Individuals transform, money moves, nations collapse. But what about you?




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Weekly Report | Desired Corrections

More indicators correlate expectations of the reality experienced in American and world markets. The Asian markets, Hong Kong and Shanghai, have been undergoing prolonged corrections for almost a year.

Alibaba, for example, has already lost 53% of its stock value. Nio – Chinese electric car manufacturer and self-employed – it has lost 41% of its market value since January 2020. Tencent, China’s largest and most used internet services portal, is also taking a 42% loss this year. These are just three examples of the widespread correction that has taken place in major Asian markets.

The issue of correction does not only involve the overvalued prices that the assets were at, but mainly the irrational characteristics of a large part of the individuals operating in the markets. They allow themselves to be elevated by exacerbated greed and forget the intrinsic Fair Value that is behind each asset. I always consider it a behavioral and rational issue – little else. In fact, the greater the level of short-term volatility, the more accentuated and aggressive the corrections and valuations of these assets will be. In this scenario, individuals who seek Fair Value in their acquisitions benefit, abusing their purchases during periods of extreme volatility.

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Recessive Intuitions – Last 30 years

Below is some interesting weekly information that makes us reflect a little more on the moment we are living. Retail sales have declined drastically in recent months, contrary to investors’ positive expectations. In the previous article, found in the ‘News [english/Portuguese]’ menu, there were many cumulative distortions that indicate a strong recession is approaching: the third in the last 30 years.


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The Bubble of Everything


Some still insist on telling and influencing people with the objective of encouraging them to enter into extremely complex and risky situations. It already happened several decades ago, centuries past, and in 2020, it did not happen as designated by the “magic potions” of Governments and Central Banks – abruptly worsening the future context. We are increasingly on the verge of a delayed collapse – not just painful in the short term, but especially in the long term.

I reported this in quite a bit of depth in my second book. A pity to watch what is approaching in a sneaky and cruel way. Unfortunately we will see many individuals suffering from deep depressions; families destroying themselves because of monetary and material goods; a large, impoverished and unemployed mass; and finally, suicides.


Briefly interpreting the chart above, right in front of us, the amount of records that the American markets have been reaching recurrently comes to our eyes. The highlighted image only refers to the S&P 500 index. The Nasdaq index has become even scarier in its practically daily records.

Upon reflection a little more, we infer that: as soon as the index extrapolated its consecutive highs, there were in the following years absolutely significant drops to the point of mental, psychological and behavioral “break” of individuals operating in the financial markets. The split point of investors becomes clear approximately 3 (three) years after repeated lows, which obviously made them fearful about the future to come. Year after year in new lows, they made those individuals begin to feel the strong momentary losses in their assets. Pain slowly appropriated its positivist bias: greed in fear, enrichment in poverty, happiness in sadness.

Even though the big players in the markets – hedge funds – understand about the variable income dilemmas, strongly manipulating the markets, their clients, on the other hand, are completely emotional and sensitive to their assets left in the hands of third parties. In this intention, customers take the lead – before, made by managers – in their irremediable decisions and start generalized sales of their shares and redemptions of their assets: withdrawing their profits.

The graph above demonstrates well how the actions of market tamers make dystopia a reality. In almost all cases, the big losses are high for single, inexperienced, and lay people who are in the throes of excitement. In times of index records, the same fateful feature of previous crashes is always repeated: any individual, no matter how little they have studied, has their equity allocated in the stock markets.

Demonstration above the 200-day annual average without strong index correction. Still a little far from the crash average in 2000 and already at the same level as in 2008. From the year 2015 forwards, the highs are increasing without corrections in a smooth way.

In 2018 there was a longer correction of approximately one year. In 2021 we surpassed 0.30 and there was still no correction in the index in a “somewhat adequate” way.

Average Cash Levels still extremely low, indicating that investors are heavily allocated – long.

In other words: Market players are greedy, with little cash reserves and overvaluing many assets – some even without as much added value.

Despite disproportionately high expectations in the markets in general, there are still a few alternatives that have been relatively “discounted” since the 1995 recession: Energy!

Among the sources of energy matrices that are most discounted, Uranium stands out.

I’ll write about the uranium thesis, which I’ve been commenting on my social networks since early 2020, in some future post.

We probably still have some highs along the way, up to 2 (years), since EPS (earnings per share) is agreeing with that. However, we must pay attention to how American companies will start to suffer more accentuated impacts on their profits due to the expressive increase in taxes determined by the current government.

It Makes No Sense!

When faced with the following graphs, I become extremely skeptical of how disproportionate the American market has been since 1987. The maximum discourse is applied, in the current moments, that everything can be justified by the configuration of the current globalization, with massive performance of the technology and, mainly, of Artificial Intelligence [AI] – not leaving out the efficient logistical and informational expansion in which we live. On the other hand, numbers have always been numbers, determining the coherence – or not – of gains and losses over the years, decades and centuries. I’ll leave just one image – of the many in the rest of the content – very intuitive of the frantic, exciting moment we’re living and explain in detail the next sensational graphics below.

S&P 500 accounting for 29x return in 2021. In practice, in a simple and summarized way for understanding: You applied $100.00 and will only have the return on the same amount in 29 years. In 1999/2000, when bubble burst, the Risk x Return was significantly high and did not compensate for the time period of approximately 36x. I won’t go into the speculative details of that moment so as not to make the post too tiring, but I’ll leave a link at the end for the curious.


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Value History and Indication of Deep Recession

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The image above presents us only a review of the Current Value, Expectations of Return and Leverage totally far from the reasonable of the investors. It is not up to me, at this moment, to make such conceptual approaches on the subject, I just present to the subscriber in the graphs below the quantum behavior of individuals operating in the markets that are extrapolating their own perspectives on the world economy. We are a clear way to live at the beginning of a deep retreat, which is also the place to experience the glorious makeup through government institutions.

I always emphasize the same idea of ​​obtaining assets that are still undervalued and with prices far below what they expect. The great advantage of this totally coherent strategy is that: even with broader recessions, one continues to buy assets (businesses) at prices considerably below market expectations.

It is well worth reading and interpreting the graphs below. My intention is always to take the subscriber to the macroeconomic reality and constant observation about the absolute importance of Fair Value.


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