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There Is no Magic Buy or Sell Point | Traders Wanted. Losers Welcome. Baltimore, Maryland February 2
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There Is no Magic Buy or Sell Point [Morning Reckoning] February 27, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Traders Wanted. Losers Welcome. Baltimore, Maryland
February 27, 2024 [Greg Guenthner] GREG
GUENTHNER Good Morning Reader, They say the definition of insanity is doing the same thing over and over again and expecting different results. But if this adage is accurate, shouldn’t most investors buy a one-way ticket to their local looney bin? Perhaps this is an insensitive comment. Let me clarify: I don’t really believe all investors are nuts. Even if they were, I’m pretty sure most of the country’s mental asylums shuttered decades ago. Since no more padded rooms are available, retail investors will just have to retreat back to their basement offices to read 10-Qs, download analyst reports, or whatever else they might be doing to pass the time while their stocks sink deeper into the abyss. Whoops! There I go again. I should probably quit ripping on these poor souls, especially since I used to consider myself a member of this not-so-exclusive club. I began my stock market journey much like everyone else, attempting to find some sort of profitable edge through fundamental research. After all, Isn’t this what we’re taught by the wise fund managers and economics professors who came before us? Before we invest in a company, we need to know what it does, who its customers are, how much money it makes, various valuation metrics, and its plans for future growth. We need to dig into news articles, analyst ratings, earnings statements, and call transcripts. The more you know, the more money you’ll make! Except this isn’t entirely true. If you’re lucky, you’ll soon realize what I discovered all those years ago… No matter how much you research a stock, no amount of fundamental information will pinpoint the best time to buy or sell. This is where technical analysis comes into play. It shifts your attention away from the obscure to the relevant, forcing you to focus on the forces behind the market movements that consistently perplex most investors. More importantly, technical analysis brings the one critical component into focus that can profoundly impact your returns: timing. Once I started to understand the true forces powering the markets, I began my evolution from investor to trader. It was a long process learning the ins and outs of classical charting, technical analysis, and behavioral finance – not to mention the countless hours of real-world market experience. When it comes to trading, putting your money on the line in the markets is the best teacher. As my knowledge and experience grew, I would talk trading with anyone who would listen. By now, I’m sure you’ve read many of my notes where I claim that thinking like a trader can change your life. Unfortunately, I’ve learned that not everyone is ready to dive down the rabbit hole and abandon their long-held beliefs. They’d much rather stick with what they know, despite seeing the same results over and over again. Maybe these folks are onto something. Why fix something, even if it’s broken? Just keep losing. Stay on the same path. Keep those returns predictably mediocre! [ Strange and Powerful AI Project Revealed]( Jim Rickards was recently passed some urgent new intelligence involving a $10 million A.I. project … That could have a massive and direct impact on your life. Everything you need to know is in this 2-minute AI briefing . [Click here to play his urgent message now.]( [LEARN MORE]( Here are a few more reasons you should avoid beginning your own trader’s journey: You’re going to regret all the time you used to spend on fundamental research. I spent way too much time at the beginning of my career trying to figure out the fundamental research that would give me some sort of a repeatable edge in the markets. Looking back, I don’t even think this endeavor is possible – even for investors much smarter than me. If I had put those hours to better use learning market mechanics – why stocks go up and down – I’d have found success much earlier. If you never adapt or learn these important trading skills, you won’t have to deal with this kind of regret. Instead, your returns will roughly match the ebb and flow of the markets (if you’re lucky). Becoming a trader will alienate your friends and family. Once you develop some consistency, you’re not going to be as interested or engaged in the financial noise machine. You’ll start to see through the hype and approach earnings and economic announcements with a skeptical eye. You also won’t have as many opinions to share on news events that supposedly move the markets. This change in behavior will irk your investing buddies. They’ll think you’ve lost your mind or fallen under the spell of some strange stock market voodoo when you have nothing to add to a discussion about producer prices or Peloton earnings. Traders have no one to blame but themselves. You don’t need much to trade. It’s just you, your computer, and an internet connection. You might want to invest in a big monitor and a standing desk (if you’re feeling fancy). But even a tablet and your favorite chair will work just fine. The stock market won’t judge. Your winning and losing trades will pay out the same no matter what. But this also means you’ll spend a lot of time by yourself. That’s great if you hate meetings and dread office small talk. On the flip side, this arrangement is not-so-great when it comes to accountability and idea generation. You might find that you have trouble consistently finding the best setups or sticking with your trading plans. You might also find that you occasionally need some encouragement when the market isn’t cooperating or you feel like you’re underperforming. You’ll need to stay proactive and seek out communities of other traders who can help you stay the course. Here’s a great place to start: [Join me on Top Trades Live]( where I’ll break down today’s action, including some of the market’s most promising short-term plays. But I must warn you… We’re building an exciting community of motivated traders of all skill levels. It’s a place to learn and share ideas – even ones that fly in the face of more “traditional” investors. If you want to stay the course, it’s probably not for you. Best, [Greg Guenthner] Greg Guenthner
Contributing Editor, Morning Reckoning
feedback@dailyreckoning.com [URGENT: Regarding Your 2024 Strategic Intelligence Membership Dues!]( Hi, I’m Matt Insley. I’m the Publisher at Paradigm Press. Just moments ago, I just got off the phone with Jim and we agreed: it’s time we start charging more money for access to his newsletter. That’s why we may implement a massive price hike for all subscribers in the coming days. But if you [click here now,]( you can lock in your current subscription price at 80% off – and never have to pay the potential new price of $500. Don’t waste any time. [Just click here now to claim this special offer.]( [LEARN MORE]( In Case You Missed It… “The Literal Price of Freedom” Sean Ring, Editor [Sean Ring] SEAN
