🗞 Fed on Friday, Buffett Today

WHILE YOU POUR THE JOE… ☕️

There are 50% more homes for sale now compared to last year, and that’s a problem. 🏘️ 

You see, there’s a reason why building permits in the US are down 5.7% over the year, and 2.8% over the past month alone, homebuilders are entering a near depression phase right now. 📉 

We recommended you short some of those names, including the $XHB ETF, in September 2024, and you made a hefty profit just a couple of quarters later.

For those inside our Sovereign Trader Program, that’s the hierarchy of industry biases system, the one leading us to where volatility (opportunity) may be next.

We got a lot of hate back when we made that call, people saying mortgage rates would come down, that housing wasn’t going to go in the toilet, etc.

Everyone was wrong, and we have yet to see that 20-30% haircut on property prices across the board on average.

But that’s an idea for another post.

For now, let’s focus on what’s happening in the economy today and where we think the next big move may be.

By the time we post the next one, it might already be too late, so I encourage you to join this free 5-day email experience (where you will learn the foundations of proper idea generation through my mistakes)

Start getting ahead of the pack ✅ 

Speaking of looking ahead, let’s get on with today’s email 📧…

NEVER BET AGAINST EXPERIENCE
Uncle Warren’s Retirement

$348 billion, that’s how much cash is being held in Berkshire Hathaway right now.

I know what you’re thinking:
“But G, Berkshire is much bigger of a company now, so that cash isn’t really significant as it was before.”

You’d be right, except..

On a percentage of assets basis, this current cash pile is the same as it was during two key market pivots:

• 1999 (Dot Com Bubble) 📉 

• 2008 (Great Financial Crisis) 📉 

Which means Buffett is not stepping off the gas because he's retiring, he’s leaning back because there are literally no good deals anymore.

15% of my own money goes into long-term value investing, and I haven’t bought a serious amount of stock in a company since 2022. Nothing fits my criteria anymore.

It was a good run, though:

• $WSM at $112

• $PHM at $35

• $BABA at $63

• $SPG at $107

But now the party is over, and here’s why:

The Buffett Indicator (Stock Market / GDP) is now at the highest it’s ever been in history. 😨 

Which means people are buying and holding stocks out of complacency, not because there’s opportunity.

Which makes sense to see the following behavior coming from large speculators ⬇️ 

This is the Commitment of Traders report, where you can see net futures contract positions.

Two main participants you need to be aware of:

1. Commercials: These are the prime brokers and the banks, the ones that typically manage most of the inventory in the market

2. Non-Commercials: Hedge Funds, CTAs, and individual wealthy investors

That being said, notice the massive divergence in net holdings right now..

Commercials are now the most long they’ve been all of 2025, and Non-commercials are now the most short they’ve been as well.

All before the next Fed meeting. 🐻 

Speaking of which, there’s now an 84.8% chance of a 25bps rate cut by September’s meeting.

Which isn’t bullish, now before you put me up on a cross (again), let me tell you why that is.

• With high interest rates for this long, there’s been very little opportunity in other asset classes.

• Risk-off has been rising along with risk-on as a result (i.e., Gold and S&P 500)

• Cutting rates will trigger trillions of dollars rotating back to other forgotten assets

In other words, the market will keep going up as long as the Fed DOESN’T cut rates, weird right?

Well, that’s why you have me, with 10 years of experience under my belt, to show you what your furus are oblivious of. 🤷‍♂️ 

Oblivious to things like real rates. 👀 

You see, with the US 10-year trading at 4.3% and the 6-month median adjusted PCE at 0.27%, we have an annual real rate that looks more like 1.1%.

Which means cutting rates now by 25bps would bring real rates to roughly 0.85%, in other words, creating another massive speculation wave. 🔥 

The only way that doesn’t happen is if what I said above happens, the whole rotation out of stocks and into assets like fixed income and credit.

Which is what historically happens, and it makes sense since rate cuts are an admission of recession and trouble.

Speaking of which:

The Services PMI is near a contraction again, while the Manufacturing PMI has been in contraction for nearly 3 years now (not even a weakening Dollar Index could help it).

If the Services sector ends up contracting for a whole quarter, that, along with collapsing employment figures, would mean a fall in GDP revisions. 🐻 

Which means the hypergrowth names in the S&P 500 lose their shirts 📉 

But, there’s still something you can do about it ⬇️ 

You can start adopting the strategy that beats the market most years out of every decade, ESPECIALLY during pivoting points like the one we are in today.

So why lose your shirt and 30% of your net worth in a single quarter when you can actually make money in any environment?

That’s right, hedge funds (long/short by nature) do just that, which is why they charge the immense fees that they do. 💡 

And why our alumni have seen success inside and outside their trading accounts using this approach, the exact one we teach inside our flagship program. 👨‍🎓 

So what will it be?

Lose 30% in this cycle or make a life-changing decision to monetize a new skillset forever?

Join the Program Now ✅ 

P.S.

We are heavily focused on the Mid-Cap areas of the market, for reasons we’ve posted in this newsletter post.

Recently, I’ve come across some ideas I’ve already begun sharing inside our Whatsapp Group, which will be broken down in upcoming newsletters as well.

Join the chat now for reference into those ideas in the coming days ⬇️ 

AND

If you missed our last long/short equity trade idea, here’s a post breaking that one down (you are still early on that trade).

To your success,

G 🫰 

GO AND MAKE IT HAPPEN
More to Come

Been trying to take our YouTube and video content more seriously, but hey I’m a busy guy bear with me.

Before our next one comes out, I’d like to invite you to watch this video here, where we show you a bit of the process you’d learn inside our flagship program, and how we go about spotting new long/short trade ideas! 🧠 

To your success,

G. 🥃