Forward Guidance How Macro Trading Veterans Are Thinking About 2025 | David Cervantes & DCP
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Dec 28, 2024 David Cervantes, a macro investor at Pinebrook Capital, shares valuable insights on the economic landscape, including reflections on the FOMC's recent decisions. He draws parallels between today's market conditions and the 1990s, discussing how traders manage their emotions during volatility. The conversation touches on the impact of recent Federal Reserve policies, expectations for 2025, and strategies for navigating inflation amidst political shifts. Cervantes emphasizes the importance of a resilient mindset in adapting to market changes.
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DCP's 2008 Experience
- In 2007-2008, DCP knew the financial "plumbing was broken" while selling mortgage-backed tranches for GE.
- Despite this, the market didn't react for three months, similar to Michael Burry's experience in "The Big Short".
Focus on Profit, Not Being Right
- Avoid clinging to negative biases, as they cloud judgment in trading.
- Focus on making money, not proving you're right, and admit when wrong for faster learning.
Building a Trading Strategy
- Formulate opinions through research, consulting others, and considering multiple perspectives.
- If a trade doesn't work, exit without hesitation, prioritizing capital preservation.