Good advice from Barry Ritholtz - Capitulation Playbook

1. Begin Humbly: We never know how far these drawdowns will go or how long they will last. Is this a shallow 20% pullback? A 30% crash? Worse? (We don’t know). 2020’s 34% crash barely lasted a month, the 2008-09 GFC ran for 18 months, and 1966-1982 bear market was 16 years long.

Begin your plan by acknowledging you are venturing into the unknown. Never bet the farm or assume so much risk that an entire portfolio can be destroyed if the underlying premise turns out to be wrong (aka “early”).

2. Seek Asymmetry: Look for opportunities that have much greater upside than potential downside. Traders never know which of their positions will work out or not in advance. There is value in creating a potential for net gains, even if you only bat .300.

3. Automate: The best-intentioned bottom buyers often fail to execute trades (despite their own desires) out of fear and emotion. Remove your limbic system from the process by deciding upon a series of entries, and then automating them.

4. Buy Over Time: Rather than guessing a specific “ideal” entry date mid-sell off, consider spreading out your purchases across months. Pick six dates over the next year with chunks of your discretionary trading capital. This guarantees you will be both early and late – but it also creates a high probability your average purchase price will be considerably lower than where the market is six months into the recovery.

5. Buy Across Prices Levels: Another approach to avoid guessing the bottom is to make multiple purchases at different price levels: Example: Set GTC limit purchase orders to buy a broad index down 19%, 26%, 33%, 42%, even 53%. (I like to avoid round numbers). If only half of your orders get executed it means markets avoided matching some of the worst downturns of the past 20 years – but you were still a buyer at advantageous prices.

6. Favorite Stocks: As much as I like broad indices, some folks have their favorite companies. Consider the ones that may have run away from you last cycle that you would like to own long term. Whether its Nvidia or Apple or whatever your personal fave, follow the same strategy of making multiple purchases across different price levels.Link here.

Which Generation Has the Most Influence Over U.S. Politics?

The Changing Face of the U.S. Voter

Younger generations have very different perceptions on everything from cannabis to climate change. This is starting to be reflected in legislation.

2016 was a watershed moment for politicians vying for the vote—it was the last election in which Baby Boomers made up over a third of U.S. voters. Collectively, Boomers’ voting power will decline from here on out.

Link here. 

WATCH: Mearsheimer and McGovern on Ukraine

"Prof. John Mearsheimer and ex-C.I.A. Russia specialist Ray McGovern discuss the Ukraine conflict and U.S. policy towards Moscow, presented by the Committee for the Republic in Washington."

Link here.

Extending Russia - Competing from Advantageous Ground

The Ukrainian military already is bleeding Russia in the Donbass region (and vice versa). Providing more U.S. military equipment and advice could lead Russia to increase its direct involvement in the conflict and the price it pays for it. Russia might respond by mounting a new offensive and seizing more Ukrainian territory. While this might increase Russia’s costs, it would also represent a setback for the United States, as well as for Ukraine.

Link here.

I was there: NATO and the origins of the Ukraine crisis

Was this crisis predictable?

Absolutely. NATO expansion was the most profound strategic blunder made since the end of the Cold War. In 1997, when the question of adding more NATO members arose, I was asked to testify before the Senate Foreign Relations Committee. In my introductory remarks, I made the following statement:

“I consider the administration’s recommendation to take new members into NATO at this time misguided. If it should be approved by the United States Senate, it may well go down in history as the most profound strategic blunder made since the end of the Cold War. Far from improving the security of the United States, its Allies, and the nations that wish to enter the Alliance, it could well encourage a chain of events that could produce the most serious security threat to this nation since the Soviet Union collapsed.” Indeed, our nuclear arsenals were capable of ending the possibility of civilization on Earth.

Link here.

YouTube Video - Professor Mearsheimer: The Situation in Russia and Ukraine | King's Politics

"This interview was recorded on Tuesday 15th February before Russia invaded Ukraine. 

Professor John J. Mearsheimer is the R. Wendell Harrison Distinguished Service Professor of Political Science at the University of Chicago, where he has taught since 1982. He graduated from West Point in 1970 and then served five years as an officer in the U.S. Air Force. He has published six immensely influential books on international relations theory. In 2020, he won the James Madison Award, which is given once every three years by the American Political Science Association to 'an American political scientist who has made a distinguished scholarly contribution to political science.'”

Video link here.

Biden’s CIA Director Doesn’t Believe Biden’s Story about Ukraine

Two years ago, Burns wrote a memoir entitled, The Back Channel. It directly contradicts the argument being proffered by the administration he now serves. In his book, Burns says over and over that Russians of all ideological stripes—not just Putin—loathed and feared NATO expansion. He quotes a memo he wrote while serving as counselor for political affairs at the US embassy in Moscow in 1995. ‘Hostility to early NATO expansion,” it declares, “is almost universally felt across the domestic political spectrum here.” On the question of extending NATO membership to Ukraine, Burns’ warnings about the breadth of Russian opposition are even more emphatic. “Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin),” he wrote in a 2008 memo to then-Secretary of State Condoleezza Rice. “In more than two and a half years of conversations with key Russian players, from knuckle-draggers in the dark recesses of the Kremlin to Putin’s sharpest liberal critics, I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.”

Link here.