HX Weekly: April 28 - May 2, 2025

Hello reader, welcome to the latest issue of HX Weekly!

As you probably know, we stopped publishing HX Daily back in February.

Since then, we've been very focused on the beta for our algorithmic trading platform, Signal Trader Pro. Check out our Signal Trader Pro site here if you haven't seen it.

If you would like to continue to receive similar FREE DAILY content from me (Enrique Abeyta ) – please sign up for my free e-letter Truth & Trends, which published by Paradigm Press Group publishes.

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So, what's HX Weekly all about?

Well, each Friday, we'll bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

I: Thoughts on the Market – The Hidden History of May Day

For those of you who missed it on Thursday, happy belated May Day!

You may be asking about now, what the heck is May Day?

Well, many think it’s a celebration of Spring. May Day, however, also called Workers' Day or International Workers' Day, is the day that commemorates the struggles and gains made by workers and the labor movement. It is celebrated on May 1 and is often viewed as a Marxist or Communist concept.

And about now, you're probably thinking, what in the heck does this have to do with investing?

Well, as you may have noticed, we at HX Research have a passion for history.

So, what if we were to tell you that 50 years ago, while Communist leaders Brezhnev and Mao were celebrating May Day, on the other side of the world, in the shadows of Wall Street, a pioneer of finance was forever liberating investors…

In fact, on May 1, 1975, after being ousted from Wellington Management, where he served as CEO, Jack Bogle founded the mutual company Vanguard. Here, "mutual" means it is owned by the funds themselves and, thus, by their shareholders.

His revolutionary idea was to strip out excessive management fees and keep costs low by not trying to beat the market but match it.

Bogle’s biggest innovation was still yet to come.

In August 1976, Bogle launched the First Index Investment Trust, now known as the Vanguard 500 Index Fund (VFINX). It was the first index mutual fund available to retail investors, tracking the S&P 500.

At the time, the fund was mocked and dubbed "Bogle's Folly" because most investors and fund managers believed in active management. The initial public offering raised just $11 million, far short of its $150 million goal.

Initially, Bogle’s invention was panned by critics and investing “experts” who believed it was "un-American" not to try to beat the market. In fact, many in the financial industry dismissed indexing as mediocre or a concession to failure.

It’s only now, in hindsight, that we know how wrong those naysayers were.

Bogle’s VFINX fund, and the many others that followed, have outperformed the majority of actively managed funds over time due to lower fees, better tax efficiency, and market-matching returns.

In fact, when you compare the performance of most actively managed funds to passive index funds like VFINX over time, it’s not even close.

For example, passive index funds outperform almost 90% of actively managed funds over a ten-year investment period.

Don’t believe us? Check out the chart below

So, while others may celebrate May Day as a rite of Spring or a celebration of workers' rights, here at HX Research, we choose to celebrate Jack Bogle's legacy.

And just what is Mr. Bogle’s Legacy?

Well, for one thing, Jack Bogle is hailed as a champion of the individual investor. Index funds are now a core holding in many investment portfolios, including retirement accounts and institutional funds.

Moreover, Warren Buffett once called him a hero for doing more for average investors than anyone else. Now that’s high praise coming from the “Oracle of Omaha”!

And last but certainly not least, Mr. Bogle's company, Vanguard, became one of the largest asset managers in the world, managing trillions in assets. If you’re like us, you may have an account with them today.

Sadly, John Clifton "Jack" Bogle passed away in 2019. That said, we and investors all over the world owe him a great debt.

So, happy belated Jack Bogle Day to you all!

II: HX Daily Redux – The Case for Bitcoin $100K

Today, we’ll revisit an HX Daily post from May 2024 titled "The Case for Bitcoin $100K – Part One”.

As we write this, Bitcoin is trading close to $97k again. For the first time in months, it could easily surpass the $100k mark again any day.

With this in mind, we thought it would be fun to revisit our initial piece as Bitcoin approached the $100k threshold for the first time last year. Enjoy!

It is useful sometimes to take a step back and think of all the incredible technological advancements that have happened in our lifetimes.

Personally, we were born five decades ago, and 90%+ of the technology that we interact with every day didn't exist just a few decades ago. Not to mention, our engagement with that technology is a hundred times what it was for our parents.

Now – not sure if that is a good or bad thing – but it certainly is where we are in the world today.

As much as it feels very "normal" at this point, one of the biggest developments in technology in the last few decades has been "blockchain technology". Specifically, the "crypto currency" Bitcoin.

This is a moment where we want you to take a step back…

While bitcoin seems like the most ordinary thing in the world today, imagine if two decades ago we told you that an anonymous Japanese software developer (Satoshi Nakamoto) was creating a massive mathematical algorithm for a new digital (and safe) currency.

Sounds like something out of the “Matrix” movies.

Yet here we are in 2024 with this sci-fi idea having almost a $1.3 trillion market capitalization and trading over $18 billion a day. This crazy idea is one of "The Magnificent Seven"!

It is easy for many older people to dismiss Bitcoin as digital “fool's gold”.

It is some made up software algorithm with no inherent value, no cash flows and no history.

We don't disagree!

That being said – what is “gold gold"? It is rare metal with minimal industrial uses that millions of people have decided to ascribe a value to it for thousands of years

This gets to our point about bitcoin.

