In Investing, as in War, One Must Adapt or Die

As a long-time martial arts practitioner that trained with many active-duty military personnel, including Army Rangers, I learned of a saying that one must learn to be disciplined, yet flexible enough to adapt to changing situations in order to overcome unforeseen obstacles in your path. For some reason, many people today equate discipline with rigidity and inflexibility, especially in the investment world. In investing, this mindset will cause us to be slaughtered and easily picked off by the big whales in the game, as the best combination for investors is discipline with adaptability. This was a great lesson from my martial arts training that I learned to apply to my investing time and time again.

Many lauded fund managers in the industry have a reputation for being obstinate and possessing an unrelenting singular devotion to an investment thesis that often causes them to lead their clients into financial ruin when their thesis no longer is valid. A singular devotion to a thesis without constant stress testing will lead to failure to adapt to changing conditions, especially rapidly changing conditions that are brought about by war. This was a lesson I learned the hard way during my youth as I once led clients into a 35% down year due to delusional confidence that my thesis was correct (it wasn’t). Such inflexible confidence never serves anyone well in the investment game, as  I ignored multiple red flags along the way to a 35% down year. That happened well over a decade ago and was the last time I ever produced such horrid yields.

Recently, I was required to adjust my investment strategies first to propaganda (I ignored the “transitory” inflation propagda narrative of the Feds at the end of last year to correctly provide buying guidance several months ago to my skwealthacademy patrons across a wide variety of commodities and commodity based stocks – agricultural, energy, precious metals and industrial. Thus, Phase I of my strategy involved ignoring US Central Banker propaganda and formulating buying decisions based upon underlying reality.

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Then, every week thereafter, Phase 2 involved a firm maintenance of our positions during significant periods of price volatility as perception overtook reality. I provided analysis to my patrons of why we needed to keep riding  price surges higher across the board for some commodity assets, and reassured them as we were chased out of some stocks due to tight stop limits I placed on our positions, to rebuy them as I was very confident they would pay out handsomely in the end (which they did). During this time, propaganda narratives of $300 oil and $5,000 gold materialized that never came to fruition, but nonetheless pushed commodity stock prices sky high and contributed to a buying frenzy in many of the stocks we had purchased after we had already purchased them.

In other commodities like nickel, wild propaganda narratives succeeded in quadrupling the price of nickel from about $25,000 per metric tonne to $100,000 per metric tonne over a wild five-day period before nickel prices finally plummeted back down to reality. And I needed to adapt to the ever changing balance between perception and reality in which I knew that reality would overtake a frenzied perception and cause the prices of many of our stocks to plummet.

At this point, I executed Phase 3 of my strategy in my skwealthacademy patreon platform, as divestment of assets before reality brings delusional perception back into line with reality and crashes asset prices happens. In weekly updates I provided to my patrons, I informed them that gold was going to retreat back below $1,900 and silver would retreat back to $24, both of which happened by the end of last month. By mid-March, I provided exact selling prices points for all 27 assets we had purchased a few weeks to a few months prior, and divesting of all of our positions locked in superb profits for 26 of our 27 assets. And this understanding of how the tail wags the dog (click the link to see the profits earned by skwealthacademy patrons on these 27 assets). when war plays a significant role in influencing asset prices, is invaluable to not just making significant profits over a short period of time, but more importantly, in keeping them, especially during periods of wild price volatility when a single piece of propaganda about successful peace negotiations or war escalations, true or false, can create wild price swings across a number of different assets.

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Before and after Russia invaded Ukraine, I knew it was necessary to adapt my investment strategies, rather than to forge onward, blindly committed to a static thesis, to a wildly changing and dynamic investment environment heavily influenced by changing global geopolitical conditions. And as many of my former military training partners in martial arts would say, “Adapt or die”. Of course, while this is true in wartime combat, it is only applicable to investing in the sense that one has to:

  1. Adapt or fail to identify investment opportunities that may come and go within short windows of opportunity, and;
  2. Adapt to turn rapidly gained paper profits into realized profits with the risk of inaction causing paper profits to die on a hill not worth defending. 

Many bitcoin hodlers learned the above lessons the hard way, after bitcoin experienced wild swings in price and fell twice by 50% over the past 18-months, first from more than $60,000 to $29,000 in H1 2021 and then from $69,000 in November 2021 to less than $34,500 earlier this year. Those that adapted and traded these peaks and valleys instead of hodling, and that ignored the btc whales that screamed at the btc community to hodl and not trade btc, ended up with twice as many bitcoins than the hodlers over the same time period without needing to spend a single extra dollar, yen, euro, or won to accumulate twice as many bitcoins. And we deployed a similar type of strategy with commodity assets on our patreon platform that allowed us to reap triple digit profits up to 278.55% over a very condensed period of time.

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A few weeks ago, even as Russia itself was pushing its own brand of propaganda that its entanglement in war would cause oil prices to soar to the moon at $300 a barrel, I informed my skwealthacademy patrons that the opposite was more likely to occur. I stated that after an initial surge in oil prices, geopolitical considerations would likely dictate a significant suppression of global oil prices, and that while oil prices would remain elevated, they would not surge to $300 per barrel. And indeed after oil surged to $130 very quickly, oil prices fell rapidly in the last week of March to below $100 a barrel now.

In the end, in this type of investment environment, a lack of understanding of the MIB (Military Industrial Banking) perception management game will literally make it impossible to reap significant profits.

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