Transcription
I've been reading for the last 24 hours every analyst report there is out there, and global uncertainty just shattered every record in history. Worse than COVID, worse than the 2008 financial crisis, worse than 9/11. And it's not even close. And right now, money is moving between sectors and industries at a speed we haven't seen in decades. And most of you, most retail investors, have no idea where it's going.
And I wasn't going to make this video. I'm on holiday. I'm literally standing in a hotel lobby just waiting to get picked up and go to tennis. But I thought I'd make this video for you because if you don't understand what's happening, your portfolio is literally a sitting duck, and you are going to get caught on the wrong side. So my goal here is somewhat unplanned and unscripted, that by the end of this video, I'm going to give you the full framework, the exact framework that woo institutions use to position and reposition during times like this. I'm going to give it to you step by step so you can protect yourself and actually profit from the madness that's coming.
If you're wondering who the heck I am, my name is Felix Pin. I'm an ex-investment banker and economist. And I'm also the founder of the Goat Academy, where my retired Wall Street mentors have taught well over 20,000 people in the last six years how the markets really work. I'm also the co-founder of tradevision.io, where we make, you know, real market data available to you. And the whole point here is to pass on the knowledge what I learned in banking to everybody. And right now, markets are extremely uncertain. The gap between what retail investors do and what institutions do has become enormous. And the gap is where people either lose a fortune or potentially make one. And I've seen this before. I've seen this same playbook before. It's just happening on speed.
So let me show you exactly what's happened. The World Uncertainty Index, which tracks how often the word "uncertainty" literally appears in economic reports, just recorded its highest reading in well over 30 years. The index spiked during COVID and during the 2008 financial crisis, straight after 9/11, during the Iraq war. But what we're seeing right now blows past all of those. And here is what makes this different from every other crisis. This isn't caused by one thing. It's caused by everything happening at the same time. So, you've got an active tariff creating trade policy chaos, right? Businesses literally can't plan because the rules keep changing every week. You've got oil prices that went through the roof because of, you know, the Iran disruptions. Uh, Brent went from like normal levels to about $126 a barrel. And that has knock-on effects, ripple effects to the economy. You've got the dollar weakening to levels that are making headlines even in mainstream media. And gold, the ultimate fear trade, way past $5,000 an ounce for the first time ever. You've got inflation much, much stickier than anybody expected. The OECD just put out that they think US inflation is going to hit 4.2%. Bonkers, right? You've got the Fed stuck in a corner. They can't cut rates aggressively because inflation is too high, and they can't raise rates to keep inflation in check because the economy is slowing. And on top of all of that, global growth is well below where we were pre-COVID. So it means there is less room for error, less cushion for error. But despite all of this, the S&P 500 is, you know, near record highs depending on the latest Trump tweet and and that sort of thing. And that's a divergence that doesn't last, at least by historic standards. Something's got to give.
Now, here's where this gets personal for you because it always ends in the same way. When uncertainty spikes like this, retail investors, regular people like you and me, we make one of three catastrophic mistakes. And I mean every single time. And I want to make sure that you are not making those catastrophic mistakes. So, please write these down.
Mistake number one, it's the cash panic. The first mistake is you run into cash, you sell everything, you sit on the sidelines. It sort of feels safe because your brain is screaming, "Protect what I've got, what I've worked for really hard." But what actually happens is that inflation, you know, 4% is eating away that money you've got. So, it's guaranteed to lose 4% a year. And the stock market has historically been higher a year after every major geopolitical event. Well, not every, 70% of the time we were higher. So the people who panic sold, they basically locked in losses. They missed the recovery. Basically, the most expensive way of playing it safe, right?
And then you've got mistake two, which is the freeze. And that's basically doing absolutely nothing. You just close your eyes and you hope it's going to go away. Um, that's different from having a strategy and and choosing to hold. This is sort of paralysis. And the problem with freezing is you're not managing your risk. You're ignoring it. Your portfolio was built for an environment. That environment is now changed. If you don't at least evaluate your positions, you are driving basically with your eyes closed, which is not a great feeling. And don't do it.
