I tweeted that an indicator that had historically forecast a US recession is now on

Q I get: Should I now steer clear of US markets?

In India the story is that the economy is booming & hence the mkts look great

But the economy & markets are different animals

A thread 🧵 (1/n)

There is no one to one correlation between the economy of a country and its stock market - more so not in the same time frame.

At the minimum,there are leads and lags.

Plus there are many other adjustments to be made.

Simplistic predictions don't work. Neither do stories(2/n)

The S&P 500 is down for all 3 quarters in 2022- this has happened only 4 times in the last 50 yrs

Both US stocks & bonds are down substantially in 9 mths which has happened only 3x in 100 years

So the question for US is how much of the bad news is already in the price? (3/n)

Probabilistically speaking, it appears more than likely that most of the bad news is already in the price especially for stable,traditional businesses
The impact of the interest rate rise will, of course, be higher for companies where profits & cash flows are still far away (4/n)

Therefore one can say in a sense that in the US, the stock markets have been a leading indicator of the bad news that is still unfolding in the real economy.

Go back to March 2020: If someone had told you that this would be the impact of the pandemic (5/n)

2 books which have immensely helped me in #derivatives

Mind over markets- James Dalton
Option volatility &Pricing- Sheldon Natenberg

I recommend reading both at least 2 times.

It is 1 of the reasons I'm 15 years in markets actively trading till today

It will help you also

Purchase a hard copy guys and keep it for constant referring. Read and re read. This is me in the morning today.

If you get into that soft copy/pirated shit for a few hundred rupees and expect the markets to make you lakhs, you will instead have money taken from you.

Before AGE 40, set aside 100 MINUTES a day to learn these skills.

1. Learn Manipulation

People around you are self-centered.

You'll identify instances of manipulation around you and act right.

This will also be a game-changer for you.

2. Learn How To Fight

There comes a time when you must defend yourself.

Failures to defend yourself will be seen as a weakness

Do this:
- Set aside 100 minutes daily
- Hire a trainer day
- Commit to at least 180 days

You'll learn all basics.

3. Learn Role-Playing

People should know "just enough" about your life.

Leading a mysterious life is attractive.

You should know:
- What to share
- To whom
- When and how

Wear different hats and enjoy the game.

4. Learn Brutal Self Criticism

The only way to understand people around you is to know yourself first.

Be honest with yourself and:
- Call yourself out for your inadequacies
- Cut habits against your purpose
- Create the person you need

Your life will be 10x better.

Over the past 3 years, I've read 30+ books on trading.

The truth is - majority of them added no value.

Shorten your learning curve by reading these 10 (and toss the rest in the trash):

1. How to Make Money in Stocks

Written by William O'Neil, How to Make Money in Stocks was first published in 1970 & has since become the bible for beginning investors.

Learning CANSLIM from the start of your career will help build habits that will change your life.

2. Pit Bull

Written by Martin 'Buzzy' Schwartz, this book details the story of a man who went from rags to riches in the market.

It will fire you up and help you realize what is possible in the market if you put in the work.

3. How I made $2,000,000 In The Stock Market

In this book we learn the history behind the Darvas Box Theory & again see how hard work makes anything possible in the market.

4. Reminiscences of a Stock Operator

Written by Edwin Lefévre, Reminiscences is a make shift biography about the unique triumphs and pitfalls of the legendary trader Jesse Livermore.

This is my favorite trading book ever & is an amazingly easy read.