Legacy conglomerates have traded at discounts for years because complexity hides accountability. Melting ice cube businesses look cheap until the cash flow melts with them. Personally, I think (PYPL) is an example of this. Cyclical stocks with permanent impairment never recover because the cycle does not come back the same way. Price does not create value. Structure does. Listen up.Anchoring worsens it. Investors fixate on their original purchase price and treat it like a reference point. The market does no ...

Core Insights - The article introduces Vega North as a new contributing analyst for Seeking Alpha, emphasizing a focus on investment processes rather than predictions [1] - Vega North's approach includes testing investment ideas using open data and reproducible methods, concentrating on position sizing, risk management, and investor psychology [2] Investment Approach - The methodology involves moving from base rates to a simple model that assesses returns, volatility, and correlations, concluding with a decision checklist for investors [2] - Coverage includes various aspects such as factor tilts, cash-flow durability, downside risk metrics, and scenario analysis, aiming for evidence-based investment strategies [2]

Market Structure and Investor Behavior - Market structure influences price movements and liquidity, affecting investor perception and stock performance [1] - Momentum is driven by structural factors like passive funds and buybacks rather than just stock fundamentals [1] - Bull markets create a false sense of security among investors, leading to a neglect of risk assessment [2][3] - The illusion of skill in investing often arises from favorable market conditions rather than actual decision-making [3] Signs of Structural Shifts - Structural shifts are indicated by narrowing market breadth, where fewer stocks drive index gains [4] - A slowdown in corporate buybacks and increased insider selling signal potential structural changes [4] - Changes in sector correlations and capital allocation reflect shifts in market structure [4] Impact of Structural Changes on Investment Strategies - Strategies reliant on momentum and leverage may fail when market structure changes, as seen in past market collapses [5] - Successful investors adapt to structural changes by reducing exposure and rebalancing before volatility increases [5] - Discipline in investment processes is crucial for navigating market shifts effectively [5] Trading with Structural Awareness - Identifying catalysts from structural changes, such as spinoffs and governance shifts, can reveal mispriced opportunities [7] - Structural alpha is most apparent when market narratives fade and liquidity tightens, emphasizing the importance of process over conviction [7] - Position sizing should be data-driven, aligning with structural changes before they become widely recognized [7] Conclusion on Market Cycles - Confidence built during bull markets often leads to harsh corrections when market structures shift [8] - Endurance and a disciplined process are key to surviving market transitions, as understanding structure provides a competitive edge [8]