Daily Trade Ideas & Trends


19 May 2020

Doc's Daily Commentary

4/29 ReadySetLive with Doc and Mav

Mind Of Mav

The Most Hated Rally Ever Is Built From Fear, Not Greed

It’s a little disconcerting to think that, even with dire economic indicators, those who trade the stock market or invest their retirement savings are able to make money on worthless stocks priced in worthless currencies, allowing them to, maybe, buy a highly inflated asset like a house; an entire economic system built on price and not value.

I can’t help thinking about the photos of the Weimar Republic and the stacks of useless cash; will we see wheelbarrows full of USD in the near future?

On the plus side, there is plenty of volatility to trade on…

So, what’s really going on?

Why is the market rising, and why is it rising out of fear instead of greed?

When it comes to investing in the stock market, the Fear of Missing Out is the most destructive cognitive bias. In a cheap money world, it preys on newbie investors overcome with gluttony and greed. They watch story stocks like Tesla, Facebook, and Amazon soar ten, fifty, one hundred percent, buying on the highs, dropping fundamentals, logic, and reason, only to sell at a big loss weeks later.

In 1999, a huge bubble in tech stocks began to emerge. At first, company valuations made sense, but then irrationality took hold, then euphoria, then insanity. At the top of the bubble, investors were purchasing shares of companies valued at triple anything in the past with some equaling the GDP of New Zealand. If you asked why they were buying stocks, it was because “this sucker’s going up.” Only greater fool theory mattered, and the rest is history.

Today’s bubble is similar, but different, to the bubble of 1999.

Valuations still discount reality, irrationality still plagues investors, and real price discovery still lurks in the shadows. The difference, however, is why investors continue to chase overvalued stocks. At the end of the 20th century, extreme greed fueled a bubble, but now it’s extreme F.O.M.O: the extreme fear of missing out.

Though, if the bubble gets bigger, what investors miss out on is another decade of economic insanity: stock buybacks fueling artificial earnings, frauds like Luckin Coffee operating for years without question, bullsh*t optimism on conference calls from “zombie companies” unable to make a profit even before COVID-19 hit the economy.

Investors will miss out on the return to normal, on what Julio Gambuto’s viral piece exposes as a return to economic and social absurdity, which will turn the house of cards we’ve built over the 21st century into a seven-story mansion.

Most of us know and accept we’re in this dire situation. This is old news.

But still, some cling to the old pretense that “this time is different.” Of course, this time is different, but for the wrong reasons. We’re in a unique scenario: “The Everything Bubble,” where all asset classes have reached bubble status.

A bubble can be seen as a social epidemic that involves extravagant expectations for the future.

But I’m not sure that the current situation is a classic bubble … The current environment may be driven more by fear than by a sense of a new era. This is different from the other overvaluation periods of 1929 when the stock market was very overvalued, but the bond market and housing market, for the most part, weren’t.

While stocks have their fun, markets that remain somewhat free from manipulation-induced speculation continue to price in the reality of a low-growth, low-inflation environment. Bonds, gold, and U.S dollars — the real bull markets of 2020 — have sustained their multi-year rallies during COVID19 while exposing other markets as stimulus-backed, liquidity-fueled Ponzis.

You can justify rallies in safe-haven assets because they make sense: Bearish economic fundamentals support higher gold prices, lower bond yields, and U.S dollar appreciation.

This, however, does not apply to stocks: They should sell-off when the economy falls apart as company earnings decline, yet the Nasdaq is close to all-time highs. And if you thought the recent 35% plunge in the stock market was a purge of malinvestments, equities still remain overvalued, miles from fair value. The poster child is Apple with its stock back to all-time highs as we enter the next quarter with forward-looking U.S GDP growth estimates as low as -39% and iPhone sales down 77%.

Most investors perceive safe-haven assets as boring, low-yielding investments. Instead, they prefer to believe that stocks will rise regardless of an economic collapse. This sounds crazy because it is. It’s fueled by what’s known as the Fed Put: the false hope and wrong assumption that central banks can inflate the value of asset prices indefinitely. The bubble itself becomes the reason to buy stocks. This forces capital into assets that might return triple-digit percentage gains like Amazon and Netflix instead of a “boring” 10 Year Treasury bond returning 0.6%.

If you know history, you’ll know speculative bubbles always end in disaster — eventually. The stock market fell more than 50% after long manias in 2001 and 2008. It’s the same thing that repeats over and over throughout history. We embrace the climax and forget the finale. Bubbles take time to build up and last for so long, the next generation will fall victim to a new but similar bubble.

Wall Street’s sell-side encourages next-gen investors to overlook incoming bearish data — “bad news is good news” — that invalidates their thesis.

Let’s look at treality: 36 million newly-unemployed workers, overleveraged corporations going bust, rising credit card delinquency rates — to name a few. Cognitive bias overrides all doubt that a “V-shaped recovery” is impossible to achieve as the potential stock market gains impede the rational part of our minds.

To beat this, we have to realize that investors are buying hope and hope alone — not the reality.

An uncertain economic future fraught with danger, risk, and false optimism. No one is blaming if you choose to take part; the bull case is just as compelling.

But, we can also sit back take our time waiting for a real economic recovery where both business and consumer confidence rises along with stock prices. That’s the hallmark of a real economic rebound. Consumers will start spending, and company earnings will increase. Soaring stock prices will reflect reality, and markets will restore some degree of rationality.

For now, the most unloved stock market rally continues, and nobody knows how long it will last. It could go on for months, years, or, as short-seller Mark Spiegel says, “this s**t could go on for decades.” When we live in a world with excessive monetary imbalances: unlimited money printing, blatant malinvestment, profitless zombie companies, self-serving leaders, and worthless fiat currencies, it will come as no surprise to bulls and bears if Spiegel’s prediction becomes reality.

Let’s also not forget that it is during these times of change and warped reality that disruption and disruptive systems are the most appealing . . .

The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)


Add your vote to the V3 Portfolio (Phase 3) by clicking here.

View V3 Portfolio (Phase 2) by clicking here.

View V3 Portfolio (Phase 1) by clicking here.

Read the V3 Portfolio guide by clicking here.

What is the goal of this portfolio?

The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as

The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

Our Current Allocation As Of Phase Three:

Move Your Mouse Over Charts Below For More Information

The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)


Add your vote to the V4 Portfolio by clicking here.

Read about building Crypto Portfolio Diversity by clicking here.

What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:



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