Calling All Nerds: Build Your Road Maps

Calling all nerds; which means day traders, casino gamblers, fundamental ideologues, ego junkies, momentum chasers and worst of all, Men Who Stare at [nominal] stock and index Charts exclusively (as if they hold secret messages about coming events) need not apply.

Why, it’s another of those busy macro charts telling its story. If you’re not paying attention to the market backdrop throughout the various cycles and phases, your investment ship is rudderless.

Sure, you’ll get lucky on occasion (make sure that ego stays under wraps) but you’re throwing darts unless you build road maps that make sense. And not just a map of one indicator like the yield curve below, but a whole range of them. Then, after that you consider them as a whole and when enough of them flash congruent signals, you act. At least that’s what I try to do.

For example, in H1 2020 the remote tools stocks worked best. All through the disinflationary Goldilocks economy Tech was fantastic. But the cycles roll on and the backdrop changes.

Earlier this year I asked (via this chart) “is this real?” and the answer is in. It’s a yield curve steepener and it is going to bring changes. These changes will be inflationary, deflationary or as in 2007-2009, both.

Consider building road maps (or let me build and maintain them for you) if you are not into staring at 10 minute charts and red/green blinking lights all day (i.e. not a day trader looking for the next fix).

yield curve

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