Fading Jim Cramer and Cathie Wood

Key Takeaways

• Use 'undercutting rallies' and failed breakouts as entry points rather than chasing actual breakouts—buy dips and sell rips instead of trend-following, which often arrives too late in a move
• Financial media typically reports on trends well after they've peaked with no incremental buyers left; ignore headlines and focus on price action via charts to stay ahead of the crowd
• Create inverse ETFs or short positions against heavily hyped but fundamentally weak portfolios (like high-duration, unprofitable tech stocks) when macro conditions (like rising rates) threaten their valuations
• Position sizing should account for both the conviction level of a call and volatility—larger positions for conviction calls on liquid stocks, smaller for speculative recommendations
• Understand reversion to the mean: when an asset has a parabolic move up (like ARK's 100%+ gain), expect mean reversion, especially when macro tailwinds shift (Fed pivot from easy money to rate hikes)