Welcome Friends, 

Here’s an assortment of posts shared this week on Trends with Friends. Let’s dive in…

ONE PAGE ON STOCK MARKET INVESTING

Howard Lindzon leveraged ChatGPT to create his One Page Book On Stock Market Investing.

Howard’s highlights include, 

• Understand your risk profile.

• Accept that the market is rigged.

• Turn off the TV.

• Try not to be a bag holder.

• Journal.

• Reduce costs, keep it simple. 

See Howard’s full post here.

SHIFTING SENTIMENT

Is bearish sentiment bullish? JC Parets highlights the abrupt shift in sentiment within the month of August. He writes, 

We use sentiment to help put the behavior of the stock market into context.

When looking at markets, it’s easy to see what stocks are doing. All you have to do is look.

But what are people thinking? That’s what we want to know.

When everyone is bullish, it’s hard for stocks to go up in price at the same rate. When everyone turns bearish, that’s historically a great time to be putting money to work.

Coming into August, sentiment was running hot. The VIX was at 10, the put/call ratio was muted, newsletter writers were giving us some of their most bullish readings of all-time, and our sentiment composite was as complacent as it’s ever been.

Boy did that change quickly.

We just saw the largest week over week spike in bears among individual investors since 2022, just as this bull market was getting started.

Meanwhile, those newsletter writers that were so bullish coming into August have completely disappeared.

We just saw the largest decrease in II bulls since Covid, which was over 4 years ago.

The last time newsletter writers got this bearish this fast, we went on to have the greatest 52-week period in the history of the U.S. stock market.

So if you’re looking for a catalyst to get this next leg of the bull market started, look no further than the sentiment washout we just got over the past week.

THIS WEEK IN AI

Michael Parekh reviews Google’s Gemini Voice AI strategy, Nvidia’s software moat, the challenge of cooling AI data centers and more in this week’s AI Summary. 

It’s a must read.

CRASHING VOLATILITY

Charlie Bilello’s breaks down the Historic Volatility Crash writing, 

The $VIX has declined 58% (from 38.57 to 16.19) over the last 7 trading days, the biggest 7-day volatility crash in history.

Here’s a look at the top 20 $VIX crashes and how the S&P 500 fared going forward…

WHEN YOU STOP FOOLING YOURSELF

It’s easy to fool ourselves. Last week, Phil Pearlman addressed the self-delusional belief in his latest piece, When You Stop Fooling Yourself.

Here’s the money quote, 

Our brains are so big that we can think up all kinds of clever schemes to fool ourselves and so we do just that.

Maybe we don’t want to face failure or a good thing went bad or there’s something about ourselves we don’t like or the inevitability of death or whatever.

I’m not convinced it even matters what the thing is we are avoiding.

I just know that self-delusion causes a lot of suffering, more than whatever the underlying fear was and more than the reality.

It’s like that old saying, it’s never the crime that gets you, it’s the cover up.

So the question is, what’s your cover up?

WALL STREET STARTS WRITING ONLINE

Wall Street is writing online and Ted Merz is taking notice. This week, Ted breaks down Solita Marcelli’s success sharing on LinkedIn and how Wall Street professionals should leverage the gated social network. 

Merz mentions, 

Never have so few published so little that is read by so many.

Solita’s account is notable not just for the size — 100,600 as of this morning — but the speed of growth: Her follower count has doubled in a year.

I attribute that to the consistency of her posts and the quality of the information.

She posts every few days, dropping recaps from the firm’s market research everthing from what the Fed is planning to market roundups. She also posts videos of panel discussions or interviews with colleagues at UBS.

Her tone is professional and even. She doesn’t overshare. There’s no cringe. Everything is relevant to the audience and meets compliance requirements.

There are a few things Solita gets right that are worth mentioning:

• Keep it short

• Post educational content

• Write about topics of interest

• Don’t require logins if your goal is reach

• Summarize each item (don’t post videos or reports with no explanation.)

The bar to participate isn’t that high. But you have to make the leap.

Solita has obviously cleared that hurdle.

DON’T HATE… PARTICIPATE

Larry Thompson suggests investors should not hate insurance companies, but participate. The iShares US Insurance ETF ($IAK) achieved an all-time high on an absolute and relative basis. Thompson writes, 

This ETF continues to impress, closing at all-time highs this week both on an absolute basis and relative to the broader market (using $RSP as a comparison due to $SPY’s technology bias). The momentum remains strong, staying in a bullish regime above 50 for over a year.

Read Larry’s full post here.

ELIMINATING TILT

Tadas Viskanta seeks to eliminate tilt with his well curated links. Here’s a sneak peek.

TRENDS WITH NO FRIENDS

Trends With No Friends sifts through the noise and discovers stocks above $1B market cap with high relative strength and low social following.

The publication shares 52-Week Highs and Lows sorted by followers on Stocktwits. 

Why is high relative strength and low social following important?

Stocks that are outperforming tend to continue to outperform. Stocks that have a low social following are, by definition, undiscovered by the crowd. Stocks that have both Relative Strength and Low Social Following can really outperform as more investors discover them.

This week, Trends with No Friends featured… 

PACS Group ($PACS), Progressive ($PGR), Imperial Oil ($IMO), SABESP ($SBS), Array Technologies ($ARRY) and more.

THIS WEEK’S EPISODE

And in case you missed it… Howard Lindzon, Phil Pearlman, JC Parets, Michael Parekh and Michael Batnick breakdown Starbucks’ turnaround strategy, the state of the venture market, AI in wealth management, Gold and more in the latest episode of Trends with Friends. 

Tune in today.

GET IN TOUCH

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