Author: Lawrence Chan

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TLC Weekly Update March 11, 2023

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Next week is going to be a very difficult option expiration week not only because it is a quarterly option expiration, but that we have major economic data like US CPI, PPI, and then ECB rate decision, etc. It will be a mess to deal with …

The biggest news for this week was the “sudden” shutdown of the Silicon Valley Bank. Here is the latest take on the event by Chris Whalen on Blockworks Macro. It’s just half an hour and obviously it represents the view of majority of those in the financial industry.

So, everyone is pointing their fingers at Fed and Powell. Next is how the US government will weaponize the event to force the Fed to stop raising rate or even start to do QE forever. More drama is ensured as US is also heading to the standoff game of debt ceiling in coming months.

One thing I don’t agree with these financial industry insiders is that SVB fails because of bad practice encouraged by bad policies put in place since year 2008. There should never be multiple boom and bust crisis since. By punishing bad behaviours like sending those bank executives to jail for their reckless behaviours back then you would have a very healthy economy built on organic growth from there, instead of the massive bubble we are seeing now.

At this point most of the people in the financial industry all playing along the bubble game because if they don’t, they need really good understand how trading really works to make money. For example, Renaissance Tech’s Medallion Fund will continue to do fine, so are the other few firms like Jump Trading. Since almost everyone is guilty, they would blame anyone who ends the gravy train.

Here is a different take on the subject by Patrick Boyle. He talks about Silvergate situation in details. As usual, I find his sarcasm on these subjects quite funny but it may hurt the feelings of those crypto fans.

Instead of keep talking about this heavy topic, let’s watch a happy desert making video.

Lately, I find posting on twitter with my charts on longer term trading outlook much easier than doing it through the blog or in an article within daytradingbias website. For those of you interested in these updates, you can check it out.

Back to work for me.

Have a nice weekend all!

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TLC Weekly Update March 4, 2023

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This month we do not have Non-Farm Payroll report on the first week. Instead it will be next week due to February being a shorter month than the other months. The usual NFP week bias, however, will face a serious challenge this coming week with Powell going to speak for 2 days in a row. I am sure we will see more extreme intraday swings thanks to that.

Very interesting take of Warren Buffett’s annual letter that is just released. The explanation of the good and bad of share buybacks is a great lesson for everyone. I do not agree to many things Warren Buffett says but that’s because of my view on risk management is very different from his “empire building” mentality.

For those of you who are long term investors interested in figuring out a strategy to navigate the current market environment, here is an updated talk from Howard Marks. Great lessons from Marks as usual. If you prefer, you can choose to read the pdf instead of listening to the audio.

I find this youtube channel quite interesting because the way how intense the guy is with his presentation on global economic topics. His conclusion is a much more useful take on the current financial market environment. If he manages to find someone or a team to improve his production, his channel should gain a lot more subscribers.

Have a great weekend all!

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TLC Weekly Update February 25, 2023

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We just witnessed a week of intense bull bear fight for control of the stock market narrative that ended, again, indecisive. The animal spirit of the retail investors is very clear that they want a piece of this new bull market while the bears are cashing out.

Which side is right? Well, the answer is way more sarcastic than many of you think.

Both sides are wrong to think that they are right. It is really a bet that there is no WW3 or other major natural disasters such that Fed will be the only deciding factor for the future of this world. At best, both sides are blind by their own flawed reasoning.

Jeffrey Gundlach talks about the current investment environment. He’s not that upfront about the near term outlook and his takes on how to solve the economic problems US facing is asking for normal people to hate him.

Chamath Palihapitiya was interviewed by the Wharton Private Equity and Venture Capital Club. It is a long video with half of the session being question and answer from the audience. I find it very interesting that the event was recorded back in October 25, 2022 for which he mentioned his upside target of S&P500 and what will happen after.

Here is an interesting video of Warren Buffett talking about private equity. I agree with him that the current size of the capital the PEs have, makes it very difficult for PEs to find great businesses to acquire. Hence, the quality of the investments made by the PEs tend to decline. If one chooses to invest with PEs, one has to be careful.

