When Markets Feel Easy, That’s the Warning

In early 2026, price action mimics smooth, low-vol conditions investors associate with abundant liquidity.

But underlying plumbing variables—dealer balance-sheet capacity, collateral/repo conditions, central bank stance—remain constrained.

What we’re experiencing is positional alignment (everyone facing the same way) rather than genuine exit capacity.

Portfolios are implicitly short liquidity: they rely on exiting at current marks through narrow doors when volatility or correlations jump.

For allocators, the question isn’t ‘Are markets going up?’

It’s ‘How much size can leave before price dislocates?’

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Price Is Not Liquidity

What people mistake for liquidity:

• Tight spreads
• Low realized vol
• Quick bid appearance

What liquidity actually lives in:

• Dealer risk capacity and VaR limits
• Collateral availability and haircuts
• Repo and term funding capacity
• Real money willingness to warehouse risk

The key distinction:

“When liquidity is real, shocks are absorbed. When it’s implied, shocks are passed on as gaps.”

The Structural Mismatch Beneath the Calm

• Asset prices embed assumptions: low vol, robust issuance, narrow spreads

• Systems still operate under tight constraints: post-GFC/SVB regulatory pressure, no unlimited CB backstops

• The tension: “Portfolios are priced as if exits are continuous, but systems are configured as if exits are rationed.”

Investor Lens

This isn’t about being bearish.

It’s about knowing where the doors are when everyone decides to leave at once.

Why the Illusion Persists

Liquidity illusions persist because behavior reinforces them:

• Volatility targeting dampens moves
• Systematic strategies reinforce trends
• Passive flows reduce price discovery
• Short-term success validates risk-taking

None of this creates liquidity.

It consumes it.

Markets feel easier precisely because no one is testing the system.

That’s not stability.

That’s deferred stress.

At this point, the core idea should be clear:

Markets don’t need real liquidity to feel liquid.

They only need alignment.

The real problem for investors isn’t recognizing the illusion.

It’s knowing what to do inside it.

That’s where most portfolios quietly fail.

What Members Get in This Week’s Deep Dive

In the full member edition, we go further and get specific:

• A full walk-through of how liquidity constraints shape real portfolio construction
• How to distinguish assets that benefit from liquidity illusions from those that break when liquidity withdraws
• Position-sizing logic designed for conditional liquidity regimes
• How the 2026 Market Constraint Checklist helps identify fragile positions before stress appears

You can also download the 2026 Market Constraint Checklist, a practical tool to stress-test whether an asset deserves capital in today’s constraint-driven markets.

If you’re a serious investor navigating 2026, this is where the work actually begins.

👉 Upgrade to Fearless Investor to continue reading.

Why Forecasts Feel Less Useful Than They Used To

Markets Are Pricing Constraints, Not Forecasts

Most investors are still arguing about where inflation goes, when rates fall, or how fast growth returns.

Markets aren’t.

Markets are responding to limits.

In 2026, price action is being driven less by forecasts and more by what simply cannot expand fast enough — energy, fiscal capacity, labor, liquidity, and geopolitical coordination.

That’s why so many confident narratives feel right… and still underperform.

The Constraint Lens 

Before going any further, here’s the framework that matters:

Markets don’t need certainty to move.

They need constraints to bind.

Right now, assets are being repriced based on:

• Energy capacity, not demand projections
  
• Fiscal headroom, not political promises
  
• Liquidity conditions, not earnings stories
  

If an investment depends on flexibility where none exists, risk is being underpriced — even if the story sounds good.

The 2026 Market Constraint Checklist (Free Download)

Before every allocation, I run investments through a simple filter:

• Does this require abundant energy?
  
• Does it assume fiscal rescue?
  
• Does it rely on cheap labor?
  
• Does it need smooth liquidity?
  
• Does it depend on global coordination?
  

If the answer is yes to any of those, the risk profile changes — even if the forecast doesn’t.

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In the full piece, I break down:

• Which constraints markets are already pricing
  
• Where investors are still anchored to outdated playbooks
  
• How this shows up in energy, metals, equities, and liquidity-sensitive assets
  
• And how I’m positioning around constraints rather than predictions
  

This is not a forecast for 2026.

It’s a map of the limits shaping it.

