‘You can’t time markets’ is simply an excuse that people who aren’t good at it make. God Bless them and their whining. We need them on the other side of the trade. – Keith McCullough, CEO of Hedgeye

Investment, Instinct, and Insight

The recent Bloodbath in Crypto is why I keep encouraging people to practice proper Asset Allocation and Risk Management practices.

I will now happily take some of the big recent gains I made in the stock market while all the indexes have been hitting all time highs nearly every day since the new year and rotate some of that capital into crypto now with so many coins oversold.

Remember, the winning market strategy is to buy low and sell high, but your instincts want to make you do the opposite: Chase Momentum and Panic Sell.

The mantra to succeeding in trading is Buy Dips, Sell Rips.

The mantra to succeeding as a long term investor is: Hodl & Chill.

My Current Cryptocurrency & Economic Forecast

I expect the crypto-market to follow a trajectory similar to the Internet Bubble.

Attached is 36 year graph of the NASDAQ.

Crypto will dramatically change the world not just through hype and speculation, but through its revolutionary applications.

But it will take 5-10 years of hard won engineering and trial & error.

Prices will get ahead of value and there will be a rapid run-up and rapid decline.

It many ways the Crypto-Market is Internet 2.0.

Crypto is reimagining the web with a new secure protocol that enables many new decentralized applications.

I expect us to hit the peak in about 2 years with a total market cap 1.5x to 2x bigger than the internet bubble due to inflation, the accelerant of social media and that the world’s global economic infrastructure is 20 years more mature.

This gives a Peak Crypto Total Market Cap Price Target of 10-15 Trillion.

We are currently hovering close to 800 Billion in Market cap.

I think Bitcoin will fall as the #1 most valuable cryptocurrency within the next year to Ripple, Ethereum, Cardano, EOS or IOTA.

Personally I’ve got a fairly diversified portfolio of about 40-50 alt coins. That’s around the number that is recommended for proper diversification for angel investments in startups, which is what all these alt coins effectively are — early stage tech products/companies.

I pick alt-coins using the criteria of an angel investor (market opportunity, team, vision, traction, competition, status quo…with the additional factor of public receptivity due to the hype factor being such a large determinant of returns).

I swing trade a little bit and take profits off the runners and invest it into smaller alt-coins. I added to my cost basis to have around a 10% total portfolio allocation. This portfolio has run up 200-300% in just the last 6 weeks and so is already a much higher total portfolio allocation. I keep the other 90% in a diversified stock portfolio that are mostly options for leverage. I will probably let the crypto portfolio ride to the peak and try to get out somewhere within 20% of the top, rather than rebalancing the crypto portfolio.

I even arbitraged off some new 0% credit cards and a small amount at 20% interest just for fun to see if I could beat the rate — I have.

What’s scary for the whole global financial system is that there are many reports of people taking out a 2nd mortgage on their house to buy Bitcoin. So the crypto bubble bursting will likely be one significant catalyst for the next Global Financial Crisis, especially as the fall from its peak lines up well with timelines for the next recession which will likely become a depression due to all the accelerating negative feedback loops to the downside: The Current Tax Reform Bill being an excessive stimulant in the late stages of a bull market cycle, excessive government debt around the world, Geo-political instability, and stretched stock-market valuations.

When this happens I hope to be sitting pretty with a shiny bag of put options shorting the market.

For now, I’m enjoying riding the euphoria.

The future portends to be highly volatile, my friends.

Stay alert. Stay ready. Be dynamic.

What are your forecasts for the crypto-market compared to my own? And how are you personally positioning your finances?

My Hypothesis on Future Bitcoin Price Action

Cryptocurrencies represent legitimate disruptive technology. However they’re currently in a speculative bubble since the real transaction volume across the network isn’t that high, and most people are buying it for speculative purposes rather than functional purposes.

Bubbles do not die of old age and it’s possible to make a lot of money if one can get out in time.

So the key thing to look for is negative catalysts in bitcoin price in particular.

I think the main negative catalysts are another cryptocurrency overtaking bitcoin in speculative hype and when the market gets mature enough that you have a motivated group of Crypto-Bears with the technical tools to make a lot of money on the short side — either through shorting the new CME futures contracts or when a mainstream option chain is rolled out.

After motivated short sellers win their first battle that dip will be voraciously bought. But the 2nd and 3rd time they seize the momentum a panic may ensue, as there will be many new retail investors in the cryptospace who bought for purely speculative reasons who are now losing significant amounts of money. Other new-ish uneducated crypto investors may exit too — really anyone who invested for speculative purposes who does not understand the fundamental technology.

Overall I expect cryptocurrencies to follow the Gartner Hype Cycle:

And currently we are maybe 60-70% up the peak.

We will get fully up the peak when all the institutional and retail money can easily participate via futures contracts and ETFs.

One friend commented that Bitcoin has already been thru multiple Hype Cycles of which I would add:

That the Gartner Hype Cycle is fractal and applies to each segment in the life cycle adoption curve.

