Your Brain Is Lying To You About The Market
Energy Is About To Do What It Hasn’t Done Since 2008
Markets change slowly… until they don’t.
The hard part isn’t spotting volatility. The hard part is recognizing structural change while it’s happening. Our brains are wired for continuity. We explain things away. We normalize pain. We assume today looks like yesterday.
Last year I was in treatment for a neurological condition. The treatment was brutal. But what shocked me most was the mental gymnastics happening inside my own head.
I had dysrhythmia. Constant migraines. Head pressure. I’d get sick in elevators. Random pain everywhere. And my brain kept explaining it away.
“You’ve injured almost every part of your body… of course you’re slower.”
“You were an addict 15 years ago… this is just aging.”
“Maybe this is normal.”
Not once did my brain scream: something is wrong.
That’s the danger.
When you’ve pushed through enough pain in life—mentally, spiritually, physically—you get good at telling yourself you’re fine. But that same survival mechanism can blind you to change.
Markets are no different.
S&P 500 Growth vs. Value — The Jaws Are Closing
For years, growth dominated value. The spread widened relentlessly. It felt permanent. AI. Mega-cap tech. Passive flows. Everyone piled in.
Value was “dead.”
Cyclicals were “uninvestable.”
Energy was “unownable.”
But look closely.
The jaws are closing.
Value has started to rally. Growth is no longer accelerating away from it. This isn’t a one week bounce. This is a structural rotation that has been building underneath the surface for years.
Most investors didn’t recognize it because their brains normalized the regime:
“Growth always wins.”
“Tech always leads.”
“Every dip is buyable.”
Sound familiar?
Markets change quietly before they change loudly.
The U.S. Dollar — The Shift Everyone Laughed At
Last year, when we went heavy into Europe, Asia, Africa, and Latin America, people thought we were crazy.
“Why buy international?”
“U.S. exceptionalism.”
“The dollar is king.”
But look at the chart.
The dollar cycle rolled over.
And that single shift has been the fuel behind:
Precious metals
Industrial metals
Latin American equities
Emerging markets
And now energy
This is not a random move. This is a dollar cycle.
When the dollar falls:
Commodities rise.
International assets outperform.
Capital rotates globally.
We’ve seen this movie before—in the early 2000s commodity supercycle.
The difference is that this time, most investors are still anchored to the last regime.
They don’t see it because they don’t want to see it.
I believe this dollar cycle continues through 2026. And if that’s true, then the reflation trade is not over. It’s just getting started.
30-Year Treasury Yield — The 40-Year Cycle
Bonds have been in a secular bull market since the early 1980s. Forty years of falling yields. Forty years of capital gains.
Entire careers were built on that trend.
But cycles don’t last forever.
Historically, bonds move in 35–40 year structural waves. The 1940s bottom. The 1980 peak. The 2020 generational low.
Look at the chart.
The downtrend from the 1980s is broken. Yields have already made a violent move higher. Yes, we will have countertrend rallies in bonds. Yes, yields will dip at times.
But structurally?
I believe bonds will be a poor long-term investment for most of our lifetime.
There will be short lived rallies. But the larger regime is one of higher yields.
And if yields are going to continue higher, they will need help.
XLE — The Sector That Can Power Yields Higher
If bond yields are going to make another leg higher, it will likely be driven by a sector that hasn’t had a real bull market since 2008.
Energy.
Yes, 2020–2023 was good. But it was nothing like a true commodity supercycle move. Not even close to what we saw in prior structural runs.
Energy stocks are breaking out.
Shorts are getting squeezed.
The market is not positioned for this.
If yields rise in a reflationary environment, they won’t rise because growth stocks are booming. They’ll rise because inflationary pressure is bubbling underneath the surface.
Energy is the transmission mechanism.
Crude Oil — The Line That Matters
This bottom in crude oil is the most important level in the entire setup.
If bonds are going to stage a meaningful rally here, oil should break down hard. Not drift lower. Not chop. Break.
A sustained move below 55 would signal real demand destruction and likely give bonds legs.
But that’s not what’s happening.
Energy is breaking out. Shorts are getting run over. Including high-profile names betting against XOP and XLE.
Yes, bonds have bounced for a week.
But I want to see:
Bonds take out a major structural level.
Oil break decisively lower.
Energy roll over.
Until then, the weight of evidence favors reflation.
The Mental Trap
Here’s the dangerous part.
When regimes change, it doesn’t feel obvious. It feels uncomfortable. It feels wrong. It feels early.
Your brain whispers:
“This is just a bounce.”
“This won’t last.”
“It always reverts.”
That’s exactly how mine handled my health. It normalized dysfunction because it was easier than confronting change.
Investors are doing the same thing now.
Growth dominance is fading.
The dollar cycle is turning.
Bonds are no longer a free lunch.
Commodities are quietly regaining leadership.
Energy is waking up.
This isn’t about being dramatic.
It’s about recognizing that structural shifts don’t ring a bell.
They creep.
Then they accelerate.
Gratitude and “This Is Different”
One habit that saved me during treatment was this:
When stuck in a negative loop, write what you’re grateful for.
It forces the brain to break pattern recognition. It disrupts the loop.
In markets, the equivalent is saying:
“This is different.”
Not emotionally. Not recklessly. But objectively.
Value vs growth is different.
Dollar dynamics are different.
Yield cycles are different.
Commodity leadership is different.
International leadership is different.
When you say it out loud, your brain starts looking for evidence instead of excuses.
The Big Picture
If the dollar continues lower into 2026:
International stocks outperform.
Metals continue higher.
Energy expands margins.
Value closes the gap on growth.
If the 40-year bond cycle has turned:
Bonds underperform long term.
Capital rotates into real assets.
Alternative investments gain importance.
If crude oil holds this bottom:
Yields likely grind higher.
Energy leads.
The reflation trade stays alive.
Markets change.
The question is whether we are willing to recognize it before the majority does.
Because by the time it feels obvious…
… the move is already mature.
Stay data dependent.
Stay flexible.
But don’t let your brain normalize a regime that is already fading.
This might be one of those moments where we look back and say:
“That was the turn.”
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Thank you 🙏🏽 one of my favorite things to do. Sorry I took so long to get back to some of these
Very deep & informative. You masterfully correlate your life to the markets & the mindset of the masses. Excellent piece!