The NEW FED Rate Transformation Brought Out The OLD Wall Street Playbook
Hey Subscriber,
Ok, first an apology. I did not explain WHY we did not post "Buy Under" prices on our favorite Growth at a Reasonable Price secular growth plays in last night's update or any other new buy under prices--my bad.
The reason we did not post nor update new Buy Unders for any of our holdings was simple--the melt-up on Fed Day felt like a classic short-covering/relief rally--as mentioned many times--it's the last half of December and clearly many major Wall Street hedge funds and trading desks with many hundreds of $billions under management were afraid of a scorched earth bloodbath with a new Fed rate cycle and when they got just 3 months and 3 hikes, they covered those shorts like crazy.
BUT--the only way I can explain today's massive sell-off in EVERYTHING in technology that has worked for the last 11 years is this-- TODAY is the day money managers and their bosses pulled out their Wall Street playbooks and went to the section labeled " What to buy and sell when a MAJOR transformation of Fed monetary policy is announced and detailed?"
Today was the CLASSIC continuation of the 50-80% unwind in the 30-50X multiple stocks (Zoom/Docusign/Chegg and dozens more) that I posted for our All Access members that started with the "Powell Pivot" in October and November. Yesterday was a classic relief/short-covering rally aka "major head fake."
Playbook Indicator #1--Virtually every asset class that is supposed to go up according to the Wall Street Fed Rate Hike playbook went up--banks, energy/gold/silver (classic runaway inflation hedge), water stocks and utilities, healthcare, and pharmaceuticals.
2) EVERY sector inflated in value by free Fed money and negative return TINA that clicked the checkbox of"rational and irrational exuberance" was sold lead by the SPAC sector we ditched last June and the 25-35-50X+ revenues cloud technology.
3) Take the POSTER Child and children of the last 12-24 month run of the 11-year bull market out (The ARKK Cathie Woods Disruptors) and shoot all the stocks in the fund/ETF. ARKK is now hanging on by a thread.
And yes you are welcome we stayed away from the ARKK shit show...missed some upside in 2020 buy BOY this chart looks exactly like March 2000 with the Dot Com implosion.
Our FAAAMGTS stocks, on the other hand (with the exception of Adobe and Shopify), hung in very well while most of our 60% allocation to Ultra Income was in the green today.
Actions to Take: I am putting at $1300 sell stop on Shopify and $540 on Adobe--they are the highest valued multiples in the Game Over Digital Dominators. We have nice profits in the FAAAMGT stocks from our May entry--if you don't have a tax issue you can sell as much as you need to feel comfortable.
The easiest way to hedge FAAAMGTC is to buy slightly out of the money early January PUT options on the leveraged TQQQ or sell early out of the money January CALL OPTIONS on your positions.
Final Point: We HAVE our "What Works In a Fed Rate Hike Cycle" playbook out for 2022, too. There still is a risk that, as I talked about a few updates ago, that the inflation genie is not tamed with these Fed measures--certainly wage inflation is with us for the next 12-18 months at least.
On the other hand, IF Omicron shutdowns rapidly go nationwide and hospitalization looks to go ballistic in the U.S. as it is doing right now in the U.K. (and odds are it does after the Holidays and College/Pro Sports playoffs), WE will be prepared to go DEVCON 5 to protect our massive profits in our Ultra Income Plays (and be ready to run the Ultra Income playbook again if energy prices fall 15-20%).
Warning: This whole market is a place we have not been in since the WWI/Spanish Flu era--the only difference without vaccines the world lost 50 million souls.
I'd love to think with all the antivirals now out that Omicron will turn out to be a nuisance like flu season....but NONE OF US can NOT be prepared for the worst...again. I have already talked a few Transformity Wealth clients off the ledge today--if you want to see our play-by-play analysis and hedge plays and ask real-time questions of me and our team, NOW IS THE TIME to sign up for our All-Access plan as we are literally in an hour-by-hour/day-by-day very fluid and dynamic situation.
Someone from Transformity Research in or monitoring the market minute by minute and responding to questions with updates in real-time.
IF you will sleep better and lower your blood pressure with our real-time "concierge" All-Acces service, sign up right now by clicking on this link, scroll to the bottom of the registration page, and Shauna will make sure we get you all up and running.
Seriously-- in order to keep ALL the ridiculous 80+ years of wealth we have all made in the "Don't Fight the Fed" market and after March 2020 with the Fed and the Federal Government's $10 trillion of free money, it would be brutal to give a lot of those hard-fought gains back by NOT making the adjustments you need to make NOW to keep the money you have made and benefit from Fed's Monetary Policy transformation.
Navigating the Fed's Monetary Transformation is part of our Transformity Investing strategy--you don't fight the Fed when they are creating $trillions of new money that has to go somewhere, and you DO NOT FIGHT the Fed when they are raising risk-free bond rates and taking back some of that free money.
We will navigate these choppy waters--but bear in mind the economic and stock market dynamics are changing and morphing in real-time some of these days. To think the Fed is "one and done" I find naive--remember they were the same folks who told us the inflation was "transitory" when Stevie Wonder could have told you that dog would not hunt in a once every 100-year event.
Once again--take a few deep breaths--take a few sips of your favorite libation. We DO have a playbook for either 1) regular old Fed rate hike cycle 2) worse than forecast sticky inflation and 3) if Omicron jumps the shark and the 65 counties in America that product 72% of our ENTIRE GDP go on lockdown.
Have a great night...but be prepared for ALL the possible outcomes--we are in a place no economy in the modern world has ever been ever before.
Cheers.