And the third mistake, and that's probably the most dangerous, is you chase whatever just spiked up 60%. Let's buy gold at the top. Oil spiked. Let me pile into energy stocks. And that's buying the spike. And what history shows us that the initial spike in a crisis like this is pretty much always the worst time to buy. In the first phase of any shock, gold and energy and defense stocks spike, right? But those spikes are driven by fear and by computers, algorithms chasing it, not really by fundamentals. And they usually pull back pretty hard when the when the dust settles. But retail investors buy at the peak. Institutions are well positioned, which is why it went up to start with.
So the difference is very critical. Institutions don't react to chaos. They prepare for it. They study patterns. They understand sector rotation, industry rotation, and they reposition their money based on where the money is flowing next, not where it just went. So what I'm going to teach you in the next section is how to do that, the actual framework. So stick around if that's something that's useful to you.
So let me show you what retail investors do versus what the institutions do. The Wall Street guys, because there is a gap between making money and losing money, right? Um, when you and me, which we call retail now, right? I'm a civilian. Um, we see a conflict. We typically do one of those three things we just talked about, right? We either move all of our money into cash because you're being safe. Um, but you're actually guaranteeing loss to inflation, right? And then number two, that's the second thing we do. We just cover that, you know, we freeze, we do nothing at all. So, we just stare at the screens in horror and feel really, really bad. And then third is we chase whatever just spiked. Uh, and that might be oil, defense, gold, whatever. And you bang at the wrong time.
The big boys, the institutions, the ones with the deep pockets, they're doing something very, very different. They're not doing any of this nonsense we just covered. No, they reposition based on the patterns that they have understood and have been taught for the last 50 years. And I'm going to teach you the same thing. Now, if you're wondering whether I'm going to predict the outcome of the US-Iran conflict, no, I don't care. This is not what this is about. This is about understanding the framework, the patterns that happen to money when there is a conflict like this. Right? And the questions you want to be asking yourself is what happens to oil prices, energy prices, what happens to inflation and therefore interest rates, and what happens to all the different industries? Because you see, the stock market isn't just one great big pile of stocks. No, it's cut into lots of different industries, and money flows from one to the other. So what are those industries? Well, aerospace, yes, defense, you know, oil, gas, energy, tech, uh, biotech, and all that stuff. Um, in fact, there are about 150 of these industries that make up the stock market. Now, once you understand how the money flows from one industry to another and how to monitor that, I think you're in a position to make much, much better, much, much more informed decisions. And if that's something you're interested in learning, put a "yes" down below in the comments. And I'll give you something for free here, which is a mini masterclass. Um, I took about four and a half hours of me teaching this and I squeezed it down to about 17 minutes because I know you're all very busy. And you can literally watch that um how money moves from one industry to the next. And and it's completely free. Just go to felixfriends.org/getfree. Take 17 minutes of your day and you watch it. The link is down below in the description. And my hope is that it'll help you get free. And once you watch it, um share it with other people who might benefit from it too. So finish this video, watch that link. It's down below in the description.
Now let me dive a little bit deeper into this framework though. Do do go watch that masterclass because it's really going to help you. But there are four steps institutions use to reposition in these times, and it isn't tied to one event. It works whether you are dealing with a war, a trade war, an energy crisis, a pandemic, whatever it is, it's always the same. It's always the same pattern, right? Money moves in relatively simple ways once you really understand.
So phase one is the shock, and that's the first days to weeks after a major event. Um, it's when the fear and the algo sort of dominate. The S&P typically drops 5 to 7% in the first 10 days. The fear index spikes to, you know, 20, sometimes 50, sometimes 80. Gold shoots up 8 to 12% usually, unless, you know, the Middle East is selling hard as they have been. And um, defense stocks do pretty well. Um, and it's where retail investors panic and they make those mistakes we just talked about.
Phase two then is is repricing. And this is where the smart money starts asking the better questions. How long is this going to last? What's the structural impact here? And what does it mean for things like inflation? What's the Fed going to do next? How are supply chains affected? So this is the phase where institutions start doing their analysis, and then they quietly reposition their money. Now, you watch the free masterclass down below, you'll start to see how they move that money and how you can how you can spot that. So links down below. But markets bottom about three weeks and tend to start recovering within one or two months of a conflict breaking out. Right? That's phase two.
