THE NEXT PERFECT TRADE (REDUX) (Guest: Alex Gurevich)

Alex Gurevich, author of *The Next Perfect Trade*, discusses the motivations behind the second edition of his book, emphasizing the importance of real-time trading experiences and evaluating past strategies against current market conditions. With a PhD in mathematics and experience as a managing director at JP Morgan, Gurevich reflects on his trading insights.

In precious metals, he notes a shift from gold to silver and now to a new preferred metal, highlighting the ten-year cycle in precious metals, with gold peaking in 2011 and stagnating until a resurgence in 2020. He discusses silver's impressive performance, which has recently outpaced gold, and stresses the importance of long-term investment strategies for achieving good returns.

Gurevich expresses skepticism about conspiracy theories regarding precious metals price suppression and advocates for a non-chartist approach that focuses on carry valuation and historical patterns. He sets conservative price targets for silver and gold while acknowledging the potential for higher targets.

Transitioning to cryptocurrencies, Gurevich identifies trading patterns similar to those in precious metals and emphasizes the importance of total return charts. He introduces the concept of "Swim with the Tide," advising against trades expected to lose money long-term and explaining the principle of positive carry. He cautions against speculative market positioning and stresses the importance of valuation and exiting trends when assets become too expensive.

The conversation delves into global factors influencing asset prices, particularly copper and platinum. Gurevich predicts that copper will benefit from electrification trends, while technological shifts in Europe may slow the transition to electric vehicles, positively impacting platinum prices. He emphasizes analyzing objective factors over speculative ones when evaluating asset values.

One speaker reflects on the bond market, predicting a return to lower interest rates and acknowledging past mistakes in bond trading. They discuss the economic landscape, noting that high inflation in 2021 and 2022 led to negative real rates, incentivizing borrowing. As inflation decreases and real rates turn positive, they predict a contraction in balance sheets and labor losses, with AI potentially accelerating these losses.

The discussion shifts to portfolio management and the carry trade, highlighting Jim Leitner's macro trading approach using options. Gurevich shares his experiences with options, noting the challenges of option decay and the rarity of perfect trades. He emphasizes the importance of patience and strategic commitment in trading.

Gurevich compares trading to duplicate bridge, suggesting that success comes from making better decisions over time rather than outsmarting others. He advises traders to exit positions if doubts arise for mental clarity and discusses the importance of rigorous risk management.

Reflecting on past predictions, Gurevich speculates that interest rates could drop to zero, contrasting with the common expectation of a terminal rate around three. He notes that market surprises are often unpredictable, particularly crises.

The conversation touches on current market trends, with Gurevich finding the S&P unexciting and pointing out better opportunities outside the U.S. He observes improving market breadth and discusses the performance of the S&P equal weight index and small caps. Concerns about the dominance of major tech stocks in the S&P 500 and NASDAQ 100 are raised, particularly regarding their upcoming earnings reports.

Gurevich analyzes Nvidia and discusses the strong performance of the COSPI, driven by major companies like Samsung. He raises concerns about concentration risk in South Korea's market and addresses market correction indicators, noting the absence of typical warning signs.

The conversation also covers the Nikkei index, which has shown structural bullishness, and Japan's market performance compared to European markets. In Asia, the China A50 shows an uptrend, but the Chinese market faces stress due to government interventions. Gurevich expresses a bullish outlook for China in the medium to long term.

The US dollar is experiencing increased volatility, with the dollar index struggling to rally above 100. Gurevich discusses currency pairings, noting the euro nearing its 52-week highs and the rising Australian and Canadian dollars against the US dollar. He expresses optimism about the Australian dollar due to its ties to China's liquidity cycle.

Gurevich discusses the current state of silver, expressing reluctance to invest at its current price and suggesting a potential buy-in only if it reaches $55. He sees gold as a more favorable investment in the short term, despite its overbought appearance, due to ongoing central bank purchases. He cautions against the consensus view that gold is a safe investment, highlighting the risks of market corrections.

The conversation shifts to market risks, with Gurevich pointing out the dangers of rapidly increasing asset prices without clear reasons for decline. He shares insights on platinum and palladium, expressing bullish sentiments for both metals. Regarding crude oil, he notes its resilience despite negative news, suggesting that bearish sentiment may present buying opportunities.

Gurevich mentions the uranium market, expressing a long-term bullish outlook despite concerns about rapid price increases. He believes uranium prices could reach $200 before stabilizing. The discussion concludes with reflections on market pullbacks and potential investment strategies in various sectors.