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Strategies & Market Trends : The Art of Investing

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Rarebird

To: Rarebird who wrote (3160)	1/7/2022 10:14:49 AM
From: Sun Tzu	1 Recommendation Read Replies (1) of 10590

I am a very systematic data driven person. This is how I make my investment and trading decisions: (1) Something catches my eye and I form a hypothesis around it. For example I hypothesized that Omicron will be very mild and in effect provide free global mass vaccination. The hypothesis is just the starting point. (2) I run a thought experiment as what the extended impact of this hypothesis would lead to. This is what you may call speculation. For example if I am right, we should see rapid spread of covid and lead to an initial sell off of reopening stocks, but the ventilator and death rates should not go up or go up very little. That should lead to a buying opportunity. I am being brief here. In actuality I have a much more detailed list of how things should play out. (3) I validate my hypothesis by tracking the components of that thought experiment and adjusting my theory based on the reality. If the theory is correct, then I act on it. This brings us to whether or not I was right about my prediction about slow down and falling inflation back in September. That prediction (which I articulated in detail) was based on the expectation of inventory build up due to retailers panic buying/triple-orders and supply chain problems that will begin to resolve after thanksgiving. Components of that are shipping rates, inventory build up, new orders, Chinese sales data, etc. Omicron did not exist at the time and has had little impact (if any) so far. My previous post shows the inventory data (the orange line is what matters) and pretty much proves my theory. Ditto for Chinese sales data (came out a month ago). And ditto for inflation, shipping rates, and commodity prices which are mostly down a good chunk from their peak. Side note - I am building a theory about palladium. I suspect a buying opportunity is in the works.

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