Now phase three is where the smart people, well, not the smart people, actually, the informed people, um, which you can be too, is where they make money. It's where the rotation really happens. So we go into companies that genuinely benefit from the new new normal, and this can literally last quarters, it can last years. And it's typically what retail investors miss out on because they're either sold, or they're still stuck, or or they're pulling back because they're really, really scared. But you see, while the market tends to recover over time, it's done 8 to 10% a year for for many, many years. There are certain sectors, certain industries that lead the recovery every single time. And that's why I'm trying to hammer this point home for you. Where does the capital actually go? Where does the money actually go? That's step two, right? Because those flows, those patterns are not random. And what happens when uncertainty hits? The money doesn't leave the market. It moves within the market. So, it moves from, you know, biotech or, you know, software or AI into defense, or into energy, or into utility, or into into oil services and so on. Think of it like um a swimming pool, and you push down on one side, the water rises on the other side. Would have to be quite big to push down the amount of water. But you you get the idea, right?
So, let me walk you through the typical money flow patterns during major disruptions like what we're seeing here, right? Energy is the first mover during conflicts that involve oil or shipping, which, you know, obviously both are affected here. But that initial spike in oil companies is usually quite a short-term trade. The longer-term winners tend to be energy infrastructure. Think pipelines, storage terminals, refineries, and that's what we've been investing in for months. Actually, before this war started, we were already in in these oil service companies. Um, why? Because the money had been starting to flow in there. Why does that happen? Well, maybe somebody knows something. But that doesn't really matter for us. We don't really judge. We don't look for the, oh, it's all manipulated. It's a conspiracy theory. It might well be, but it doesn't really matter because I believe we can make money out of it potentially. I'm not a financial adviser. I'm not a registered investment advisor, anything like that. I'm just a, you know, an ex-banker sharing with you my my thoughts because I think it's I think this is so important and people have no idea how important this is and they're just sitting there and they're scared or they're happy depending on the latest tweet, and life doesn't have to be that way, right?
So, what's the next sector? Well, defense, right? Obvious first mover. They tend to uh go up about 40% or so during during wars historically, but that's often in the big names everyone knows about, right? Now the institutions look at the more specialized pairs. So the companies focusing on the components, the AI-driven defense systems, drone technology, right? And defense spending tends to stay high way after a war. It's not a temporary bump. We're going to get a probably a 50% increase in the US defense budget, right? Crazy stuff. But yeah, that's going to happen.
And then what about gold? What about Well, gold is being bought by central banks. The dollar is weakening, which adds to gold because people want hard assets when the paper money becomes less valuable. So don't think about gold the commodity, think also about gold miners, gold streaming companies, gold ETFs. There's a whole ecosystem there um behind that.
And then fourthly, we have consumer staples, boring companies, but they sell things people need no matter what happens in the world. Food, beverages, household products. Um, boring but reliable. And these companies have the ability to increase their prices even if inflation bites because they sell stuff you need. Not exciting, but again, it's incredibly effective if you want to protect yourself. It might be a heck of a lot better than sitting in cash. It might be a heck of a lot better than just freezing right now.
What gets hit? Utilities. And I think people often think, oh, utilities are safe. People think real estate is safe. No, they tend to perform really, really poorly when you have high inflation, uh, because high inflation hurts them. Also, companies that do really, really poorly in this are the sort of nice-to-have companies, and those are consumer discretionary. So they they make stuff that will be nice to own, but you don't need to own, and because you're feeling a bit uncertain, you're spending less. Airlines are getting crushed by high fuel costs, right? I know loads of bankers who've been shorting airlines like MAS, and again, I'm not recommending that, but that was sort of a, you know, fairly obvious trade here.
Now step three of the framework is something that most people never even think about. It's the US dollar. Because the dollar isn't just money you earn, money in your pocket, money in your brokerage account. It's a it's a reserve. It's the reserve currency, and it has an impact on every asset out there. So what's happening? Well, the dollar index has fallen significantly. The dollar's share of global currencies, reserve currencies, has dropped massively. Central banks around the world are trying to hold less dollars and they're trying to hold other things, gold particularly, right? Other alternatives too, and it's accelerating. Now, even the Wall Street Journal has caught on to this, which must mean we're fairly late to the story. Um, and it's the erosion of the dollar is a real structural shift. That's essentially what they're saying. And I've been telling you about this for for months.