This is the framework behind how we’re positioning for 2026.

The full analysis — including the portfolio implications — is available to Fearless Investor subscribers.

👉 Continue reading here:

Welcome to Fearless Investor

If you want investing insights grounded in macro fundamentals, risk systems, and real-world strategy — you’re in the right place.

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The Fearless Investor’s 2025

Every year, investors learn two lessons:

1. The world does not move in straight lines.
   
   
2. You need a system that adapts faster than your emotions.
   
   

2025 delivered both reminders.

It was a year defined by contradictions: strong consumer spending but weakening confidence… equity rallies overshadowed by liquidity tightening… AI breakthroughs colliding with energy shortages.

Investors who chased narratives got hurt.

Investors who followed structure got rewarded.

Below is our annual review — what mattered, what surprised us, and the signals shaping 2026.

What We Got Right in 2025

Energy wasn’t a trend — it was the constraint.

https://fearlessinvestor.substack.com/p/the-real-risk-why-ignoring-50-years

https://fearlessinvestor.substack.com/p/beyond-bitcoin-the-new-era-of-tokenized

https://fearlessinvestor.substack.com/p/digital-gold-rush-20-what-bitcoin 

The real AI bottleneck wasn’t compute — it was power.

Inflation didn’t fall the way people expected.

Headline cooled. Core stayed sticky.

This was predictable — and we said so early.

https://fearlessinvestor.substack.com/p/burning-contradictions-macro-mayhem 

https://www.macromashup.com/p/the-fourth-turning-playbook-gen-z 

Private credit + real assets continued outperforming.

Quietly, consistently, structurally.

Liquidity drove markets more than stories.

Liquidity explained nearly every “unexpected” market move.

https://www.macromashup.com/p/liquidity-crunch-fiscal-dominance 

https://neilwinward.substack.com/p/ai-for-investors-strategic-benefits 

https://fearlessinvestor.substack.com/p/beyond-bias-real-wealth-requires 

‍

What Surprised Even Us

AI adoption moved faster than any forecast.

This wasn’t hype — it was operational transformation across industries.

Supply chains remained structurally fragile.

Geopolitics, shipping, and cyberattacks kept pressure high. Reshoring sounds great, but the hard work of resetting has only just begun.

Retail investors improved dramatically.

More macro-awareness

Less leverage

Better fundamentals

Less meme-driven behavior

A meaningful shift.

Retail just continued buying the dip—they were proved right.

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What Most Investors Missed

Silent concentration risk in indices.

Portfolios got dramatically more top-heavy without people noticing.

Real yield became a true anchor again.

Short duration returned as a high-signal risk tool.

Energy + infrastructure became necessity plays, not value plays.

Systems beat predictions.

2025 rewarded automation, discipline, and risk rules.

Not guesswork.

To Continue Reading: Upgrade to Fearless Investor Premium

This is where the actionable, high-signal guidance begins.

In the premium version of this report, we break down:

• The 5 biggest investing lessons of 2025
  
• Where asymmetric opportunity exists going into 2026
  
• The 2025 → 2026 macro handoff and how to position for it
  
• The Fearless Investor Model Allocations for 2026
  
• The risk traps most portfolios will fall into next year
  
• The Fearless Investor 2026 Playbook Index
  
• A complete Q1 2026 portfolio priority checklist
  
  

If you want the full analysis that shapes our own positioning, upgrade to Fearless Investor Premium.

👉 Subscribe to Fearless Investor Premium to unlock the full report and every premium deep dive.

Welcome to The Fearless Investor. You’re reading one of the most important macro breakdowns of the year. If you want weekly, data-backed insights on markets, energy, policy, geopolitics, and real-world investment strategy, hit Subscribe — for only 0.30$ per day; you’ll never miss a market-moving trend again.

If 2024–2025 were about AI hype, 2026 will be about energy reality.

Every investor I talk to feels the same tension:

Tech is soaring. Rates are sticky. The dollar is strong. Inflation feels “stable”… but not stable enough. And beneath the surface, commodities have quietly tightened in a way most people aren’t paying attention to.

2026 will be the year energy resets — not because of panic or politics, but because fundamentals finally collide with underinvestment, geopolitics, and rising global demand. This article breaks down the supply squeeze, the structural shifts, and the best-positioned assets investors should understand now.