For those of you who are into astrology, someone sent me an older post by Jessica Adams on Pluto in Aquarius. She listed out the past major events in history when Pluto stays in Aquarius. It provides a more comprehensive view of what may happen this time.

Back to my marathon meetings.

Have a great weekend all!

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TLC Weekly Update February 18, 2023

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The option expiration Friday yesterday was a perfect example how the MSMs always bullshit their way to put a story on what happened after the fact. There is really no need to do so. But then if all they do are telling the truth, there is no need of them at all, right?

Charlie Munger spoke at the Annual Shareholders Meeting of the Daily Journal Corporation. It is a long video of 2.5 hours. He answered many questions and if you are an investor, you will want to know what he thinks. At 99 years old, his mind is sharp and his ability to answer questions with maximum clarity is just amazing. You may not agree with everything he says though …

Thinking of Charlie Munger’s old age, here is a video on broad overview of anti-aging methods. If you want to see the hardcore testings he has done on himself, you can watch this.

Many people do not know about this simple fact that US Department of Defense has a very serious audit issue. I’ve seen many people condemning CCP of China for pillaging the country. Well, no matter how much they actually took, it is a peanut compare to what happens in the United States. Maybe that’s why US politicians are so mad at CCP – they are looking at a mirror of themselves.

Back to work as usual. And I have a long weekend to catch up too.

Have a great long weekend all!

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TLC Weekly Update February 11, 2023

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When every single guru out there calling for higher prices in stocks, the CPI figures from past few months all revised higher. In shock, many people sold their stocks and in turn took the indices lower. But seriously, isn’t that obvious since it was the midterm election? I am not saying “someone” intentionally distorted those figures. I am saying many working together to distort those figures.

Next week we have another CPI report coming. Then, it is monthly option expiration by Friday. Another roller coaster ride is guaranteed.

Someone sent me this video of a cute bunny whose best bud is a bunny doll.

A short clip on the moon landing. Was it fake?

From Lex Fridman, here is another one of his podcast. In this episode his guest is Andrew Bustamante, an ex-CIA agent. This is a good (and very long) video for anyone who has no idea how CIA functions. After you watch the whole video, you need to ask yourself this question – is he still working for CIA as a PR front?

Back to work for me as usual.

Happy Valentine’s Day!

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TLC Weekly Update February 4, 2023

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First month of year 2023 finished with one of the best monthly performances in S&P500 history. Many anxious retail traders are now very pissed that they listened to those perma bears and failed to hop on the boat. Well, they have no one to blame but themselves. If they have access to non-free market analytics, many of them already identified at least a 50/50 chance that we see 4100 and above.

The more interesting question is whether this rally will have legs like some people comparing this to the bottom of year 2009. They have a point – years after 2009, we’ve learnt that the central bankers agreed back in end of year 2008 that they will work together when the time comes to “save” the financial markets. So those who know about the secret agreement made billions off that bottom in 2009.

This time, that very interesting bottom in year 2022 was the work of Bank of England. If it did not intervene, the UK financial system would go under and the damage will spread worldwide. So, it is reasonable to speculate that all these major central bankers will do whatever it takes to save the game from total collapse.

The problem is, what if something happens that is bigger than these central bankers can handle? Are we at such risk now?

As long as these potential disastrous events have not happened, investors worldwide will pretend that all is fine and continue to seek for alpha.

Here is a funny video from Cathie Wood on her takes about various markets. It is funny because she is really just trash talking. At this point, she couldn’t care less whether her fund will perform or not. The hefty fees she has collected in 2020 and 2021 already put her in a very good place financially. Of course, if she is stupid enough to believe her own calls and put the money to work ….

In contrary, Jeff Gundlach, speaks things he believe in with much less fluff.

All these famous analysts and macro players are telling the world that S&P will have to fall a lot this year yet the stock market has been doing the opposite against these calls. Here is another one of these macro guys, Alf Peccatiello, talking about his current take on the financial markets. I like Alf and his vids often offer very comprehensive views. But I like to point out price dynamics is not a function of macro factors.

