macrobation

There is a cohort of super smart people online who are, what I have coined, Macrobators.

These are people who get all hot, sweaty and turned on by the latest bit of macroeconomic data, or a funky new chart predicting doom.

They are, in no uncertain terms, profitless and full of b*llocks.

Since 2010, the strategy that has worked has been ‘quantimentum’.

Looking at data that suggests US equities will extend higher and in our words, exhibit the fascist signs of ‘up and to the rightism’.

Build that into a model that automates across a basket of stocks and rebalances accordingly and you’re halfway set to making money (this is sort of what we do in the Academy since we exclude a large subsection of stocks such as biotech an pharma).

What macrobators tend to forget is their previous lil data points don’t matter one iota to the market.

As Euan Sinclair’s famous anecdote says, ‘that there is the bund. You don’t need to know what it is apart from the fact that some c*nts buy and sell it.’

The serial macrobators end up blindfolding the unitiated who end up studying the wrong game.

They dive deep into macro narratives that largely do not matter, especially when you run a single stock momo strategy (because some sh*t somewhere is running higher even if the SPX falls for instance).

Macrobators need to be put against a wall for the crimes they commit against the novice investing community.

There is a fella on LinkedIn who constantly spouts this kind of nonsense about debt to GDP, spending etc.

Here’s an example of one of the charts he shows…

This kinda thing is constant.

What value does this provide?

Macrobators at the heart of things are always looking out for risks.

But why does focusing on this kinda thing just not really work?

Three reasons…

1) Macro data has to be relative versus other economies.

Without making it relative, it doesn’t make sense. At the heart of things, macro is more a fixed income/FX trade, where you’re trading interest rate parity over everything else.

IT IS A BET ON INTEREST RATES AND THEREFORE YOU’RE EFFECTIVELY ALWAYS TRADING A SPREAD.

2) Other economies are in the same, if not worse situation than the US.

Most of these guys focus on the market which has the greatest earnings growth, the biggest firms and the deepest liquidity (which causes capital to flow to them and therefore causes their stock market to go up the most).

You rarely hear about these guys talking about a DAX or FTSE collapse, because it’s not sexy.

3) It’s REALLY hard to time a macro trade.

As I said in point 1), macro is largely an interest rates bet in FX and fixed income.

If you don’t know how to trade options spreads on rates, forget about your best guess on macro.

The timing and risk is largely way too unbounded.

Imagine trying to price interest rate expectations where SOFR is the most liquid market in the world (again why we do not recommend people to trade NQ or ES on short timeframes - there are not enough inefficiencies).

You’re betting in not only a really complex product, but against THE most complex participants.

That’s actually one of the first lessons in the Academy — stop betting where others are way, way smarter and with way more expertise than you, on timeframes where their technology and pricing will win.

PS. are you missing our daily call each morning?

If so, join the Fink Community today (you get this community free for life if you undertake the Academy by the way).

We get it… ‘not another Discord group.’

But I don’t think many other investing communities out there get 5* on TrustPilot because of the improvements people see in their investing growth and knowledge.