Goldman Sachs has just declared that we're in a "postmodern era" where fundamentals no longer matter.
They're telling you to trade with algorithms and ignore value.
That's garbage!
I've been trading for 38 years. I've seen this movie before.
When Wall Street starts saying "it's different this time" and fundamentals don't matter, something bad is about to happen.
The market has priced in zero geopolitical risk, zero interest rate risk, and zero chance of anything going wrong.
The Economic Reality Check
Yesterday's Fed Beige Book showed completely sluggish economy growth.
Most new jobs are government jobs. That's not growth.
Meanwhile, Japan's 30-year yield just spiked to the highest level in decades. They're freaking out because they've never had rates above 3% for hundreds of years.
Here's what most traders don't understand about the current setup:
- Interest rates run the stock market, not stocks
- When someone offers you a 10% yield on bonds with virtually no risk versus a 10% on stocks with triple the risk, you take the bond every time
- The market automatically gravitates toward higher returns with lower risk
The Japanese situation is your canary in the coal mine. Everybody across the globe has rising inflation:
- China, Japan, Southeast Asia, Europe, the US, and Brazil
- All prices are going up while the Beige Book shows flat to down growth
- That's stagflation reporting - it's coming
My Track Record Speaks
I nailed the NiSource call after saying it would blow.
I kept telling you Fastenal would blow.
They're all gonna blow. It's just a matter of time because their valuations are obscenely stupid.
But the market isn't as smart as you think it is.
You get rich when the institutions catch on and the algos chase that.
Corporate Earnings Tell the Real Story
Take a look at what happened to Salesforce today. Down 14%.
They blew out estimates, but the market doesn't care. The market is telling you Salesforce's business is slowing to a crawl.
Meanwhile, CNBC refers to it as a "one-off." Nothing's a one-off when you're talking about one of the 30 largest companies in the world.
Texas Instruments announced today that its aged accounts aren't paying and aren't ordering.
Their accounts receivable are going up. They're not collecting cash, and their lead orders aren't there.
The market took off 5% and called it good enough. That could be the beginning of the end for chip stocks.
Market Top Behavior
The market is focused on two things:
- Momentum
- Making up its own narrative every day to look for reasons to buy
Markets are looking for reasons to buy, not reasons to sell. That's what happens when you're at a market top. When the market goes profoundly deaf and blind, you're at a top.
Why You Can't Short Yet
You can't short this market yet.
The hourly indicators are completely aligned upward.
Algorithms defend these patterns. They defend these trends.
But when that weekly MACD rolls over, the market's gonna crap out. I promise you it runs the market.
Here's what I'm doing instead:
- Positioned in low beta, high dividend, high cash flow, conservative defensive stocks
- Not losing money on the short side or the long side
- When the rotations start, I'm positioned for rotations
What's Coming Next
Tomorrow we're diving into technical and statistical risks.
We'll talk about basis risk, gap risk, and tail risk - the statistical risk that destroyed Long-Term Capital Management.
These are the not-so-obvious risks that translate into the obvious ones by the time you find them.
The business was built 250 years ago. Buy low, sell high. That's it. Buy cheap, sell expensive, and goodnight.
What the market does nowadays is trade on narratives, themes, and momentum in both directions while ignoring everything that matters.
Don't ignore fundamentals. They don't matter in the short term, but in the long term they determine the outcome of your profitability and success. I can assure you that.
Ready to Learn the Genesis Cog System?
Join us tomorrow at 9 AM CT for Risk Impact Week - Day 3.
We're covering technical and statistical risks that most traders never see coming:
- Basis risk that destroys hedge strategies
- Gap risk that creates execution nightmares
- Tail risk that killed Long-Term Capital Management
Time's running out on limited-time access. When the market starts listening to fundamentals again, you'll want to be ahead of the curve.
Get Access to Risk Impact Week →
Professor Jeff Bierman
Creator of the Genesis COG System