To make things simple, consider a funny story happening now at a house just a few blocks from mine. This house was sold a year ago at a very high price to the current owner. Since then this new owner tried to rent it out at $9,000 CAD for a few months. When it is not working, he lowered the price to $7,000. And then lowered it again to $5,000. A friend of mine checked out the place and offered to rent it at $4,000, which is already too much (reason below). The owner said he would never rent it out below $5,000. He even boasted that he has a lot of money so he does not need to rent it out at all. This house is still listed for rent today.

Participants in a market do not need to be rational. This owner of the house may not know that other houses bigger than his on the same street all rented out at or below $4,000 before he bought his. Yet he paid a price that top ticked the market with the belief he can rent it out at $9,000. The other properties in the area of similar size are sold at 30% lower than his purchase price lately. He must have his reasons when he made his decision to buy the property at that very high price, no matter how dumb those reasons are. And same goes for his conviction that he will not rent the house below $5,000, he must have his reasons. As long as he has holding power, he does not need to follow what others do.

If everyone is rational in making every decisions, human race should have been gone for a long time. I would say majority of people are irrational beings and majority of their decisions are made emotionally. That’s why it is fun to watch how price moves.

Back to work on my projects.

Have a nice weekend all!

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TLC Weekly Update January 28, 2023

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This week even some of the biggest bearish analysts from major financial firms finally admit the stock market can keep going higher. Is that a sign of too fast too much? We will see how things unfold in coming week as January will end by middle of the week and then FOMC decision on February 1st. It will be very interesting how the world will react on that day.

For those of you who think the economy will do fine, maybe you need to watch this video. From Theresia Gouw’s perspective, it will be tough going forward over the coming few years. Her perspective is very unique as a venture capitalist.

Interesting video about foam rolling (Warning: it use real dead people’s body parts) that makes me think. Maybe majority of the exercise tools or fitness products are not really useful after all.

I love watching videos of opposite opinions on the financial markets. Here is one with bullish view and another with bearish view.

Who will eventually be proven right? I have no idea. The only thing I like to point out is that no one talks about the biggest elephant in the room – geopolitical risk.

Thanks all of you who expressed interest in my proprietary trading venture lately. It has been two years of hard work and things are looking very good now. I should have written more about it in my article series on automated trading but my schedule is very hectic for a long time. I may not have answered all your messages and in case your have not received my response, please remind me again.

Back to work.

Have a great weekend!

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TLC Weekly Update January 21, 2023

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Biggest financial news this week is not about the stock market – it is about Bitcoin. After spending months near its low at 16000, a breakout above the 18000 resistance gave it a chance to shoot up to 23000. All the HODLRs went into euphoria and claim that Bitcoin new all time high is coming … well, the breakout was a tradable setup but it has not done anything to convince me the long term bottom is in.

Howard Marks on Bloomberg TV commented about the current market environment. I believe he has summarized the current global environment perfectly and it will be a tough road ahead for businesses, both big corporations and small companies, to navigate through the coming years.

One of the hottest debate (or fight) among investors is that whether the inflation high prints we saw last year is now gone thanks to the fastest rate hike in US Federal Reserve’s history. The bulls think the Fed is done as inflation will subside “soon” while the bears think that inflation is here to stay.

All these discussions are a waste of time. Michael Burry already told the world what will happen and it is unfolding exactly as he said – the bullwhip effect will continue to cause waves after waves of inflation in various areas in the economy. The Fed is cornered and can’t raise rate high enough to stop the inflation. As explained by Howard Marks and anyone who really understand how the world works, the effective interest rate is still negative. To stop inflation, the Fed needs to push the rate to 8-9%. However, doing that will bankrupt many banks and zombie companies immediately.

So this year and the next will be a super roller coaster ride in many financial markets until “the great reset” is here.

Since it is Chinese New Year later today, here is a funny bunny video for this year of the rabbit.

Why the Chinese New Year has not happened yet? It is another technical detail of the Chinese solar-lunar calendar. The start of a lunar month happens at the exact time when new moon happens. For the Chinese New Year, it will be January 21, 2023 at around 4 pm Eastern Time.

And so all these people who line up overnight in various Asian cities to be the first in line to give their prayers at temples and other worship places on the first day of the year … have done it wrong. Maybe that’s the reason why it never works for them.