But what does it mean? What does a weaker dollar mean? Well, several things happen at the same time. Gold and commodities tend to go up. They cannot a straight line, but they tend to go up because a weaker dollar means each dollar buys less gold, and it pushes the prices higher. US multinational companies, that that phrase has gone out of out of fashion, hasn't it? But they're essentially companies that have big overseas earnings. So think about Microsoft. They earn lots of, you know, euro money and lots of yen and then, you know, other, you know, monkey currencies. And thirdly, and again, this is something nobody looks at, and I hope you're making notes. It's a bit, it's a bit dense, isn't it, Felix? Maybe I should I should slow this down and and stop it, but I just want to give you guys as much value as I can here. Emerging markets tend to do quite well in this. Why? Because their debts are often dollar-based, and a weaker dollar means their debt is now smaller in terms of their own currency. Um, which is an interesting one. But inflation tends to get a lot worse, right? Because the US imports a lot, and all those imports get more expensive. So the dollar is a huge, huge signal, and it's essentially telling you money is moving out of pure dollar assets. It's moving into hard assets, international assets, and other inflation hedges. So, if you're 100% in pure US stocks and cash and bonds and so on, and you're earning dollars, it's working against you, right? And one thing I learned from my Wall Street mentors is that currency is a is a big um canary in the coal mine. And the dollar moves, everything moves, everything gets repriced. Uh, and it's a really, really important signal. Uh, and and and you need to understand that signal.
So, go and watch that 17-minute video because it's going to really break it down for you step by step in a more of an educational way rather than in a um, you know, this is a little bit more everything sort of thrown together here because I think there is so much happening that you need to really understand where we are.
So, what's our we on the fourth step? Are we on the fourth step? I think from memory, we're on the fourth step. So how do you turn this into say, a checklist? So let me give you the questions that institutions ask before they buy or sell something, um, because it's not about answers, actually. It's about asking the right kind of questions, and they have um five, six, maybe seven questions.
The first question is, what phase are we in? Is it the initial shock? Is it the repricing? Is the rotation already begun? Because your entire strategy depends on that. Right? Very, very different how you behave in each one of those phases. During the shock, you don't chase the spikes, which we didn't do. We protect our money, but we start building out our watch list, and you know, the good things that I come out of it, and you know this, given that this conflict starts and stops, you get lots of these shock phases, which is actually quite quite cool if you know what to do with it. In the rotation phase, we put our money into the structural winners, and we've already done that, but we continue to do that.
And then the second question is, where is oil going? Oil is the backbone of the global economy. Everything you touch, everything you own, everything you've ever bought has basically been been been touched by oil. Um, think of it sort of like a tax. It's a tax on everything. It's like a value-added tax in a sense. So, very important to understand that.
Now, the third thing is, what's inflation doing and what's the Fed going to do? Inflation is is a silent killer. Um, higher inflation means higher rates, which is bad for growth stocks, tech stocks, real estate. Uh, lower rates, you know, rate cuts are um are great for growth stocks, emerging markets, gold, and so on. Um, we are have a have a situation where we're boxed in. We have a fairly slow economy and we have fairly high high inflation. So that's a tough one.
Fourth question, what's the dollar doing? We just covered that. Um, a weakening dollar is good for hard assets, right? The multinationals, the international exposure, and so on. Um, so important to understand that.
Uh, fifth question, what is the risk to earnings profits? Stock prices eventually follow profits. So does this hurt say, you know, Apple's ability to make money and whatever sector you're in? Right? Apple was just an example. Um, can you see earnings doing better maybe in gold miners, maybe in defense, maybe in, you know, energy stocks? Um, very, very important. Um, airlines probably going to have terrible earnings, right? Import-heavy businesses are going to have terrible earnings. So this is where the rotation happens.
