🐻 The Big Short 2.0? Not So Fast...

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Which is why we launched the Wealth Building Community.

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What’s on the Menu 🍴

The internet has been buzzing with rumors…

And we’re here to clear the air and give you the real deal!

Let’s jump into it:

• Navigating Crypto? Here's Your Essential Toolkit 🛠️

• The Big Short 2.0? Not So Fast… 🐻

• Consumers Keep Consuming 🛒

• This is exactly when altcoin season starts 🚀

Today’s newsletter is a 4 minute read.

Navigating Crypto? Here's Your Essential Toolkit 🛠️

The cryptocurrency space is like a bustling port city in the age of discovery: fast-growing, teeming with new opportunities, and a tad overwhelming.

With a tidal wave of information crashing in every day, it's essential to have the right tools to organize, analyze, and make sense of it all.

Here's our treasure map of the best crypto data tools:

• Screeners: The magnifying glasses of the crypto world, helping you spot the gems amidst the rubble.

  • Messari: A resources for sifting through the crypto haystack to find that golden needle.

  • Koyfin: A sleek screener for stocks, crypto-assets, and macro data.

• Charts: The visual storytellers of the crypto saga, painting the picture of price movements.

  • TradingView: Offers a broad range of charts and custom indicators and strategies.

  • Coinigy: A crypto-focused charting platform with API connections to crypto exchanges.

  • CoinTrader Pro: Charts for finding the longest price history of crypto-assets.

• Tokenomics: The anatomy class for cryptocurrencies, breaking down the inner workings of your digital assets.

  • TokenTerminal: The heartbeat monitor for your crypto's economic health.

  • The Block: The encyclopedia of tokenomics.

  • IntoTheBlock: Delve deep into the DNA of your favorite tokens.

  • Glassnode: The OG of on-chain data for bitcoin, ethereum, and other top cryptocurrencies.

• Market Info: The pulse-checkers and weather forecasters of the crypto universe, keeping you informed and ahead.

  • CoinGlass: The looking glass into the vast crypto market.

  • LunarCrush: Because who doesn't want to have a moonshot view of the market?

  • Dune: Navigate the shifting sands of the crypto market with ease.

  • CoinGecko: Find a comprehensive list of crypto-assets, market data, and overview info.

  • Mempool Space: For those who like to keep an eye on the crypto traffic jam.

A good trader or investor always has the best tools. Navigate wisely and may your crypto treasure chest overflow! 🧭

The Big Short 2.0? Not So Fast… 🐻

Once per quarter we get excited to dig into “13F filings”.

Large investment firms and hedge funds are required to file a list of their US stock holdings in these public filings.

So it’s a great way to get a peek at what famous investors are doing with their stock portfolios and sometimes it even helps us generate new investment ideas.

However, there are significant drawbacks to these quarterly 13F filings:

• Staleness: they show holdings at quarter end but don’t become public until 45 days after quarter end

• Incompleteness: they don’t show international stock holdings, non-stock holdings, short positions, private investments, or other complex positions

• Inaccuracy: when it comes to stock option positions such as calls and puts, the quantities and values of the positions are calculated incorrectly

Case in point: yesterday the 13F filing for Michael Burry’s firm (Scion Asset Management) was made public and headlines all over the internet got it hilariously wrong.

Michael Burry is famous for making a huge bet against the US housing market in 2007, which ultimately paid off massively and led to the making of “The Big Short” movie.

Most of yesterday’s headlines incorrectly claimed he just put billions into put options, betting against US stock indexes with more than 90% of his portfolio value.

The real truth?

He did make a bearish bet against stocks, but in a much smaller way.

When call & put options are listed in 13F filings, the share amounts and share values are based on the underlying asset of the option instead of the option values themselves.

Here’s what showed at the top of Burry’s Q2 2023 filing:

An option contract gets an investor exposure to 100 underlying shares. So this filing shows 4,000,000 total shares but in reality that would equate to owning 40,000 option contracts.

The “Market Value” lists the value of the 4,000,000 underlying shares, which was roughly $1.6 Billion. However, this is NOT the market value of the options contracts.

We do not know the actual amount paid for the put option contracts themselves, or the current market value of the put options.

It is likely that the cost and market value of the puts purchased by Burry are FAR LESS than the value of the underlying shares.

This is because options have a strike price and an expiration date that help determine their value.

Options give investors the right to buy or sell the underlying stock ONLY IF the stock goes above or below the strike price by a certain date.

In other words, options have value under very specific conditions.

Investors often buy options because they can get directional exposure to an underlying stock while spending a fraction of what it would cost to buy the stock itself.

The tradeoff is that options can expire worthless if the stock doesn’t move enough in the preferred direction within the specified timeframe.

Back to Burry’s bearish bet.

We don’t know from the filing which put options he actually bought.

If he bought 40,000 put options expiring this September that give him the right to sell the index ETFs at a price 20% below today’s levels then he might have spent just $2 MILLION.

If he bought 40,000 put options expiring next June that give him the right to sell the index ETFs at today’s price levels then he might have spent as much as $100 MILLION.

Regardless, he didn’t risk billions and he didn’t risk more than 90% of his portfolio here.

According to regulatory filings from Q1 2023, Scion Asset Management only manages about $250 million of capital.

So a $1.6 Billion bet is not even possible, giving us a “sanity check” on our math.

Burry does seem bearish on stocks which isn’t too surprising since 1) stock indexes have rallied a lot despite economic uncertainty and 2) he’s known for making a LOT of bearish calls over the years (many of which did not turn out right).

Moral of the story here?

Don’t always believe the headlines and don’t always blindly follow the permabears!

Consumers Keep Consuming 🛒

Just when we all thought we’d see the consumer slow their role on buying goods and services, we get better than expected retail sales data.

Call it Amazon Prime Day, consumers abusing credit cards, or continued savings being spent down, but, it’s likely got bears (and the Federal Reserve) frustrated.

Retail sales cruised way past consensus estimates of 1.5% to a whopping 3.2% for July.

While that sounds like a pretty big deal, the truth is retail sales are in the process of “normalizing” back to pre-pandemic levels.

That’s not to discount the consumer in any way. They’re definitely going strong considering the environment we’re in.

Notable categories of strength were E-commerce retailers (Hi, Amazon), sporting goods, hobby & musical instruments, food & beverage stores, and even clothing.

The question is, could this be a problem for the Fed?

The Federal Reserve is likely worried about inflation ticking back up.

Although this economy seems to have pockets of some consumers doing better than others, looking at the whole picture is showing us that there’s still plenty of demand to go around.

Delicious Bites 😋

• NEW VIDEO: This is exactly when altcoin season starts

• Europe’s first spot bitcoin ETF

• What The Top Recession Gauge Is Saying Now

• Binance to Shut Down Crypto Payments Service

• Meet Argentina’s Pro-Bitcoin Presidential Candidate

Food For Thought 🧠

“The four most dangerous words in investing are, it’s different this time."
- Sir John Templeton

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.