Thin air..

Tuesday 9th July - Daily Equity Update

Should I change the opening image?

Should we remove some of the numbers and add AI-generated weird faces?

The SR-71 had a working altitude requirement to evade Soviet surface-to-air missiles. A by-product of that safety requirement was twofold. First, it meant more advanced life support was required for the pilot. Flying at that altitude could be a little breathless. Also, I wonder what pressures might be felt by the body ejecting from a plane at 2100 mph.

Those very risks to the pilot aided the plane. At those altitudes, the air is thinner, making those high speeds possible.

Picking up from Sunday, "thin air" could be taken as a title to cause panic or assessment.

Every day is a day to assess. You don’t need a dramatic title to remind you of that.

If you have been following along for some time, you know I am a supporter of the passive market thesis and the underlying mechanics that drive it.

If we take Sunday’s post and the point that we have cycled through many of the equities into rarified air, it means we are left with only the largest, most likely to trend and remain with a SoS > zero.

The inelastic market hypothesis tells us that many of those left have the largest reaction function to each incremental dollar that buys them.

It doesn’t matter that there are only a few left if those few move the most.

If the pot of money we can allocate has “slowly” grown but we could buy 500 then 400 then 300 stocks etc. That pot can now only buy 100.

Just like our SR-71, if you eject now, you may not survive (if you run OPM), but being at high altitude and low drag might mean some things go supersonic.

Are we entering the point of the cycle where bears get fired by clients?

It will, as always, be the wrong time. Such is life.