Welcome Friends, 

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

LINDZON IN LONDON

This week, Howard Lindzon traveled to London and attended his first Wimbledon with his son Max. 

This weekend, he’s prioritizing rest at Heckfield Place. In Saturday’s post he shared his experience writing, Slowing Down Outside London At Heckfield Place and Fine Tuning My Filters. 

“EFFICIENT MARKETS” LOL

Are markets “efficient?” JC Parets rejects the idea in his latest post. He writes,

“It was never just large-cap Tech.

That was a lie.

And as it turns out, yesterday’s gains were pretty much everything BUT large-cap Tech.

In fact, small-caps outperformed large-caps on Thursday by 450 basis points. According to our friends Ryan Detrick & Charlie Bilello, that’s a 6 standard deviation event.

If markets were actually efficient, and that burton malkiel guy wasn’t lying about everything he ever said, then 6 sigma events wouldn’t happen as often as they do. They should come around once every 500 Million days.

It happened yesterday.

Because markets are not efficient.

The random walk theory was just a bad theory that some weird academic blatantly made up years ago.

He said in his book that he’s never met a rich technician. But that’s not because there aren’t any rich technicians.

It’s just that all the rich technicians don’t want to hang out with him.

Because why would they?

We don’t like liars who hurt people for their own selfish gain. Princeton can have him. They seem to be big fans of his bullshit.

Meanwhile, here’s the Russell2000 Small-cap Index going out at new 52-week highs yesterday.”

Read Parets’ full post here.

A GLIMPSE INTO OPENAI’S CONTENT LICENSING DEAL

Michael Parekh provides a quick glimpse into OpenAI’s content licensing deal with The Atlantic.

Michael mentions,

“The big take away though from my perspective is that the industry this time is learning from its experience with past technology waves, and is proactively leaning into playing both defense and offense in their long-term interests. As the Atlantic CEO Nicholas Thompson at one point says:

‘We can go through it in a complex way or a simple way. The simple way is we believe it provides revenue, but more importantly provides a potential traffic source. Provides an avenue for a product partnership that could be very beneficial, and that provides a way for us to help shape the future of AI.

AI is coming, it is coming quickly. We want to be part of whatever transition happens.’”

THE GREAT REVERSAL

Thursday was “one of the wildest trading days in market history.” Charlie Bilello’s Chart of the Day displays the 180 degree shift in market cap leadership. 

Charlie comments, 

“Today we witnessed one of the wildest trading days in the history of markets, with all of the major secular trends of the past decade reversing course in dramatic fashion.

At the top of that list: the 180 degree shift in market cap leadership.

Small caps ($IWM ETF), which had been lagging large caps ($SPY ETF) by a massive amount this year, rocketed higher with a gain of 3.6%. At the same time, large caps fell 0.9%.

The 4.5% spread was a 6 standard deviation event and the 2nd biggest outperformance on record, trailing only the 10 sigma differential on October 10, 2008.

How unlikely is a 6 sigma event? If markets followed a normal distribution, such an event would be expected to occur only once every billion years. But clearly they don’t, and it won’t take another billion years for it to happen again.”

WRITING ON THE SUBWAY

Ted Merz was in need of an office space free from distractions. He found such a place in an unconventional way. In this week’s post, Ted shares how he Writes on the Subway.

Here’s the money quote,

“Everyone needs a room of their own to write, Virginia Woolf famously argued.

Today, the challenge is more about finding a place without distractions…

I started writing on the train out of necessity. I was forced to write on the train once when late to a meeting.

It turned out well, so I started to make it a practice.

I now look forward to long subway rides because they provide the ideal environment to write.

I’ve realized the most important ‘room’ I need isn’t inside a building.

It’s a place free from the distractions.”

THE NATURE OF KNOWLEDGE WORK

The Nature of Knowledge Work is Tadas Viskanta’s theme for his Wednesday Linkfest. 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… 

SPX Corporation ($SPXC), Lantheus Holdings ($LNTH), Revolution Medicines ($RVMD), MACOM Technology Solutions ($MTSI), KB Financial Group ($KB) and more.

THIS WEEK’S EPISODE

And in case you missed it… This week, Howard Lindzon, Michael Parekh, JC Parets and Barry Ritholtz review the state of the markets, the impact of EU regulations on big tech, data ownership, fair use in the AI era and more in the latest episode of Trends with Friends.

Tune in today.

GET IN TOUCH

If you share insight on the market and would like to contribute to Trends with Friends, send us an email.

Disclaimer: All opinions expressed on this show are solely the opinions of the hosts’ and guests’ and do not reflect the opinions of Stocktwits, Inc. or its affiliates. The hosts are not SEC or FINRA registered advisors or professionals. The content of this show is for educational and entertainment purposes only. Please consult with your financial advisor before making any investment decision.

Stocktwits, Inc. (“Stocktwits”) operates the stocktwits.com website and Stocktwits mobile device applications (the “Apps”). Stocktwits is not a securities broker-dealer, investment adviser, or any other type of financial professional. No content on the Stocktwits platform should be considered an offer, solicitation of an offer, or advice to buy or sell securities or any other type of investment or financial product. Read the full terms & conditions here. 🔍