The Supply Squeeze Nobody Wants to Talk About

For the last decade, governments pushed for decarbonization while investors pushed for buybacks. Result?

Chronic underinvestment in oil, gas, metals, and grid infrastructure.

• Capex in fossil fuels is still 40% below 2014 levels.
  
• Grid expansion hasn’t kept up with electrification demand.
  
• Copper, nickel, and lithium projects are delayed or abandoned.
  

At some point, ESG narratives collide with math.

2026 is that point.

Geopolitics Is Now a Permanent Risk Premium

We’ve entered a world where “energy security” has replaced “cheap energy” as the priority.

• Middle East instability
  
• US–China rivalry
  
• Shipping routing risks
  
• Critical mineral chokepoints
  

Investors still model commodities like we’re in 2015.

But the 2026 world is multipolar, fragmented, and unstable. That’s bullish for scarcity assets.

The next section breaks down:

• The four asset classes most likely to outperform in 2026
  
• The exact energy subsectors we believe are structurally undervalued
  
• A portfolio-weighting framework for macro investors
  
• Our forward-looking thesis on LNG, uranium, copper, and clean hydrogen
  
• Where we see asymmetric opportunities before they price in
  

If you’re serious about making 2026 your most informed investing year yet, upgrade to Fearless Investor Premium to unlock the rest.

A Rare 2.5x Clean-Energy Opportunity You Shouldn’t Miss

If you want to see where these macro signals are actually materializing on the ground, we just published a new MacroMashup deep dive on a giga-scale, multi-fuel energy–compute project that showcases the architecture behind a potential 2.5x clean-energy opportunity. It’s one of the most concrete examples yet of how the energy–compute transition is creating real, investable structures—not narratives. You can read the full breakdown (including the investor notes) below. It’s available to paid subscribers, but you can unlock it instantly with a 7-day free trial.

Keep reading to learn more:

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How Decades of Globalization, Debt, and Deregulation Created Today’s Market Fragility

For fifty years, Western economies worshipped the same religion: open markets, cheap debt, and the myth that globalization made us safer.

It didn’t.
It made us fragile.

Factories vanished.
Debt exploded.
Markets became untethered from the real world.

Now, as tariffs return and industrial policy becomes mainstream, investors still cling to a playbook that no longer works.

This week’s Fearless Investor breaks down how the end of the neoliberal era is quietly reshaping every portfolio — and why most investors won’t see it coming until it’s too late.

Read the full report (paid):
→ How 50 years of policy dogma built today’s fragility
→ The new economic order emerging from its collapse
→ How to position your portfolio before the next cycle begins

Subscribe to access the full analysis:

‍

This summer, markets partied like risk didn’t exist.

AI hype drove record highs, the dollar stayed dominant, and investors convinced themselves America could out-grow gravity.

But now that fall has arrived, the euphoria is cracking.

The U.S. is waging an economic cold war with the same country it relies on for critical materials.

Debt keeps rising, yet yields remain irresistible.

The “Magnificent 7” are unstoppable while everything else drowns in liquidity.

In this week’s Fearless Investor, we’ll dissect the contradictions fueling today’s markets where power, policy, and profits are dangerously misaligned.

Inside the full edition (for paid readers):

• The geopolitical double-bind beneath America’s tech boom
  
• Why rare earths, not semiconductors, may be the next asymmetric trade
  
• How global liquidity masks the West’s waning order
  
• The Fearless Playbook to profit when logic and liquidity diverge

‍

👉 Read the full analysis on Substack — unlock the complete issue.

‍

‍

The Fourth Turning isn’t just a dusty history book on your parents’ shelf; it’s a live script playing out in markets right now.

We’re in a generational reset where trillions in capital are set to move, and the way money flows—not just what’s “valued”—is warping every chart you thought you understood.

1. Generational Reset: The Fourth Turning in Real Time

Every 80–100 years, societal tectonics shift: upheaval, renewal, and the creation of new norms. Neil Howe and William Strauss coined the term, but Gen Z is living it.

War, political upheaval, pandemic aftershocks, and a tech/AI revolution mean today’s 20- and 30-somethings are coming of age in constant disruption.

The result?

• Deep skepticism toward top-down narratives.
  
  
• Preference for tangible assets, such as commodities, and ideological assets, like cryptocurrencies.
  
  
• A baseline assumption that crashes are normal, not exceptions.
• Profound distrust of governments and central banks that have built a system that does not align with their interests. Should the Feds stop setting interest rates?

2. Wealth Transfers: Tsunami or Mirage?

The “Great Wealth Transfer” — estimated at $70 trillion — is not just about size, but about destination.

Younger generations are:

• Prioritizing digital assets, non-traditional investments, and ESG/impact projects.
  
  
• Building and engaging with digitally native family offices and advisors.
  
  
• Demanding liquidity, which feeds into the ETF and passive index boom.
• Strong conviction that Wall Street should no longer be calling all the shots: wealth managers are boomer-aligned.

This isn’t a smooth trickle; it’s a structural tide that will reshape capital markets for decades. Why Fear Stops People From Investing

3. The Passive Machine: Indexing, Herds, and the Mirage of Liquidity

Passive funds (BlackRock, Vanguard, ETFs) allocate automatically: every paycheck into the same stocks, same weights, every two weeks.

• Strength: Keeps markets bid and dampens volatility—for now.
  
  
• Weakness: Price signals degrade, bad companies rise with the good, and risk premiums flatten.
  
  
• Impact: Valuations disconnect from fundamentals, rotations surprise even seasoned traders. Market Clichés Unpacked: Wisdom or Fool's Gold?
  
  

4. Private Credit & Private Equity: The Hidden Hand

When banks pulled back after the last crisis, private capital stepped in and never left.

Now, with cheap money gone, these funds influence everything from small business lending to infrastructure ownership:

• Returns engineered: Often marked to model, not market.
  
  
• Signal distortion: More assets are private, making public market data an incomplete picture.
  
  
• Cycle risk: Private capital delays pain, but when it hits, corrections can be brutal and sudden. Real World Macro: When Reality Bats Last
  
  

5. Why It Matters: The Fearless Playbook

• Gen Z invests differently: They’ll move to tokenized, transparent platforms and act quickly when trust wavers. Digital Gold, AI Grids, and The New Age Of Reserve Assets
  
  
• Wealth transfer = volatility spike: New hands, new rules, new asset preferences.
  
  
• Passive crowd risk: When everyone’s in the same trade, the exit gets crowded fast.
  
  
• Private capital risk: Less transparency means delayed bad news and faster snapbacks.
  
  

Bottom Line

Markets are being shaped less by valuation metrics and more by generational capital flows, passive indexing, and opaque private markets. The Fourth Turning isn’t coming; it’s here.

Your edge? Spotting where the real signals are and knowing when the crowd’s “safety” is the actual risk, and the received wisdom is yesterday’s playbook.

Want More

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→ Book a call with Dakota Ridge Capital

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Across policy circles, trading floors, and social media, one debate is gaining momentum:

Should the Federal Reserve continue setting U.S. interest rates — or should we let the market decide?

This isn’t just an academic question. It’s about who holds the steering wheel of the U.S. economy and whether we still trust them to drive.

A Brief History of the Fed

The Federal Reserve was created by the Federal Reserve Act of 1913, signed into law by President Woodrow Wilson on December 23, 1913.

Woodrow said it best himself: “There has been no question in our time more anxiously debated than this question of banking reform. This measure takes control of our currency out of the hands of a private monopoly and makes it an instrument of the whole people.”

The Fed’s creation meant the United States would have a central authority for monetary policy and banking stability that would serve the public interest, not just private financial institutions.

The Fed’s original mission:

• Provide a stable money supply
• Act as lender of last resort during crises
• Smooth out the boom-and-bust cycles by adjusting interest rates and credit conditions
  

Over the decades, the Fed’s mandate expanded to include promoting maximum employment, stable prices, and moderate long-term interest rates.

The Pre-Fed US Economy

The U.S. before 1913 had no central bank. Interest rates and credit were set entirely by private banks and market forces. That often worked fine during good times but in bad times it was catastrophic. Rates would spike, credit would dry up, and economic downturns would deepen.

• The Panic of 1907 was the breaking point:
  • Triggered by a failed attempt to corner the copper market
  • Stock markets collapsed, depositors rushed to withdraw cash, and many banks and trust companies failed
  • The U.S. economy spiraled toward depression
  • J.P. Morgan personally organized a rescue by rallying major banks to inject liquidity but the crisis showed the danger of relying on one man’s influence instead of a formal institution.
    

This led Congress to create the National Monetary Commission in 1908, which studied central banking systems abroad and drafted the blueprint that became the Federal Reserve Act.‍

The Value the Fed Brings

Proponents argue the Fed is the economy’s shock absorber. By raising rates when inflation rises, and cutting them when growth stalls, it can reduce the severity of recessions and keep prices stable.

It also plays a critical role as lender of last resort: injecting liquidity when markets freeze, as in 2008 and 2020. Without that backstop, many believe financial crises would be deeper and longer.

Notable Accomplishments Credited to the Fed

While controversial, the Fed has played critical roles in stabilizing the economy during crises:

• The Great Depression (1930s): Eventually implemented policies to expand the money supply, though economists debate if this came too late
• World War II: Managed interest rates to keep government borrowing costs low, enabling massive war financing
• 1980s Inflation Fight: Under Paul Volcker, the Fed hiked rates aggressively to bring down double-digit inflation, paving the way for decades of lower inflation
• 2008 Financial Crisis: Provided emergency lending facilities and slashed rates to near zero, helping prevent a complete financial collapse
• COVID-19 Pandemic (2020): Acted quickly to stabilize markets, slash rates, and launch large-scale asset purchases to avoid a deep economic depression

Attempts to Close the Fed

Over the years, various politicians — particularly populists and some libertarians — have called for the Fed’s powers to be curtailed or for it to be abolished outright.

Notable examples:

• Ron Paul and the “Audit the Fed” and “End the Fed” campaigns in the 2000s–2010s
• Some criticism during President Trump’s term, where he publicly attacked Fed rate decisions, though he did not move to dismantle it
• These efforts have never gained enough congressional support to seriously threaten the Fed’s existence.

The Case for Market-Set Interest Rates

Some economists and investors argue that central banks distort the natural supply and demand for capital. Their main points:

• True Price Discovery: Letting the market set rates would ensure borrowing costs reflect real-time economic conditions.
• No Moral Hazard: Without the Fed “bailing out” markets, risk would be priced more accurately.
• Greater Transparency: Rates wouldn’t be influenced by closed-door meetings or policy speeches.
• Fiscal Discipline: Governments would face real borrowing costs, potentially reducing deficits.
  
  

The Case Against Removing the Fed’s Role

Critics of a purely market-driven approach point out serious risks:

• Loss of Stabilization Tools: Without the Fed adjusting rates, there’s no lever to combat inflation or recessions.
• Volatility: Markets can overshoot — pushing rates too high or too low, amplifying economic swings.
• Liquidity Crises: In times of panic, rates could spike uncontrollably without a lender of last resort.
• History’s Warning: The pre-Fed era saw frequent, devastating financial panics that destabilized the economy.

Top Supporters of the Fed

• Jerome Powell, Federal Reserve Chair — Continues championing the Fed’s independence and long-term credibility. Amid political attacks, financial leaders like JPMorgan’s Jamie Dimon have echoed this defense of institutional autonomy. Business Insider
• Moderate and centrist economists, such as Mohamed El‑Erian and Jeremy Siegel, are quietly urging Powell to resign—not as a criticism of his performance, but as a strategic move to protect the Fed’s independence under mounting political stress.
  

Prominent Critics and Opponents

• Former Governor Kevin Warsh — Delivered strong criticism in April 2025, arguing the Fed has strayed beyond its mandate, misusing tools like forward guidance and drawing caution and concern from policy hawks. Reuters+Barron's

• Stephen Miran — Recently nominated by President Trump to the Fed’s Board of Governors, Miran is aligned with Trump’s call for aggressive rate cuts and structural reform, including reducing Fed independence. Financial Times

• Donald Trump and MAGA-aligned figures — Increasingly vocal critics of Powell and the institutional Fed, Trump has attacked the chair personally and signaled eagerness to restructure or replace the institution. Aljazeera.com+MarketWatch

• Libertarians and Gold-Standard Advocates — Figures like Ron Paul, Rand Paul, and economist Mark Spitznagel continue to denounce the Fed, calling for its abolition or return to the gold standard, echoing long-standing skepticism.

The Trade-Off

At its core, the debate comes down to a choice:

Pro-Fed: Stability (Centralized Fed Control)

Centralized control by the Federal Reserve allows it to act as a lender of last resort in crises, inject liquidity to prevent bank runs, and use interest rate adjustments to smooth out the boom-bust cycle. By anchoring inflation expectations and keeping borrowing costs relatively predictable, the Fed provides businesses, households, and governments with a stable environment for long-term planning. Its ability to coordinate with other central banks during global shocks and its dual mandate to promote stable prices and maximum employment make it a powerful tool for dampening financial turmoil and sustaining economic confidence.

Anti-Fed: Freedom (Market-Set Rates)

With market-set rates, borrowing costs are determined purely by supply and demand for capital, credit risk, and inflation expectations — not central bank policy. Large government deficits push investors to demand higher interest rates, increasing debt costs. This acts as a natural brake on overspending, forcing fiscal discipline through spending cuts, tax adjustments, or structural reforms. Investors, not central bankers, act as the real-time “enforcers” of sound fiscal policy. But, without the Fed cutting rates or injecting liquidity, recessions could be deeper and longer, credit harder to get, and unemployment slower to recover.

Who Wins and Who Loses in Each System?

Where Do You Stand?

This is not a theoretical exercise. In a world of high debt, shifting global power, and rapid information flows, how we set interest rates could shape the next century of U.S. economic history.

Let’s end with a thought for you to contemplate: Should the Fed step back and let markets set interest rates — or is their guiding hand still essential?

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Your trading screen gives you the illusion of control. You can rebalance, monitor, buy, and sell. You feel in charge.

But then the sink backs up. Or you get the flu. Or you’re told we can’t upgrade the electrical grid because… there aren’t enough welders.

This is what macro really looks like—messy, physical, inconvenient. It isn’t just data and charts. It’s plumbing, supply chains, demographics, and geopolitics.

Try coding your way out of a clogged drain.

Macro Isn’t Just Theory. It’s the Terrain.

We like to think markets are driven by logic, sentiment, or central bank policy. But real-world constraints shape the battlefield. Consider:

• We need to rebuild manufacturing and mining capacity. You can’t “reshore” factories without robots—or people to build the robots.
  
• Wastewater surveillance is how we now track public health. When no one tests for Covid, the plumbing goes hi-tech.
  
• We can’t build out the grid without skilled trades. And we’ve oversold 4-year degrees while underinvesting in vocational skills.
  
• Fiat currencies are being quietly debased. The illusion of wealth grows, but so does the fragility underneath.
  
  

These aren’t headlines. They’re underlying forces that drive markets—long before you notice them on your Bloomberg terminal.

The World Is Repricing Risk

What would’ve happened if the Israel-Iran conflict lasted two more weeks? Israel was reportedly close to running out of ammunition.

U.S. officials now openly admit: we can’t fight multiple wars simultaneously. We don’t have the weapons—or the domestic capacity to build them fast enough.

China controls the rare earths. They can squeeze supply whenever it suits them.

Fertilizer supply? Fragile. And without it, global agriculture teeters.

These are macro constraints with micro implications. And they don’t come with a tidy UI.

Your Portfolio Is a Window to Your Worldview

So… how do you structure a portfolio to reflect this reality?

You start at the top:

1. Macro cycles
   
2. Relative GDP strength
   
3. Inflation trends
   
4. Global liquidity
   
5. Geopolitical risk
   
6. Trade flows
   
   

Then you look for signal.

You listen to smart macro voices, not TikTok talking heads.

You track the cycle, not the clickbait.

And then you ask:

How do I position for resilience? What do I actually want to own?

Gold, Bitcoin, and What to Watch

• Are we in a commodity supercycle?
  
• Why are central banks hoarding gold?
  
• Should you own gold via ETFs or physical?
  
• What about Bitcoin—cold storage or fund format?
  
• Can China’s robot army offset its demographic collapse?
  
