In poker, they say if you don’t know who the sucker is at the table, then it’s probably you.
It works the same way in markets. Our job is to identify who’s most vulnerable — the investors caught on the wrong side of the trend, positioned for a world that no longer exists.
That’s where opportunity lives. The biggest moves often come from those moments when the market forces mispositioned players to adjust.
At TrendLabs, that’s exactly what we focus on — finding those pressure points, recognizing where the crowd is offside, and positioning ourselves to take advantage when the squeeze begins.
Republicans & Democrats
One the reasons we were so bullish in Q2, ahead of a historic run in stocks, is because of how bearish the liberals were.
Ninety percent of democrats this June believed stocks would fall over the next six months.
90% lol…
Not only did stocks not fall, but the S&P 500, Dow Jones Industrial Average and Nasdaq-100 are all up double-digits since then. The Russell 2000 is up more than 17%.
The Democrats were the suckers.
Taking a look at Consumer Sentiment today, when you break it down by political affiliation, you can see that Democrats are still very angry.
Look at that gap between Republicans (in red) and Democrats (in blue):
From where I’m sitting, Democrats appear to be among the “suckers” at the market’s table right now — still positioned on the wrong side of current trends.
That’s not a new development, but it’s been fascinating to watch just how consistently this group has misread the setup.
And just to be clear — this isn’t about politics. We don’t care who you voted for. Markets don’t discriminate by party. Our only focus is price, positioning, and opportunity.
If one group happens to be offside and that creates a profitable setup, we’ll take it. Whether it’s Democrats, Republicans, or whoever’s next — we’re here to trade what’s in front of us, not debate ideology.
So don’t be sensitive that we’re profiting from your angry friends.
“Bad Policies”
Here’s the latest from the University of Michigan showing consumers’ net favoritability of U.S. economic policies.
Notice how this remains near the low end of its historical range. People are upset, as the stock market keeps making new all-time highs.
Perfect.
These are exactly the kinds of conditions we look for.
When everyone’s optimistic and confident that the government’s doing a great job, that kind of sentiment usually marks frothy conditions — like what we saw heading into 2020 in the chart above. That was a time to be selling stocks, not buying them.
But when sentiment turns the other way — when confidence in economic policy collapses and frustration is high — history shows that’s when the best buying opportunities appear.
18-to-34 Year Olds
In 30 years of data, we’ve never seen consumers in the 18-to-34 group sustain this much relative gloominess.
This chart below comes from my pal Joe Weisenthal. When it’s green, it means younger people are more optimistic than the general public.
It’s currently the opposite. They’ve never been more pessimistic compared to the general public:
The young kids these days aren’t thrilled about things right now. Neither are the Democrats. Consumers in general aren’t happy about economic policy, either.
Good.
The more people who are mispositioned during a bull market, the longer it’s likely to last.
We’re here for one thing: to make money.
This isn’t about politics, emotions, or ideology — it’s about positioning.
If you’re investing for any other reason, you’re doing it wrong.
It’s not “fundamentals” that drive asset prices. It’s positioning. Always has been.
Our job is to identify who’s offside — who’s most vulnerable — and then take full advantage.
I showed you a few examples today. And we’ll keep finding more.
Because in this market, awareness pays.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs