of Defense
PS: Yes… Another letter will launch in 2024. It will cost much more. It will have our best long-term ideas baked into an allocation model.
It will also have lifestyle content, teaching you how to make a proper Gator Martini and why I don’t like buying cars (let alone driving them).
It will have a Sovereign Wealth Portfolio with a 10-40-40-10 framework, invitations to the Florida Republic, and more offensive-minded education.