• What happens if Taiwan chip exports suddenly stop?
  
  

This isn’t just theory. It’s portfolio input.

Kahneman, Bias, and the Illusion of Skill

Daniel Kahneman (RIP, March 2024) gave us the lens to think about this. Thinking Fast and Slow isn’t just a behavioral finance classic—it’s an investment survival guide.

System 1 is fast, reactive, emotional.

System 2 is slow, analytical, disciplined.

When markets lurch, which system are you using?

Common Biases That Hurt Investors:

• Anchoring – Fixating on arbitrary price points
  
• Loss Aversion – Overreacting to small downside risk
  
• Regret Aversion – Making irrational trades to avoid missing out
  
• Confirmation Bias – Only seeing data that supports your thesis
  
• Overtrading – Confusing action with strategy
  

Micro Tip: Don’t Overcomplicate Trades

Obsessing over a $0.99 vs $1.01 entry point? Been there.

What difference does it make if you’re holding for a 10X gain?

If the bid-ask is wide, buy at the ask and move on.

Watch order size. Accumulate gradually if needed.

Don’t be conspicuous in the market, especially with small market-cap stocks. Be deliberate. 

Watch trade volumes and buys or sell inside them.

Final Thought: Reality Always Wins

Your model is only as good as the inputs.

Your strategy is only as strong as the assumptions you check.

Macro isn’t just theory. It’s the terrain you’re trading on.

And reality, as they say, bats last.

📈 Want a portfolio that responds to macro signals instead of gambling on timing

Want to surround yourself with other clear-eyed investors?

→ Join the Fearless Investor Community

Every investor is watching Jerome Powell. Again.

Powell’s term expires in May 2026. Chances Trump extends it? Near zero.

Trump and Treasury Secretary have pivoted away from debt reduction to growing GDP to outrun debt growth. That’s inflationary.

But here’s the thing: the Fed is no longer the fail-safe. With war, debt, and political chaos on every front, the Fed is playing defense, not offense. The old playbook of “watch the Fed, ride the market” is broken. It’s different.

Here’s what’s changed:

• Bond vigilantes are back. The market is calling BS on unlimited stimulus.
• Geopolitical tensions are now investment risk factors, especially in energy and commodities.
• The debt isn’t just a number. It’s a future tax. And markets know it.

Let’s take a deep dive into these issues

Source: U.S. Treasury

• Rising Interest Payments: The U.S. government’s annual interest payments on debt have surpassed $1 trillion, exceeding expenditures on major programs like defense and Medicaid. This surge raises concerns about the sustainability of fiscal policies.
• Elevated Treasury Yields: Yields on 30-year U.S. Treasury bonds have climbed above 5%, the highest since 2007, indicating decreased demand and heightened risk premiums.
• Persistent Inflation Risks: Despite some moderation, inflation remains a pressing concern. Federal Reserve officials have expressed caution, emphasizing the need to maintain current interest rates to combat ongoing inflationary pressures. The new normal is going to 3%—a likely condition for the next Fed chair to sign off on.
• The Fed faces an unprecedented dilemma:
  • Traditional toolkit: higher rates cool the economy
  • Today’s debt levels do the opposite: increased rates => higher GDP
  • Stock market gains and IRA withdrawals fuel federal receipts
  • Falling receipts drive deficits
  • The Fed has to support the stock market, but how?
  • Yield curve control is coming
• Geopolitical Tensions: Escalating trade disputes and geopolitical conflicts are contributing to economic uncertainty, affecting global supply chains and investor confidence.

Implications for Investors:

The confluence of these factors suggests that traditional investment strategies may require reevaluation. Relying solely on conventional asset allocations could expose portfolios to heightened risks in this evolving economic landscape.

60/40 meant bonds outperformed when stocks went south—an allocation hedge. Bond vigilantes still act as a brake on policy excess, but we have entered a structural bear market in bonds.

Bonds may offer short-term trading opportunities as a temporary refuge from market panic, but those trades don’t last.

If your portfolio is still built around the Fed as your safety net, it’s time for a wake-up call.

Sure, the Fed has to backstop the stock market, but you have to know when and how.

Want to build an allocation strategy that actually protects your capital? Book a strategy call with Dakota Ridge Capital.

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