📬 A Letter to My Subscriber #3

Staying Rational When Markets Reach for the Sky

Dear Subscriber,

We are witnessing a moment that feels both exciting and uneasy: the Nasdaq-100 is hovering around all-time highs. It’s the kind of environment that fuels optimism, invites risk-taking, and tempts investors to abandon caution. But beneath the surface, there are some key facts we shouldn’t ignore.

First, valuations are stretched — historically stretched. By most classic metrics, from price-to-earnings to enterprise-value-to-EBITDA, the Nasdaq’s current pricing sits far above long-term averages. The forward P/E multiple of the Nasdaq-100 is now brushing against the levels we last saw during the dot-com bubble. That doesn’t mean a crash is imminent, but it does mean we’re skating on thinner ice.

Second, the price path has been unusually concave — a relentless climb upward with almost no meaningful corrections. That may feel like strength, but in market history, such smooth trajectories are rarely stable. Healthy markets breathe. They consolidate. They shake out weak hands before continuing higher. What we’ve seen over the last few months is more akin to a pressure build-up. One-sided moves, with low volatility and high crowd confidence, tend to unwind violently.

And that’s precisely why now — perhaps more than ever — we need to stay rule-based.

📐 A rules-based strategy doesn't care about headlines. It doesn’t get emotional when the market breaks to new highs, and it doesn’t panic when fear spikes. It simply follows the evidence. When the models detect strength across structure, volume, and confirmation signals — we invest. When that structure breaks down — we de-risk. That’s the core promise of this system.

Could markets melt higher for another six months? Absolutely. But if they reverse — whether gradually or suddenly — the models are designed to preserve capital first. The Base Model has only about 2–4 entries per year, and every one is based on clean, high-conviction trend signals. The two complementary models bring more granularity and responsiveness.

There will always be noise — especially near tops. Analysts will argue why the high valuations are "justified," media will highlight breakout charts, and friends may brag about making 20% on speculative tech in a week. But the real edge lies in having the discipline to stick to a system that’s already proven itself over 25 years of data: over +27% annualized returns, with lower drawdowns and fewer emotional decisions.

This is not the time to chase. It’s the time to lean into structure. Let others follow hype — we follow signals.

If the trend holds, we’ll ride it. If it cracks, we’ll step aside. And if the next big leg lower comes, we’ll be ready — not with a forecast, but with a system.

Stay patient. Stay systematic. The models don’t sleep.

All my best,
Felix

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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice. All strategies involve risk. Past performance is not indicative of future results.