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December 17th, 2023 | Issue 213 |
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Let's rewind to the end of 2022, a year when financial prophets filled the airwaves with predictions of an impending recession in 2023. Economists were pointing fingers at a steep rise in interest rates, forecasting Europe's tumble into recession and predicting China's market dominance. It was the consensus—the majority opinion shaping the financial narrative. But here's the kicker—the majority's crystal ball isn't always on point. So, what's the takeaway for us, especially looking ahead to 2024? Enter Daniel Kahneman's enlightening exploration in "Thinking, Fast and Slow." In the realm of understanding decision-making intricacies, Daniel Kahneman's book takes the spotlight. Within its pages lies several powerful concepts, one of which represents exactly this situation—What You See Is All There Is (WYSIATI). This concept illuminates the tendency of our minds to make decisions based on the information immediately available, often relying on what we've observed in the past. |
Trade what you see, not just what you think. The majority's prediction about an unavoidable recession in 2023 turned out to be wide of the mark. It taught us a valuable lesson—reality doesn't always align with popular opinion. Enter 2024, and the echoes of Kahneman's insights become more crucial than ever. Our minds operate on dual tracks—System 1 and System 2. System 1, often referred to as the fast, intuitive, and automatic mode, is the culprit behind the ease with which we fall into the WYSIATI trap. It's the part of our brain that swiftly processes information, relying on heuristics and shortcuts. When making decisions, especially in the fast-paced world of finance, System 1 seeks simplicity. It forms quick, coherent stories from incomplete information, providing us with a sense of confidence and ease. System 2, on the other hand, is the deliberate, analytical counterpart. It's the part of our cognitive machinery that engages in slow thinking, meticulous analysis, and deliberate consideration. Unlike the rapid-fire nature of System 1, System 2 takes its time, probing deeper into complexities and demanding a more thorough examination of information. When faced with consequential decisions in finance, particularly when employing WYSIATI, System 2 is called to action. It encourages us to resist the allure of quick, intuitive judgments and prompts us to think slowly, ensuring a more nuanced and informed perspective. Understanding the interplay between System 1 and System 2 is paramount in grasping the implications of WYSIATI. The tendency to trade what we see, often molded by System 1's rapid-fire decisions, can be tempered by the deliberate engagement of System 2. By keeping a trading journal, documenting observations, and consciously allowing for slow thinking in significant decision-making moments, we harness the power of both systems. It's about striking a balance—acknowledging the intuitive ease of System 1 while leveraging the analytical prowess of System 2 to navigate the complexities of financial markets with prudence and clarity. Empower your journey with a trading journal—a tangible tool to document what you see in the market. And here's a secret weapon—engage your System 2, your analytical brain, for a more thoughtful approach. The call to action is clear: trade is based on observable realities, not just prevailing opinions. It's about learning from the missteps and acknowledging that the majority's outlook is merely an opinion, not a certainty. WYSIATI isn't just a concept; it's a strategic mindset. In the financial arena, where decisions carry weight, it guides us toward a more informed and measured approach. As we navigate 2024, let's heed the lessons from the misjudgments of 2023, trade smartly based on observable trends, and let WYSIATI be the North Star guiding our financial journey. |
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Chief Investment Officer/Founder |
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people) |
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TRADE IDEA OF THE WEEK Breaking AI News: Banking on $JPM |
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A financial powerhouse, JPMorgan Chase & Co. ($JPM) stands as one of the world's largest and most influential banks. With a robust presence in investment banking, asset management, and consumer banking, JPM plays a pivotal role in shaping the financial landscape. |
Firstly, the dovish stance adopted by the Federal Reserve bodes well for financial institutions. The indication of potential rate cuts in the future creates an environment where banks, especially those with a diverse portfolio like JPM, can thrive. Secondly, JPMorgan Chase has demonstrated resilience and adaptability in navigating economic uncertainties. Its strong financial position and robust risk management practices position it favorably in volatile market conditions. The bank's expansive presence across various segments, including investment banking, asset management, and consumer banking, provides a hedge against uncertainties in specific sectors. |
Considering the overall positive sentiment towards the financial sector, the upcoming week represents an opportune moment to buy $JPM. Investors can leverage the bank's stability, diversified revenue streams, and the potential tailwinds from the Federal Reserve's stance, making JPMorgan Chase a strategic addition to a well-balanced portfolio. |
As we delve into the trade of the week, focusing on JPM, the rationale becomes clear. Amid a backdrop of a dovish Federal Reserve and indications of potential rate cuts, financial institutions like JPM are poised for growth. JPM's diversified portfolio and strong financials position it favorably for gains. Considering the overall positive sentiment towards the financial sector, the upcoming week presents an opportune moment to buy $JPM. This week, I'll be adding $JPM to my portfolio! |
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| Vlad Karpel
YellowTunnel and Tradespoon Founder |
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P.S. Click here for access to the Power Trading Live Strategy Roundtable Recorded every Thursday. |
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DISCLAIMER: Vlad and his team may have a financial interest in the picks as they trade many of the same equities and options they pick. Vlad Karpel and YellowTunnel (Company) is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. All investing strategies are made available to the general public on a regular basis. We do not provide personalized financial advice or investment recommendations. As an investor, you know that any kind of investment opportunity has its risks. There is no such thing as low-risk stocks and we recommend you invest wisely and that only risk capital should be used to trade. Investing in Stocks and Options is highly speculative. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here and on our website. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE SUCCESS: It should not be assumed that the methods, techniques, or indicators developed at YellowTunnel will be profitable or that they will not result in losses. Nor should it be assumed that future picks will be profitable or will equal past performance. All of the content on our website and in our email alerts is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. Remember, you should always consult with a licensed securities professional before purchasing or selling securities of companies profiled or discussed on YellowTunnel.com. Performance results that are discussed above are from the Live Trading Room. Multiple YellowTunnel tools were used to achieve these results. Trade % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk, which is the posted Stop Loss for the trade. Yellow Tunnel's performance data represents the average return on all trading recommendations from January 1, 2020, to today. *Win rate percentage reflects the average that Yellow Tunnel's software helped me identify a profitable investment strategy.** Triple-digit returns are not typical and are not intended to reflect the likelihood of similar returns in the future. |
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