GOLD is “gold” because humans have decided to ascribe the value to it.

There was a real question about whether bitcoin would ever achieve that same status, we think it has.

One of the most fascinating aspects of bitcoin is to think about the future of ownership.

Look it up and you will see that there are currently just over 46 million bitcoin "wallets" that own at least $1 of value in bitcoin. In the history of bitcoin there have been 460 million wallets created.

Let’s put that in the perspective of the almost EIGHT billion people on planet Earth…

This means that there is only 0.5% of the planet’s population that owns bitcoin today.

We don’t know where that number is going in the future, but we are pretty sure it is going higher

The current market capitalization of gold is over $14 trillion or more than ten times the market cap of bitcoin.

We think gold is great - and probably a buy right here – but it is not very useful. When is the last time you used gold to buy groceries or a car? Maybe it can be done, but it is quite complicated.

While you can’t directly buy groceries with bitcoin, it is a lot easier of a process than gold with future potential for a seamless process.

While bitcoin isn’t the easiest choice either, it is a lot easier than gold!

Let’s go back to the ownership numbers we discussed before…it is difficult to get real data, but most sources think about 10% of Americans own gold in some form. That is around 33 million people or would make up 2/3rds of the bitcoin ownership.

Again – there are EIGHT billion people on the planet!

If just 1% decided to own bitcoin, that would be a +50% growth to the demand…with basically no growth in supply. At this point, almost 94% of the bitcoin that will ever be created has already been created.

Take a bitcoin price of just about $65,000 and add +50% growth in demand with no real supply growth and know what price target you get?

$100,000!

We are not saying you should only own bitcoin or it should be even the majority of your holdings, but we ARE saying it has a hell of a lot of upside!

III: Market Wizard’s Wisdom – Jeff Bezos

Today, as we sit here writing, the market is trading up largely on BIG earnings beats by members of the “Magnificent Seven” including Meta, Alphabet and Microsoft.

Another of these behemoths, Amazon, is set to report earnings soon. When you read this tomorrow, you'll know exactly how AMZN performed in Q1 2025.

That said, we wanted to revisit some wisdom from Amazon’s founder and CEO, Jeff Bezos, that we originally published in January of this year. Enjoy!

Every week, we profile a great thinker and share some of their wisdom.

While we are focused on the stock market and trading securities, not all of the profiles we do are on traders or investors.

We find great wisdom that can be applied to the market from many different areas. Sometimes, it is philosophers; other times, it is writers or even (gasp) politicians.

Today's issue highlights one of the greatest entrepreneurs of recent history – Jeff Bezos.

Bezos comes from a complex background that many don’t know.

His original name was Jeffrey Preston Jorgensen, and he was born on January 12, 1964, in Albuquerque, New Mexico. His mother was 17, and his father was 19 when he was born.

His father was actually a unicyclist (!) and struggled with alcohol and his finances. His mother left him shortly after Jeff was born and married a Cuban immigrant named Miguel “Mike” Bezos. The family then moved to Houston, TX before eventually settling in Miami.

After graduating summa cum laude with a degree in Engineering from Princeton, Bezos began his career at a telecommunications start-up before going to work at Bankers Trust and then joining early hedge fund pioneer D.E. Shaw & Co.

After reading about the explosive growth in web usage, Bezos left D.E. Shaw at 30 and began Amazon (originally named "Cadabra") out of his garage shortly thereafter.

We won't go through all the details of Amazon's incredible success but will share some of his great quotes.

While these are not focused on the markets, his insights easily translate to trading and investing.

As traders and entrepreneurs, we can't emphasize how important this concept is for success.

Perhaps the biggest failure by traders is not understanding exactly how and why they are both making and losing money.

At my hedge funds, we continually improved by constantly analyzing our returns. We then looked to identify common factors in our biggest winners and losers.

From there, we looked to do more of what was working and eliminate what was losing us money.

This process of constant analysis and assessment is a MUST for your process.

If you use technical analysis like we do, this is something you monetize every single day.

Bezos has tremendous respect for the ability of the human brain to quickly take in information and figure out patterns and solutions. It is one of our most significant evolutionary advantages.

Understanding that repeatable patterns can generate high-probability situations is the basis for successful trading.

I had never seen this quote, but I absolutely love it!

It emphasizes both process and conviction.

Regarding our strategies, we always say that we operate with great belief in our methods but quickly change our minds based on new information.

The concept of high conviction yet willingness to quickly change your course is difficult for most folks to understand.

It is also a trait shared by the greatest traders of all time.

We see this every day in the BULL market.

Smart traders become distracted by the next “shiny” fad that is working and drop their disciplines.

This might pay off for some time, but inevitably, they lean too far into it. Then, when these fads collapse, these investors are devastated.

We think it is MORE important to be disciplined in a BULL market than a BEAR market. It is also much more challenging to accomplish.

In the markets, it is an absolute must that you continue to evolve your process to survive and succeed.

Remember that markets themselves evolve. Don't try to trade the market you want; trade the market you have.

Embracing evolution in your process will allow you to create a sustainable one that can weather any market environment.

Anyone can become a successful trader and investor if they are willing to put in the time and exhibit the discipline.

We hope that you’ve enjoyed this week’s issue of HX Weekly…