Macro Strategy: Invest like a Pro 📈

Thesis

-Demographics & Debt-Disruptive Technology & Deflation 

Framework

1) Macro Variables2) Policy: Monetary & Fiscal 3) Currency Instrument: U.S Dollar4) Debt Instrument: 10y Bond Yields5) Equity Risk indicator: Volatility Index6) Economic Variables: Growth & Inflation7) Inflation8) Growth9) Market Regimes

Investing in Disruptive Innovation

10) The 5 Platforms11) Highest conviction names12) Risk Management​

Thesis:

Aging Demographics & Debt

The largest population in all recorded history, the baby boomers, are leaving the labor force at around 3-4 million a year. This means their spending habits will decline, and spending is what fuels the economy. A strong economy services debt levels through GDP, and taxes. With record-high government debt, corporate debt, college debt, household debt, and a declining GDP growth rate, the government has no choice but to raise taxes and create more debt to service existing debt in order to avoid a global default on the entire financial system. The problem is , if you increase taxes on citizens, their spending declines. If you increase taxes on corporations, investment declines. If you print money you destroy the real value of income and wages while asset prices appreciate. Money printing ultimately widens the gap between wealth and poverty because those who own assets benefit while those who earn wages are robbed. No matter how much growth is generated through money printing, prices always rise faster than wages, demand plummets and the economy goes into recession wiping out those who don’t own assets. The government's solution is to print more money (treat the symptoms), our solution is to own the technologies that will build the future (cure the disease).

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Disruptive Technology & Deflation

Framework:

Markets function in reaction or anticipation of tightening and loosening mechanisms caused by human behavior, policy and the rate of change in growth and inflation. If markets go too far in either extreme, the probability of recession significantly increases. Too much loosening may result in rising prices and eventual economic collapse. Too much tightening may result in defaults on debt and eventual economic collapse. We believe markets respond to the cyclical nature of macro variables and that monitoring these changes through Fundamental (the what) & Technical Analysis (the when) offers an edge to speculative opportunities for investment growth.

Concepts: 

• When something tightens its reducing the amount of money flow in the system much like reducing the water flow from a faucet.- When something loosens it increases the amount of money flow in the system much like increasing the water flow from a faucet.

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1) Macro Variables

• - Policy
• - Debt/Currency Instruments
• - Equity Risk Indicator
• - Economic Mechanisms

2) Policy 

Policy levers 👇 

Debt / Currency Instruments

  3) The U.S Dollar

risk-taking 2) investor confidence 3) quantitative easing.</span>

Below is a 10-year chart of Tightening & Loosening cycles in the Dollar ( DXY ). 👇  ​

4) 10 Year Bond Yields

• When Bond Yields tighten it's usually a sign of pending inflation.- When Bond Yields loosen it's usually a sign of slowing growth or recession.

Below is a 10-year chart of Tightening and Loosening cycles in 10year-Bond Yields.👇  ​

Below is a chart highlighting how Bond Yields responded to Pandemic risks, Monetary policy, Fiscal policy, and inflation fears.👇  ​

5) Equity Risk Indicator

The Volatility Index is a type of insurance against the S&P 500, reacting inverse to the overall stock market.

Below is a visual representation of the inverse relationship between the volatility index (VIX) and the stock market (SPY.) 👇 

Below is a 20-year chart highlighting the inverse relationship between the VIX and the overall Stock market.👇 ​

-Below is a chart highlighting the VIX response to the pandemic, monetary policy, and fiscal policy. 👇 ​

6) Economic Variables

7) Inflation

• An imbalance between demand and supply for goods and services results in rising prices.- Inflation can come from the demand side, the supply side, or both.

Measuring Inflation in terms of Producer Price Index (PPI). 👇 ​

Measuring Inflation in terms of Consumer Price Index (CPI). 👇  ​

Measuring inflation in terms of Inflation rate. 👇  ​

8) Growth

• A balance between demand and supply for goods and services results in economic growth.- Growth is measured through businesses and the consumer.

Measuring growth in terms of GDP growth rate. 👇 ​

Measuring growth in terms of Purchasers Manufacturing Index (PMI). 👇 ​

Measuring growth in term of Industrial production. 👇  ​

Measuring growth in terms of Retail Sales.👇  ​

Measuring growth in terms of Personal Income (PI). 👇  

Measuring growth in terms of Personal Spending (PS). 👇 ​

9) Market Regimes

• Identifying market conditions in terms of growth and inflation.- recognizing which assets, stocks, and style factors complement each economic environment.

Investing in Disruptive Innovation 

10) The 5 platforms 

• Each platform has subcategories that represent the new age of disruptive technology.- The 5 platforms will submerge into each other to compound the effect of technology. 

11) Highest conviction names.

Tier 1: Highest ConvictionTier 2: High PotentialTier 3: Speculative Potential-

12) Risk Management 🔐 

• Scaling into oversold territory with multiple complementary variables.- Scaling into overbought territory with multiple complementary variables.
  Generating Cash with Options
  • Selling Cash-Covered Puts during complementary market conditions.- Selling Cover-Calls during Complimentary market conditions
    Hodling
    • Adding to our biggest conviction names in times of extreme fear and panic.