Now, honestly, if you if you watch that um masterclass, the beautiful thing with that is it shows you how you follow the money. You don't necessarily need to understand why money is moving. You just need to understand how money is moving. And how do I find that out? That's very important. Um, we're on question five, six, six, I think. Uh, so what's the market not pricing? That's kind of where the institutions make money, finding what the market hasn't figured out yet. If everybody's focused on oil and gold, what sectors quietly benefiting that nobody's talking about? And, you know, we're tracking that. Last week, I think it was electronic components. I think the week before that it was um waste disposal, like really random stuff um that can potentially make us some some money, right? Um, it could be cybersecurity, it could be logistics companies, you know, kind of overlooked winners.
And then the the last question for yourself is most important, probably, what's your time horizon? Are you trading for this week or for the week after? Are you positioning for the next two years, the next 10 years? Like that answer honestly changes everything. Um, short-term traders, you know, want to take advantage of all the phases. Long-term investors think to think more about what's the structural rotation here. Now, most of us never ask that question. We just sort of react in fear and panic, and and that's why we tend to have, you know, pretty pretty shitty outcomes.
So, let me give you one or two examples. I think that might help. If we look at Russia-Ukraine, my February 2022 kicked off, the S&P dropped about 8%, energy stocks exploded high um because Russia is the biggest oil and gas supply to Europe. Retail panicked. Many of them moved to cash. 12 months later, the market had recovered. The S&P had risen massively since the conflict began. I think we're up 60% since that war's begun. 60% 60- right now. Not every sector equally. Energy, infrastructure, defense, um, agriculture, they were the big winners. So if you had the framework that is in the masterclasses I'm sort of touching upon here, and you'd mapped out the money flows, you would have been not in cash, you would have been in the right sectors more likely than not, and you would have had a really, really good time.
If you go back even further, 9/11, right? 2001, market drops 11%. Few months later, we're back to zero. Where where did the money go? Defense, security stocks. Um, but the longer rotation was defense. Why? Because the US built a military state surveillance system, cybersecurity. They went to war for the next few decades. So the people again who sold too early or sold in fear, they missed out on a decade-long profitable trade. And what frustrates me is that the institutions, Wall Street knows this. They know the playbook. They know it every single time. Now you know it, too.
And look, let's let's let's wrap this up here finally, and I'll show you the this is one of the most lovely lobbies in the world. I think we're in the most uncertain time pretty much in history. That's actually hard data, but uncertainty doesn't mean danger. The informed investors, the skilled investors see opportunity here because most people are panicking. Um, and when people panic, assets get mispriced. And that's when the best positions actually become available. And the framework I just gave you, and I break down for you again, I mentioned it for the 10th time now in that, you know, bleeding mini masterclass. If you understand that and you follow through, even if you just wrote down the seven-question checklist that I just gave you, um, you don't need to be a Wall Street banker to use it. You just need a framework. You need some discipline to follow it. Yes. But please don't do what retail investors always do. Because the gap between Wall Street and Main Street is just getting bigger and bigger and and and our whole mission here is to make it narrower and narrower. So, unless you want me to be insanely frustrated, please learn, uh, please learn these skills. Please pay attention. Um, don't move all your money into cash. It is not safe. It might feel like it. My grandmother used to think that, but it wasn't. Um, don't freeze. You actually have a pretty good idea now of what to do. But, uh, do you need to learn more? Yeah, of course, you it's not something you pick up in 15 minutes or however long this this this rant here is. But it also doesn't take years to master, right? I make every single investment decision I've ever made in less than five minutes. It's very, very simple once you have a framework, once you have rules, uh, once you have a checklist.
So I thank you for watching. If you got some value out of this, and I apologize probably for the crummy audio and the shaking camera and all of that, then um share it with some people who might benefit from it, too. Um, I'll show you the lovely view here, um, which is very nice. And I'm going to head out with some friends for lunch and then hit some walls. And um, enjoy the craziness when the market opens. And I'm not there when the market opens. I am set up before the market opens. And you can do the same thing once you understand these patterns because the patterns are very, very predictable. Money moves in very predictable fashions. Once you understand how, I think you can come out in a much, much better shape. All the best, guys.
Did you know there is an invisible system that controls nearly every trade on the planet? And I don't mean supply and demand. I don't mean the Federal Reserve. I didn't even mean the