So You Think You're a Trading Genius?

Welcome back, aspiring financial wizards! Or should I say, welcome back to another episode of "How to Waste Your Hard-Earned Money While Thinking You're Smart."

Last week, we tore into the global economic circus and promised to expose why your "safe" investments probably aren't. So here we are, ready to shatter your delusions about being the next Warren Buffett just because you can draw lines on a chart.

If you haven't caught up on our previous issues, I seriously question your commitment to not being poor. But fine, here's the link to our last issue:

The Art of Drawing Lines on Charts (And Calling Yourself an Expert)

Let me guess. You've discovered TradingView, figured out how to connect a few candlestick wicks with lines, read a couple of pages from Edwin Lefèvre or Jack Schwager, and now you believe you possess some mystical trading skill? How adorable.

It's tragically hilarious how people with absolutely zero understanding of macroeconomics or microeconomics think they can make money by predicting price movements. You panic when someone mentions "balanced budget," you've only heard "current account deficit" on obscure news channels, and you celebrate when presented with nominal data thinking it's real ("Wow, we're growing 7% next year!").

Here's a comforting thought: most people who claim to be financially literate are just as clueless as you are. We're living in a José Saramago novel—the blind leading the blind while the deaf sing songs to help other deaf people. If that isn't darkly comedic, I don't know what is.

Supply and Demand: Not Just Two Random Words

What's more pitiful? The geniuses who say, "Oh man, this coin has a maximum supply of 210,000, if each one hits $1,000..." or those who watch a two-minute Milton Friedman video on Twitter and suddenly become monetarism gurus screaming "Parabolic growth! WAGMI! LFG!" while buying Bitcoin at the peak?

I can't decide. It's a close race to the bottom.

For years, I've been annoyed at people who outsource their thinking to social media influencers for investment advice. I've written countless pieces criticizing these people. But my perspective has changed: I'm no longer angry at them or even at the so-called influencers drawing lines and Fibonacci retracement channels. Now I'm angry at myself for still trying to explain things to people who won't listen.

Well, fool me thrice:

The Only Technical Analysis That Actually Matters

How do you expect to understand where the market is going without grasping:

• Money supply dynamics

• Personal savings rates

• Gross domestic product

• Consumer indifference curves

• Marginal rate of substitution

• Income elasticity of demand

Without understanding the velocity of money, savings ratios, or government monetary policies, how will you know where retail money (the combined consumer) will flow? You won't. You'll be at the mercy of "smart money," caught in a cycle of FOMO and FUD, occasionally getting rugged and watching your money evaporate before your eyes.

Look at the Bitcoin chart during high emission periods—notice how your carefully drawn channels failed? That's because when drawing those lines, you had no idea about the global money supply in 2013-2017 and 2022. In your blissful ignorance, you became bearish, confidently predicting Bitcoin would drop to $3,000.

You didn't know that from 2013 to 2022, the M1 money supply (circulating cash and demand deposits) multiplied several times, that the world's reserve currency (USD) inflation increased substantially, that the DXY index jumped from the 70s to 115, meaning the money supply expanded dramatically.

Your Lines Can't Save You

When emission increases, household income rises (nominally, not in purchasing power), and since expenditures won't increase at the same rate (income elasticity of demand), savings will grow. This retail money will flow not just into one investment asset but into various instruments that seem "cheap" ("Should I just buy BTC, boss? Well, I got some ETH and XRP too while I was at it?").

How can you believe your drawn lines are meaningful when you don't understand these fundamental concepts?

Your band shifted, huh? Inside those charts you're crying over ("The band shifted! RSI is bottomed out! What's wrong with the OBV?") lie all the concepts I just mentioned. You're trying to make money against people who understand these concepts.

While they're calculating fat tail probabilities in exotic options, using complex Kelly criterion systems with intensive mathematical models to open positions and hedge themselves, you're drawing three lines, using RSI, and opening 10x leveraged shorts thinking you'll take their money?

Good luck with that. But understand this: You’ll lose money. It’s like you’re going up against a heavyweight world champion who is not wearing boxing gloves.

This Week's Global Financial Updates

Wall Street banks report massive profits from volatility

Major investment banks have reported record trading revenues as tariff uncertainty drives market volatility. Meanwhile, retail traders are getting crushed as their technical analysis fails spectacularly in the face of macro shifts.

Wall Street thanks you for your donation to their bonus pool. You thought you’d beat them in their own game? LOL.

Bond Market Rollercoaster

Bond yields have been gyrating wildly, with the U.S. 10-year Treasury yield reaching as high as 4.48% (highest since mid-February) before falling to as low as 3.93%. These movements reflect changing investor expectations about economic growth, inflation, and central bank responses.

Treasury yields doing the cha-cha as investors can't decide what's scarier: inflation from tariffs or recession from tariffs. Either way, tariffs win!

Recession Risk Jumps

According to the IMF's Growth-at-Risk (GaR) model, there is now a 5% chance that global growth could fall below 0.4% in the year ahead, highlighting an elevated level of financial stability risk. This figure is nearly a full percentage point worse than the October 2024 assessment.

 IMF calculates 5% chance of global growth below 0.4%. In related news, there's a 100% chance economists will keep making precise-sounding predictions about uncertain outcomes.

Inflation Expectations Rise

Global and North American consumer price inflation forecasts for 2025 and 2026 were revised upward in April, continuing the trend evident since late 2024, primarily reflecting shifts in U.S. trade policy. The price indexes for global manufacturing have been picking up, with the steepest increases in input and output prices occurring in the U.S., linked to tariffs.

Inflation forecasts climb as economists discover that making imports more expensive actually raises prices. Nobel committee, are you taking notes?

The Road to Financial Literacy: It's Long and You're Lazy

Look, I get it. Learning about economics is hard. Drawing lines on charts and following rocket emojis on X is easy. But one approach will make you money long-term, and the other will make you a cautionary tale.

Next week, we'll dive into the only investment strategy that actually works for most people (hint: it's boring, requires patience, and won't get you any social media clout).

Subscribe now because, let's face it, you need this newsletter more than I need subscribers. Your financial future might depend on it, while my ego certainly doesn't.

P.S. Share this with that friend who thinks they're a trading genius because they once made money on a meme stock. Their inevitable financial reckoning will be slightly less painful if they're prepared for it.