All posts by Faheem

“Once you understand how and why liquidity works, you’ll fully grasp the old Wall St. adage of “Don’t fight the Fed”. The Fed controls the biggest lever on global liquidity. And liquidity is what drives stocks… NOT the economy.” – Stan Druckenmiller Valuations and fundamentals don’t move the markets. Far too many bears argue about…

“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” – Harry S Truman A recession is created. It is engineered. It helps detox bad players from markets, reduce speculative and late cycle behaviors from investors that can cause a contagion. The declining asset prices provide an opportunity for…

“Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks, and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.” – Stan Druckenmiller CPI print came in hot yesterday at 8.6%. Highest since 1981. This came as…

“The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The Intelligent Investor is a realist who sells to optimists and buys from pessimists.” – Benjamin Graham By definition, a bear market is when securities fall 20% from their recent high. S&P…

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die of euphoria.” – Sir John Templeton Business confidence and consumer confidence have never felt further apart. US real GDP contracted by 1.4% in Q1 of 2022 (annualized). Recessionary risk went from being inevitable to imminent. Meanwhile, the jobs report came back…

“Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffet Stocks fell sharply last week and beginning of this week. Netflix shocked the market with its earnings and outlook. This impacted Meta, Disney and other media companies. Asset classes across every sector are being re-priced after the Fed chair, Jerome…

“When something is important enough, you do it even if the odds are not in your favor.” – Elon Musk Last week, Elon made an offer to buy Twitter at $54.20 per share to take it private and own the business outright. 10 days prior to making this offer, Elon purchased 9.1% of Twitter to…

“Inflation is taxation without legislation.” – Milton Friedman Inflation, by definition, is too much money chasing too few goods. You’re feeling the pain at gas stations, grocery stores, and restaurant bills. Everything is feeling expensive. How did we get here? The Fed has two jobs: to achieve price stability and target max employment. Historically, price stability comes at modest…

“Quarterly earnings are a function of the weather for many companies; commodity pricing, competitor price changes, volumes, etc. all impact the business in the short term.” – Jamie Dimon Short term thinking yields knee-jerk reactions to micro and macro events in life. It creates zero sum games between people, minimizes long term value creation and amplifies…

“In the short term, the stock market is a voting machine; in the long term, it’s a weighing machine. – Benjamin Graham We’re settling into a new world; a transition from “free money” to “cheap money.” But cheap is feeling expensive. The Fed announced a rate hike of 0.25% two weeks ago. Word on the street is the…