Reverse Engineer A Bull Market
A Great Way To Generate Returns
Investors,
One of the annoying aspects of this market is that not much is changing.
We’ve discussed this at length…
Equities remain in uptrends.
Bitcoin remains in a downtrend.
Some stocks are working.
Other stocks are struggling.
Some risk-on metrics look healthy.
Other risk-on metrics are deteriorating.
In this environment with such stagnant (but mixed) data, my message in recent weeks has been that the best option available to us is largely to do nothing.
And in my own personal portfolio, that’s generally what I’ve done.
I’ve added to some positions, while also reducing some exposure in other areas.
These aren’t significant portfolio changes, but rather portfolio “maintenance”.
Back in September, I wrote a report about how these rate cuts were different.
In fact, that was literally the title of the report.
In that report, I didn’t predict the end of the bull market for Bitcoin… but I warned that the conditions that produced a decisively bullish conclusion about the 2024 rate cuts were not present with the Fed’s new cutting cycle in September 2025.
That report inspired the next premium newsletter, where I shared the barbell strategy.
If I viewed the 2025 rate cuts as “less bullish” than the 2024 cuts, my interpretation was that more volatility would come as a result of heightened uncertainty.
In that environment, I suspected that a barbell strategy would be best for investors to capitalize on those conditions — one which would benefit from either path of uncertainty. The barbell strategy isn’t supposed to thrive in outright bullish conditions nor in outright bearish conditions, but help to reduce volatility and stabilize returns, regardless of the market’s path.
If you want to access that report, check it out here:
Moving on…
Even I’ve been impressed by the resilience of macroeconomic data in recent months, which have generally pointed to a reacceleration in GDP and somewhat mixed labor market conditions, though they generally remain resilient & dynamic.
This resilient & dynamic backdrop has enabled continued strength in the stock market; however, as we’ve discussed at length, the riskiest segments of the market are struggling to find their footing.
To prove that point, I’ve continuously referenced the underperformance of Bitcoin, software (IGV), and speculative growth stocks (ARKW); however, we can also point to the strong performance of semiconductors, industrials, discretionary, and many other segments of the market that still appear to be “risk-on”.
That’s the whole point — there are signs of risk-on behavior in this market.
Is it overwhelmingly evident that we’re in a risk-on regime?
Personally, I don’t think so…
I want to focus on a few specific portions from that Barbell Strategy report, following up on some of the key dynamics that we reviewed and how they are shaping up…
Let’s begin.