Postcards: Sweet Revenge...

There are very simple things that you can do to improve your rate of success. Following these leaders in the markets, and you're on your way... ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Sweet Revenge...]( There are very simple things that you can do to improve your rate of success. Following these leaders in the markets, and you're on your way... [Garrett {NAME}](floridarepublic) Jul 23 floridarepublic   [READ IN APP](   Market Update: How do you know that momentum is strong in this market? Because cruise stocks are leading the S&P 500 higher on the day. Carnival Corp. (CCL), which you should short when our signal is red, was up 3.5% today. Royal Caribbean (RCLH) and Norwegian Cruise Line Holdings (NCLH) were also up. That said, with investors at - effectively - all-time highs in terms of long-equity positions, a few warning signs are arriving for the short term. Bank of America clients piled out of stocks at the fastest pace last week since November 2020. They dumped about $7 billion in equities. Given the big rotation into small-cap stocks, this might have been a flush of profit-taking as fear emerged on the tech side. --------------------------------------------------------------- Dear Fellow Expat: If you ever seek revenge on anyone… Please don’t make it financial. Don’t wait outside their house. Don’t do anything illegal. Just… do this… Wait until they have their Apple or Amazon playlist open on their phone. And then, when they aren’t looking… add a song to their playlist or “Like” a very random song. Maybe the worst rap song ever by Ice Cube… Or a yodeling greatest hit like "Song of Queensland" by June Holms. This subtle “like” will alter the algorithm linked to their music tastes, and thus playlists into perpetuity… Thus… Apple and Amazon will continue to recommend new songs like the one that was Smoky Dawson & His Rocky Canyon Boys so long as they keep their service.... It will drive them insane… They’ll quit listening to music. You see… I liked a random song last week… and now I’m getting music recommendations that I wouldn’t listen to… even if it were my only option while on a deserted island. I’m about to delete my music account. I can’t take any more recommendations for “NAS.” [Upgrade to paid]( The Auto Pilot Algorithms Algorithms can easily be pulled in new directions. But it doesn’t change the fact they’re running everything… Algorithms took over trading long ago… leaving human traders behind. Specifically, I’m talking about high-frequency trading (HFT). Their related algorithms execute trades in microseconds, exploiting tiny price differences with incredible precision. They engage in arbitrage, identifying and profiting from price gaps between related securities faster than any human could. \ Don’t bother trying… I did. It didn’t work. Now, why do markets like these algos so much if they beat up humans so badly? Well, they provide capital… or liquidity… to the market by - for example - placing simultaneous buy and sell orders, profiting from the bid-ask spread. There are other algos as well. Momentum trading algorithms follow market trends, while statistical arbitrage and machine learning models analyze historical data to find profitable patterns. These algorithms continuously learn and adapt, driven by vast amounts of data. More data than you or I could ever consume - likely in our lifetimes. The components of these trading algorithms are complex and efficient. They collect real-time and historical market data, generate signals based on mathematical models, and execute trades quickly and accurately. But the big thing that I stress about algorithms is that they aren’t confined by the human fallacies and challenges we face. They don’t give a damn if the market is possibly facing a recession. They aren’t afraid to trade at any given moment. There are no human behavioral elements at play. These machines eliminate human error and emotional bias, analyze large datasets, and execute numerous trades quickly. There is no second guessing. The program does exactly what it is designed to do. Now. there are downsides to algos, but we largely struggle to exploit them. There are technical failures, such as system glitches, fat fingers, or connectivity issues. These can disrupt trading operations - and even if the market allows you to buy Berkshire Hathaway stock for 60 cents… [the regulators will roll those trades back.]( For us, all this speed can make it hard to keep up. Retail investors typically execute trades slower, digest information slower, and lack the sophisticated tools of this alien technology. It creates a David-and-Goliath scenario. The first thing we must do here in the Florida Republic is accept this as fact. And then we adjust to identify opportunities that the algos aren’t watching. Which brings us to an old-fashioned favorite. Follow the Insiders If you want to zig… where the others zag, pay close attention to one area of the markets that remains underappreciated. That’s by focusing on what the executives at companies are doing with their own money… And… what executives at their companies AREN’T doing with their money. One of the core things we watch here in the Republic is when and why public company CEOs, CFOs, and Chairpersons buy their stock… with their own money. I’m not talking about buying their stock on “inside” information. I’m talking about how they purchase their stock when they deem it undervalued based on big news…, broader market reactions… While algorithms scrape SEC Form 4 documents for short-term trades, we focus on the longer-term emphasis. Case in point, we just saw a relatively large amount of insider buying in… Schwab, the online brokerage that took a beating after the company made changes to strengthen its balance sheet in the face of rate cut expectations and shifting economic winds. More or less, the company has dubbed 2024 as a transition year. The problem for momentum investors - and those algos that take advantage of price movements - is that there… isn’t any momentum. Shares recently hit oversold after a brutal selloff, which took the stock from around $75 per share to the low $60s. But can patience pay off… for anyone watching the insiders? The last time SCHW was under pressure was during the bond turmoil in October. Shares jumped from under $50 to nearly $80 in about six months, prompting a lot of insider selling with prices at 52-week highs. This pullback, however, has changed the winds. For the first time in a year, executives bought the stock. On July 19, 2024, the Co-Chairman and CEO Walter Bettinger bought $1.65 million in stock at about $66.26 per share. Meanwhile, Richard Wurster picked up $620,454 at an average price of $62.05. Today, shares are hovering between those two levels. It’s important to note that executives usually don’t scoop up shares of their own stock in Schwab. It’s a rare occasion, with the last bids coming in early 2023. But for patient investors… this can pay off. Why wouldn’t you follow the people who know the companies they operate? Why wouldn’t you have confidence that someone is putting down more than $1.6 million of their own money… and they’re willing to play the long game (executives have hold times OVER six months). These are the types of things that we’re seeking here in the Republic. In our insider musings, we recommended MSCI (MSCI) after two sizable insider buys. We recommended the global financial markets company when executives purchased the stock in April for under $470. And today… the company delivered an excellent rebound after a difficult earnings season. Shares popped as high as $570 at one point today before retreating. But this was another example of what happens when you’re patient and confident in the buyers. We’ll dig deeper into this tomorrow, in addition to the results of our Tuesday research marathon… designed to create Wednesday’s Watchlist. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()