Swinging Axes > Standing in Line
Transportation, Bonds, and Health Care aren’t worth your capital.
If you ever want to know how someone becomes an anarchist, just go to a government facility and try to do anything.
Yesterday, I showed up at the passport office to renew mine before heading to Toronto for the All Star Charts Portfolio Accelerator. I thought I was good to go. My photo was on my phone. Surely, they could just print it out. Quick in, quick out.
Wrong.
The clerk told me they needed a physical photo — CVS, nine blocks away.
So there I was, in Vans (not running shoes), sprinting across the city. I parked my car on the fifth floor of a garage, bolted down the stairs, ran to CVS, got the photo, and sprinted all the way back.
When I finally returned, sweaty and out of breath, they told me the photo was too dark.
Seriously.
I thought they were going to send me back again. Then the clerk casually said: “Oh, you can take one here.”
Of course… so why did I need to get a passport photo?
“The world may never know.”
The comedy wasn’t over — the guy taking the picture couldn’t figure out how to switch the camera from auto to manual. I had to convince him to hand it over so I could do it myself.
Finally, I got the photo I needed. The whole thing was a circus.
But here’s the thing: I loved it.
I thrive in chaos. Being late, driving 100 mph, sprinting in Vans, solving problems under pressure — it wakes me up. I’m not sure I was built for this slow, orderly world. Put me in an age of axes and chaos, and I’d be right at home.
And that’s the connection: markets aren’t orderly either. They’re messy, inefficient, and frustrating. The edge comes not from expecting things to run smoothly — but from loving the mess enough to adapt.
Markets Have Their Passport Offices
The lesson isn’t just about finding strength. It’s about knowing what not to touch.
Markets have their passport offices too — places where you waste time, lose energy, and drain capital. If you want to compound returns, you have to identify them.
That’s why we love looking at the scans. They don’t just show us leadership — they show us where leadership is absent. And right now, the scans are clear: plenty of places are not worth standing in line for.
Scan #1: Leading/Sensitive Groups
Look at the groups that should be leading in reflation — and aren’t.
Transportation is negative year-to-date (-1.4%). In reflation, transports should fly. They’re lagging. (Keep an eye on this)
Biotech can’t get traction. A hot month doesn’t change the fact it’s negative over 12 months (-4.5%). (I think the move is just starting but it is still a laggard.)
Bitcoin is diverging. Up YTD, but negative in the short-term. Something to keep an eye on. (Still long)
These are the market’s passport offices: messy, inconsistent, and not worth the line.
Scan #2: International Leadership Dashboard
It’s not just sectors — whole countries are flashing red.
Argentina: -16% YTD, -16% vs SPX.
India Financials: -12% YTD, -20% vs SPX.
Saudi Arabia & Turkey: both rolling over, both weak.
Meanwhile, leadership is abroad in Greece (+63% YTD) and Chinese small caps (+53% YTD). The lesson? Not all global plays are equal. Some markets are worth waiting in line for, most are not.
Scan #3: Sector Breakdown
Defensives are failing too.
Staples: down across 1M, 3M, 6M, 12M. Pure dead weight.
Healthcare: -0.3% YTD, -12% over 12 months. That’s not leadership.
Utilities: negative short-term (1M time frame)
In a reflationary regime, this makes sense. Money doesn’t hide in “safe havens.” It flows toward cyclicals, growth, and commodities.
Why This Makes Sense in Reflation
The flipside of weakness is confirmation of strength.
Industrials: +15% YTD.
Small Caps: strong across every timeframe.
IPO Index: +16% YTD, +29% over 12 months. Speculation is alive.
Metals & Mining: +46% YTD. The clearest confirmation of a commodity bull market getting started.
This is what a reflationary environment looks like. Capital moves toward growth, risk-on assets, and real-economy plays. The laggards we just walked through don’t fit that playbook.
The Value of Knowing What Not to Do
Everyone obsesses about winners. But avoiding losers is just as important.
Think about the portfolios sitting heavy in Staples, Healthcare, or Argentina right now. The opportunity cost is massive. It’s not just lost capital — it’s missing out on the sectors that are actually compounding.
That’s why I say we love the unloved. Not because we’re buyers. But because identifying the unloved helps us avoid wasting time and capital.
The Takeaway
Standing in line at the passport office yesterday, watching inefficiency unfold, I realized something: the market is full of the same traps.
You don’t beat the market by pretending they don’t exist. You beat it by spotting them and stepping aside.
Right now, the scans are crystal clear:
Transportation, Biotech, and Bitcoin aren’t leading.
Argentina, India Financials, Saudi Arabia, and Turkey are laggards globally.
Staples, Healthcare, and Utilities are dead money in sectors.
These are the passport offices of the market. Messy, inefficient, not worth the wait.
Meanwhile, Gold Miners, Industrials, Small Caps, IPOs, international stocks and Metals & Mining are the open highways. That’s where capital flows. That’s where opportunity compounds.
I wasn’t built for standing in lines. I was built for motion. For chaos. For speed.
And this market is telling us the same thing: stop waiting around. Avoid the passport offices. Stay on the highway.
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