TradeSmith Daily

January 2020

Real Estate, Reflexivity, and Second-Order Effects

January 29, 2020TradeSmith Research Team

“Reflexivity” is a strange word. For investors, it’s important to know what it means. This is because markets are reflexive — that is to say, markets show reflexivity — which creates both danger and opportunity at bullish or bearish extremes. What does it mean to say the market shows reflexivity? To put it simply, the market observes itself and then responds to itself. This observe-respond dynamic, which endlessly repeats, will sometimes create a feedback loop, like sound waves oscillating at

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Bitcoin’s Volatility is a Red Herring

January 28, 2020TradeSmith Research Team

Deutsche Bank has a new report out on digital payments, covering the long-term migration of payment mechanisms from cash to cryptocurrencies. The report is titled: The Future of Payments: Part I. Cash: the Dinosaur Will Survive … For Now. Most of the report is fine. And yet, in an interesting way, they misunderstand the nature of Bitcoin entirely — and they also get wrong what “store of value” means. Within the report, Deutsche Bank states the following: “Bitcoin is too

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Reality isn’t a Simulation, but the Simulations are Coming

January 27, 2020TradeSmith Research Team

Is reality actually real? What if it’s all just a simulation? For technology enthusiasts and science fiction fans, the question is fun to debate just for kicks. At the 2016 Isaac Asimov Memorial Debate — an event hosted by the American Museum of Natural History — “Is the Universe a Simulation?” was the grand debate topic, with physicists, astrophysicists, and philosophers all weighing in. Astrophysicist Dr. Neil DeGrasse Tyson argues it is “very likely” the universe is a simulation, mainly

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Three Signs Market Sentiment Has Reached Dangerous Extremes

January 24, 2020TradeSmith Research Team

Investors are starting to believe — to really and truly believe — in the power of the Federal Reserve. This is centered around a cluster of assertions: The Federal Reserve will not raise interest rates. The Fed will not let the market go down. Nothing will keep stocks from continuing to rise. Holding equities is as safe as holding cash. As the major indices hit all-time highs, various “crowded trades” have almost gone vertical. Multiple FANG names, for example, have

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Interest Rates Have Been Falling for 700 Years

January 22, 2020TradeSmith Research Team

Here is a finding that will bake your noodle: Interest rates have been falling for 700 years. From the early 1300s onward, the long-term trend of interest rates has been lower. If the data supporting this finding is correct, we are talking about one of the biggest trends in history: Bigger than any nation or human migration pattern; bigger than central banking; bigger than all wars and treaties; bigger than the industrial revolution. The implications are staggering. For example, it

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Jeff Bezos Wants to Read Your Palm

January 21, 2020TradeSmith Research Team

Jeff Bezos, the founder of Amazon, wants to read your palm. He doesn’t want to tell your fortune though. He wants to make it easier to buy stuff. The most profitable technologies are so easily and frequently used, they almost become invisible. Like smartphones, for example: The typical smartphone is within its users’ reach almost 24 hours a day: On the nightstand while sleeping, next to the sink while showering, in the middle console while driving. The smartphone is always

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Never, Ever Attend this Crypto Conference

January 17, 2020TradeSmith Research Team

There is a big crypto conference from Feb. 22 through 29. No matter how much you like cryptocurrency, you shouldn’t attend. Why? Because if you’re American, and you show up at this conference, it could land you 20 years in jail. North Korea is holding its annual blockchain and cryptocurrency conference toward the end of February. Sanctions experts from the United Nations are putting out an obvious warning: Don’t go, because you’ll probably get in trouble if you do. A

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Man Who Oversees $160 Billion Forecasts 30% Upside for Gold, Disaster for the Dollar

January 16, 2020TradeSmith Research Team

Bridgewater Associates is the world’s biggest hedge fund. It has assets under management of more than $160 billion. Bridgewater is also the most successful hedge fund of all time by the metric of absolute dollars earned. By that meaning, if you looked at how many swimming pools Bridgewater could fill with the dollars it has earned for clients, they would fill more pools than any other rival. Over the course of four-plus decades, their sheer volume of profits is unmatched.

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