So the Bitcoin Innovators and Early Adopters experienced the Hype and Disillusionment, but the new Early Majority coming into the market since May of 2017 haven’t gone through that cycle yet and I suspect they will, due to a short selling dynamic like I described above.

I’m curious what other people’s thoughts on this thesis are who are following the day to day cryptomarket and cryptonews much closer than I am.

Crushing the stock market for $55,000 in 1 month & funneling the proceeds into an entrepreneurial revolution

I crushed the market for $55,000 in October, more than doubling my starting capital of $50,000 in my prototypical hedge fund.
Which means, since I implemented a full diversified long/short option portfolio on July 1st, I’m now up $81,000 in 122 days for a 162% return.
And to think I’m dusting Wall Street as a fucking Rookie, who has only been actively trading for 5 months, who is only doing this as a part-time, side project, while founding a new tech startup.
And to think I have so much more room to improve — where I’ve already identified more than a dozen areas for personal improvement and capacity for greater edge once I add a team around me and scale up.
I Profit off of the Fallacy of the Efficient Market Hypothesis.
I Profit off of the Fear of Masses and their Emotional Weakness.
I Profit off of those who subscribe to Risk Management — which often means “I’m psychologically weak, ignorant of what really makes the market move, and/or unwilling to put my money where my mouth is and bet on my beliefs about the world”.
I Profit off of having a better Model of the World:
What’s growing faster than consensus, what’s contracting faster than consensus, and synthesizing the multivariate perspectives of the Macroscope and the Microscope.
Most people making money on Wall Street are just fucking Arbitrage Whores and Middle Men skimming off the technical inefficiencies of the market, because they don’t have any real insight about the world and where it’s going.
I beast the Long Side and the Short Side. I change my strategy when the world the changes. I’m flexible, pliable and adaptive.
“I’m the fucking future.” – Conor Mcgregor, “They don’t think like me, they don’t talk like me, they don’t move like me.”
I will continue to do what others think is impossible in all areas of life.
I’m a different breed of human.
Money has never been a particularly abundant area of my life, as I’ve never taken a job for the money, I’ve invested heavily in my health (both recovering from illness and maximizing wellness), I’ve invested heavily in my personal development over saving money, and I’ve always pursued what I’m most passionate about, even when there was little or no money to be found doing so.
I’ve lived many lean years on under $40k, grinding through founder startup salaries and un-lucrative but meaningful consulting projects.
I had a 6 figure cash-out once, but spent most of that money pursuing a new startup and recovering from the long depression that ensued when it failed.
Now refreshingly, I’ve found a way to directly convert my Genius directly into $$$.
You know what makes this victory even sweeter?
From July 2016 to June 2017, I was struggling with depression and being broke, while searching for the path where I could simultaneously pay my bills and work on starting a new tech company that had a long runway before it could pay me.
I was spending a lot of time studying political and economic trends, financial markets and the systemic instability of the world’s current trajectory.
I was helping my parents re-allocate their retirement portfolio and eventually felt confident enough in my understanding of the markets that I asked them if I could reinvest some of the left over money in an account that was set aside for my college education. Capital that had just been sitting there since I dropped out of Stanford in my first quarter in 2010.
This is where the majority of my starting capital for my prototypical hedge fund came from.
So, now with this exponentially growing capital in my treasure chest, I’m ready to unleash my Genius in many areas of the world simultaneously.
“I envision two, possibly three, belts on my shoulder.” – Conor McGregor
I will suck money out of the Financial System and funnel it into projects that will catalyze the Systemic Evolution and Development of the world.
I’ve got a new tech startup launching soon that will do more to accelerate the consciousness of the planet than anything being worked on today.
I’ve got a book coming out next year that revolutionize the management science of entrepreneurship and innovation for all who are ready to metabolize its message.
I’ve got more exciting projects in the pipeline that I haven’t even talked about yet.
“Make no mistake, I am setting up to be the greatest of all time. I am working towards it and, I will go down as the greatest of all time. – Conor McGregor”
The Old World Order is Breaking Down.
Environmental Destruction. Massive Wealth Inequality. Political Regression.
We are at a Chaos Point.
We will Level Up or Level Down.
Evolve or Regress.
The Status Quo is no longer stable.
The Path to Successfully bringing the New Paradigm into Existence rests on outcompeting the Old World at its own Game.
By being better at Finance. Better at Business. Better at Relationships. Better at Thinking. Better at Feeling. Better at Life.
Soon I will be inviting many more of you to join me in this Revolutionary Campaign.
And if that’s not for you, well then enjoy the show.
Just don’t get in my way.
🙏😘

A temporarily growing global economy, an inevitable war with North Korea & a Bitcoin bubble

Highlights from the interview I watched this morning with two of the world’s best macro-economic and finance minds working today: Keith McCollough of Hedgeye and Jim Rickards.