For those of you interested in feng shui, here is a video about the feng shui setup for the year of the rabbit. It may not be the best but it is easy to follow.

Almost time.

Happy Chinese New Year!

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TLC Weekly Update January 14, 2023

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The US stock market made a powerful comeback by Friday close even after the nothing burger of CPI and disappointing earning result from one of the major banks. Could this be the start of much higher prices for the indices? Well, that all depends on the line up of earnings coming out these two weeks.

My best guess is that earnings will be bad for majority of the big techs and large banks. For the never making money companies in the S&P500, which are majority of the components now, they will disappoint further because they will easily go bankrupt as raising money through cheap junk bonds is no longer possible. Does that implies the indices will go much lower? Not necessary either as idiots will continue to buy with the expectations that free money from the Fed will return soon.

In short, I think the US stock market is stuck and have very limited upside for the year unless something dramatic hits the world like sudden world peace … However, there are so many potential disruptive developments around the world that just one of them materializes and we can forget about the current financial system. It is existential risk of the whole financial system that we should pay attention to. As long as the disruptive events do not happen, the downside will also be limited.

A very powerful speech by Konstanin Kisin at the Oxford Union. If you like the message he is giving about what really has to be done if the so-called climate change issues is true. What he said is effectively what Jordan Peterson explained for years but obviously a comedian delivering the message has a better chance to reach the woke communities.

The talk of the town lately must be OpenAI’s ChatGPT. From Ryan Reynolds’ funny video to speculations that it can be something dangerous to many people if the technology is used for exploitation by evil people.

I won’t speculate on where AI will take us. I just want to point out that if you have proprietary / secret knowledge of any kind in any field, you would not allow any internet connected AI platform near your work in a thousand miles. The moment you put your stuff into the platform, it is taken and it will no longer be your secret.

For those of you concerns about your portfolio, Jeff Gundlach’s latest webcast is now made available to everyone. Great summary of year 2022 with discussion of developing trends going into year 2023.

For those of you do not pay attention much about Asian culture, coming January 22nd is Chinese New Year. Many Asian countries celebrate Chinese New Year for many days. Thus, Asian financial markets will go into holiday mode in coming weeks and will not return to normal liquidity until early February.

Here is a tidbit on Chinese solar-lunar calendar. The regular Chinese New Year always happens on new moon. However, Chinese New Year is not the day that marks the turn from one Chinese zodiac year to the next. Currently, we are in the year of the tiger and by February 4, 2023 it will change to the year of the rabbit.

Have a great weekend all!

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TLC Weekly Update January 7, 2023

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Another NFP week is over and the mainstream media can now boast that year 2023 will be a great year for the stock markets because of the “January Effect” (the first week version) and the positive bias of third year in the US election cycle. Well, I am not so sure about that.

When everyone was paddling that we would get a “Christmas Rally” last year, I called out on Twitter that they are wrong because they failed to account for what happened in November actually has more significance on what would happen in December. I am right and they are wrong. This time on year 2023 stock market performance, I am calling the cheerleaders out again. I am not saying the year will be a big down year. Based on my analysis, I am saying year 2023 will likely be the most volatile year in many financial markets in recent history.

Gareth Soloway on Kitco News again on his views of many markets for the year 2023. His take on BTC may upset a lot of people who are die hard fans of Bitcoin.

Zeihan has been very busy and added more parts to the demographic talk series. If you like the first three parts, make sure you check out the rest. And this 2023 New Year video pretty much summarized all the chaos we are about to see this year.

A very interesting interview of David Sacks, paypal co-founder, at UnHerd. It is amazing that Freddie Sayers manages to get someone like Sacks to go onto his podcast, allowing normal people to see the world from the eyes of these “insiders”.

Some of you asked why I am always very busy. Ever since I decided to build our proprietary trading firm from scratch, I know it is a tough road. And the crazy thing is that I chose to start at a time when the stock market experienced its most volatile years. But we pull it through. Our hard work pays off. I am very excited that our new trading models are getting ready for deployment for more markets soon.

Hence I am going to keep pushing.

Have a great weekend all!