The H.E.A.T. Formula
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The H.E.A.T. Formula is a radically different way to look at investing your portfolio.
H- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge
E-Edges, you should always look for edges. Preferably these are edges with some sort of psychological underpinning, structural edges, or some sort of barrier to entry.
A-Asymmetric. Everything you do, be it trades or your overall portfolio, should be designed so that heads you win a lot, tails you lose a little.
T-Themes. You should always be invested in the top themes. Most everything else is just noise.
We will continue to build out our resources here to help. In the meantime we have a model Hedges and Edges ETF portfolio.
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Our Next Webinar will be January 23,2025 at 2pm EST.
How to Make Money In Markets During 4 Years of Trump
-Three Major Investment Themes Nobody is Talking About
-Why Crypto is a Must Own and How to Trade it With Asymmetric Risk
-Three ETFs That You Want to Almost Always Be Short
-Dangers of Covered Call ETFs and a Better Approach
Register Below:
https://attendee.gotowebinar.com/register/980141392770803292
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Lot of data this week--Retail sales on Tuesday, FOMC on Wednesday, and PCE on Friday. Everyone expects the FOMC to cut 25bps so the drama, if any, will be in the commentary and the presser.
Bitcoin is over $100k again. Michael Saylor said something interesting about Bitcoin on a podcast, and I'm paraphrasing, but it was something along the lines of first your are skeptical, then you trade it, then you own it.....
These Five Wall Street Titans Thought Bitcoin Was a Fad. Here’s What They Say Now.-WSJ
On Friday you had a few names reacting to AVGO earnings but besides that the markets continued to show weakness. The Dow is in an obvious downtrend...
Same with small caps....
SPY looks like it could roll over....
Beneath the surface most areas look weak, except things like the ARKK names
This does look like it is topping though.
Day-Trader Spirits Prove Hard to Kill at Market’s Riskiest Edges-Bloomberg
I am still intermediate term bullish, but I'd be careful on the long side here. Most of the names on my watchlist have either curled downwards or look to be curling. When the only areas doing well are the most speculative I think you ought to be cautious.
As far as hedging goes I think you want a mix. I have VIX calls, which are not helping at all. VIX doesn't tend to help much when you have a beneath the surface sell off while the S&P looks fine.
UNG is a structurally unsound ETF that I love to short, and I added on a failure at the 200 day on Thursday.
I am also looking for high fliers that turn and cross below key levels, like TOST...
The way you protect yourself from inflation is to earn more than it....
Inflation Looks Sticky Again. 19 Stocks to Protect Investors.-Barron's
Themes
Self Defense
Palantir, MicroStrategy, and Axon Added to the Nasdaq 100 Index-Barron's
GUNZ has two of these. GUNZETF.com
Inverse Regional Banks
https://www.shortregionalbanks.com/
Trump Advisers Seek to Shrink or Eliminate Bank Regulators-WSJ
Can't imagine they eliminate FDIC insurance, but if they do who's going to keep money at a regional bank?
Office Property Meltdown Is Starting to Surface at Regional Banks-Bloomberg
Slumping office property values are rippling through US banks, with smaller lenders in particular ramping up the use of loan modifications in their commercial real estate books.
Crypto/Gold
Gold or bitcoin? Here’s the case for adding both to your portfolio in 2025.-MarketWatch
But their “differences are greater than their similarities,” Moy said. “Gold and bitcoin don’t correlate well with each other.” That may be the strongest case for investors to own both given uncertainties in the year ahead.
Weight Loss Drugs
The Weight-Loss Drug Market Is Heading for a Reckoning This Week. What to Expect.-Barron's
The monthslong battle over the future of the weight-loss drug industry is headed for a climax this week, when the Food and Drug Administration is slated to reveal whether Eli Lilly’s LLY supply of its obesity drug Zepbound can meet U.S. demand.
I currently have puts on LLY on a failure at the 200 day....
Still not sure what I think of this theme, is it a short on RFK Jr. or a long based on our willingness to take a shot vs. diet and excercise? Until I figure it out I plan on trading these names.