1. There will be no rate hike in December contrary to consensus.
2. Disinflation will continue. The natural state of the world is deflation.
3. Stocks will continue to go up through the end of the year. The next 3 months are smooth sailing from the perspective of systemic financial risk.
4. 2018 presents a lot of risks geopolitically, and EPS profit slowdown YoY.
5. A War with North Korea is extremely likely. Either we’re going to attack NK preemptively in the next 6 months depending on their second strike Nuclear capabilities, or NK is going to invade South Korea within the next 18 months as a re-animation of the Korean War and NK’s desire for Korean Unification. The allies of the South Korea, which includes the US will then have to step in.
6. Bitcoin is in a bubble. Most of the non-speculative transactions taking place are black market: money laundering, arms dealing, drug dealing. “It’s a Ponzi scheme with nobody in charge.” You can make money in a Bubble you just have to get out in time. The Bitcoin Bulls understand technology but they don’t understand the history of markets and currency. Will you make money during the bubble or be like the masses of retail clients left holding the bag in the Dot Com Crash? (Disclosure — I’ve made significant returns speculating on Bitcoin but I plan to sell when particular catalysts are closer on the horizon).
7. China will experience a major economic slowdown in 2018/2019. They were in a holding pattern until Xi Jinping consolidated power, which just occurred. A China slowdown will have far reaching negative effects on the global economy.

My question for my friends:

Do you understand what’s coming? Are you prepared? Financially, Physically, Emotionally, Mentally, Spiritually?

How I made $10,000 today in the options market in 1 trading day — investing, psychology, and the superpowers of meditation

Two days ago I wrote a post about my concern about how retail investors are investing in cryptocurrency and recommended the option market as an alternative for those looking for a very aggressive risk/reward return profile. (https://www.facebook.com/maxhmarmer/posts/10211728883231644)

I mentioned NVDA LEAPS as a historical play that 10x’d the gains of Ethereum over a similar time frame.

Little did I know how prescient a call that would be.

As an example of the crazy returns one can get in the option market, yesterday I spotted the combination of a technical + fundamental set up I loved in NVDA and made one of my most highly concentrated option bets I’ve made to date.

I make concentrated bets like this extremely rarely. for what it’s worth—I’ve executed a concentrated trade like this maybe only 2-3 times since I started trading.

The trade was that I bought 15 call options at the 170 ‘at the money’ strike price with a 1 month October expiration for about $11,000.

Today NVDA was catalyzed by a fortuitous analyst upgrade with high price target and the stock rocketed up over 6%, making me over $10,000 within 24 hours.

However, the fact that the analyst upgrade happened today to light the powder keg on Nvidia was mostly luck, or perhaps an intuitive gift. My expectations were more along the lines of a 2-3% gain over the next couple of trading sessions. But the market game is probabilistic and all about tilting the odds in your favor. A landed missile from North Korea in Japan last night could have catalyzed the market in the other direction.

I can explain more about the technical + fundamental analysis that led to pulling the trigger on this big bet for those interested.

Before going further, I must say, these option trading strategies are not for the faint of heart. But neither is trading highly volatile cryptocurrencies.

Many option trades go to zero. And I’ve had days where I’ve been down over $10,000 too.

Despite this volatility I’m currently nearly 5x’ing the nasdaq, up about 40% while the nasdaq is up about 8% since late April.

At the same time I’m prepared to lose it all. I put significant intention into maintaining non-attachment to my results and mentally preparing myself for enduring considerable negative returns which paradoxically often improves my performance.

Even this NVDA trade went the wrong way on me soon after I made it. I was up $1k an hour after making it but by the end of the day I was down $2k. But I rode it out and didn’t panic and woke up to the returns from the analyst’s gift this morning.

Some more context on my strategy:

In June, I transitioned to a near pure long/short option portfolio because I became confident in my abilities to read the market, I’m young and thus can take a hyper-aggressive risk/reward profile, and I’m investing under a year’s worth of income — so should something go catastrophically wrong, it would not be too hard to make it back. For others, I often recommend some subset of their investable assets being in a high growth option portfolio.)

Investing is a psychological game as much as it is a strategic and tactical game. My proficiency as a meditator is an amazing asset.

Ray Dalio, who is considered the most successful hedge fund manager of all time has been practicing Transcendental Meditation for more than 40 years. He said,

“When I look back at my life, I am happy to have had what most people would consider a successful life, not only in terms of business, but in my relationships and in lots of ways. More than anything else, I attribute it to meditation—partially because of the creativity, partly because of the centeredness. TM has given me an ability to put things in perspective, which has helped a lot. I think meditation has been the single biggest influence on my life.”

There are more great insights from this article on Ray Dalio about how meditation can give you super powers ( https://finance.yahoo.com/news/ray-dalio-featured-in-dr-normal-rosenthal-book-super-mind-152727852.html)

Screenshots attached from my options portfolio(s) in two different brokerages.

I expect to be writing more about finance, economics, crypto and tech trends in the coming weeks and months as it aligns with some bigger picture life-mission projects currently manifesting in my world.

Over and out.