RING Good morning Reader, My goodness, I didn’t have that on my Bingo card. I had just written last week’s [piece for the]( Reckoning]( about opportunity cost. And yet, there was Jon Stewart, back on television in all his glory, getting it completely wrong. I actually smacked my head when I heard his nonsensical outburst. Of course, if it’s an outburst nowadays, it’s usually about Tucker Carlson. And what did Stewart say with respect to Carlson’s report on Moscow’s supermarkets? There is a hidden fee to your cheap groceries and orderly streets. Ask Alexey Navalny or any of his supporters. NEWS REPORT CUTS IN: In Vladimir Putin's Russia, political repression is everywhere. And hundreds have been arrested for daring to honor Navalny so publicly. Right, because the difference between our urinal-caked chaotic subways and your candelabra'd beautiful subways is the literal price of freedom. My God, he was serious. Let’s use the rest of this Reckoning to take apart Stewart’s ridiculous assertion. Opportunity Cost First, let’s review the definition of opportunity cost. From last Thursday’s Reckoning: Opportunity cost is an economic concept that refers to the potential benefits an individual, investor, or business forgoes when choosing one alternative over another. In simpler terms, it's what you give up to do something else. This idea is crucial because it helps people understand the actual cost of their decisions, not just in terms of money but also in terms of forgone opportunities. Opportunity cost is about trade-offs. But since when did freedom have to be traded for clean subways? If Stewart had his head up his ass any further, he’d puncture his pancreas. First, let’s look at the simple logical errors he made. The Logical Errors False Equivalence Freedom encompasses many aspects of life, not just the physical state of public transportation. Linking a specific issue, like subway cleanliness, to such a broad concept as freedom creates a false equivalence. It implies that any inconvenience or discomfort experienced in pursuing freedom is inherently justified, which is not necessarily true. Unclear Causality Stewart implies that dirty subways are a direct consequence of freedom. However, this causality is unclear and debatable. Many factors contribute to the cleanliness of public spaces, including funding, infrastructure, and cultural norms. Attributing it solely to freedom ignores these complexities. Ignores Alternatives Intentional or not, Stewart suggests there is a binary choice between having dirty subways and sacrificing freedom. This is a false dichotomy. There are likely solutions and strategies to improve the cleanliness of subways without compromising core values like freedom. Dismissive of Concerns Framing the issue as "the price of freedom" is dismissive of legitimate concerns about the state of public transportation. It can downplay the impact of dirty subways on commuters' health, comfort, and overall experience. But if these logical arguments don’t do it for you, let’s look at real-world reasons why big city subway systems are toilets. Budgetary Constraints Limited Resources Many subway systems, such as New York City's MTA, face significant budgetary constraints. Funding is often allocated to critical infrastructure repairs, safety improvements, and operational costs, leaving less available for cleanliness and maintenance. Prioritization In cities like Chicago, where the CTA operates buses and trains, budget allocations must cover many needs, sometimes prioritizing system expansion or technological upgrades over cleanliness. Political Challenges Bureaucracy and Red Tape Political bureaucracy can slow down or complicate efforts to allocate funds efficiently. In cities like San Francisco, competing political interests and regulatory hurdles can delay the implementation of cleaning initiatives. Funding Battles Public transit agencies often rely on city, state, and federal funding, leading to complex negotiations. For instance, Los Angeles's Metro system has faced challenges securing consistent funding streams, impacting its ability to maintain and clean its facilities. Logistical and Operational Issues High Usage Subway systems in densely populated cities like NYC experience extremely high usage, making constant cleanliness a challenge. The sheer volume of passengers can quickly undo cleaning efforts. Homelessness and Social Issues Cities like Portland and Seattle have faced challenges related to homelessness and social issues within their transit systems. These issues can contribute to cleanliness problems, as transit stations sometimes serve as shelters for the homeless population. Let’s look at some specific reasons. Specific Examples NYC's MTA Despite efforts to increase cleaning frequencies, the MTA struggles with maintaining cleanliness due to its vast size, aging infrastructure, and the need to balance cleaning with keeping the system operational 24/7 because keeping the system operational 24/7 is damn near impossible. Chicago's CTA The CTA has initiated several cleanliness programs but faces challenges due to its extensive network and the need to prioritize funding for safety and operational improvements. San Francisco's BART BART has faced criticism for cleanliness and maintenance issues, made worse by budget shortfalls and increased demands on the system. Los Angeles's Metro LA Metro has made strides in improving cleanliness through increased funding and new initiatives but still needs help with its expanding network and balancing various priorities. Portland's TriMet and Seattle's Sound Transit Both systems grapple with the impacts of urban homelessness, social issues on cleanliness, and the need to allocate limited resources across expansive transit networks. Wrap Up If only Jon were so indignant about his government starting but not ending its wars. If only Jon were angry at his fellow citizens for pooping in the subway. But Jon decided to kill the messenger instead. The question remains: Why shouldn’t anyone, not just Tucker Carlson, wonder why America can’t do better than Russia? Why do most Americans accept that their big cities are dangerous, third world shitholes? Why aren’t our cities better governed? Is moving out the price that has to be paid for cleanliness? Because dirty subways aren’t the price of freedom, Jon. They’re the price of corruption, priorities, and belligerence. All the best, [Sean Ring] Sean Ring
Contributing Editor, The Morning Reckoning
feedback@dailyreckoning.com
X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [Paradigm]( ☰ ⊗
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