Today is the "Juneteenth" holiday and for this week's HX Weekly, we are sharing the history of this youngest Federal holiday. We hope you find reading this note as educational as we found writing it.

Enjoy the holiday.

The Story of Juneteenth

We will admit that we didn't know much about the recently (2021) declared federal holiday of "Juneteenth."

Coming into this trading week, we heard several commentators refer to the week as a "shortened" trading week, and we didn't know why.

Generally, I am up to date when it comes to stock market holidays as well as American history and holidays.

In this case, though, I didn't know much, and I am guessing this is true for many of you.

Juneteenth was only recognized as a federal holiday in 2021.

Before 2000, it was recognized in only four states – Texas, Oklahoma, Minnesota, and Florida. Across the next decade, it spread across much of the rest, and – after the unfortunate events of 2020 – it reached broad adoption. Forty-nine states recognized it before the federal recognition; the last state recognized it in February 2022.

Back to our original question – what is “Juneteenth”?

The holiday's name combines "June" and "Nineteenth." This represents the date (June 19, 1865) when the final enforcement of the Emancipation Proclamation was put in place in Texas.

For those of you who don’t remember your American history, the Emancipation Proclamation was legislation that was put in place by Abraham Lincoln on January 1, 1863. It promised freedom to all enslaved peoples in all the rebellious parts of the Southern states of the Confederacy, including Texas.

Interestingly, it did not free all enslaved peoples across all states. Several border states – Kentucky and Delaware – were not governed by it. Also, several native tribes kept enslaved peoples. This didn't end until the 13^th Amendment to the United States Constitution was passed on December 6, 1865.

The Texas date was significant, though, as many enslavers had migrated to the state to escape the conflict in the South. Estimates are that there were still 250,000 enslaved people in the state on June 19 – even though the Emancipation Proclamation had passed 900 days earlier and General Robert E. Lee had surrendered two months earlier.

The earliest celebrations took place in the state of Texas but were negatively impacted by Jim Crow laws that prevented Black people from having access to many areas. In many places, it was known as "Emancipation Day.”  As America saw waves of migration of Black people to the North and West Coast, the idea of this holiday began to spread nationally.

In the 1960s, though, with the Civil Rights Movement, Juneteenth began to see a genuine revival. Soon, large celebrations emerged in the Midwest and large-scale gatherings in Texas. Texas became the first state to make the holiday a paid state holiday on January 1, 1980.

Across the next two decades, the celebrations grew in size and stature. They also began to receive broader recognition as they were highlighted in several popular TV shows.

As we mentioned above, the momentum continued to build with more states recognizing it as a holiday – either an observance or a paid holiday – culminating in the federal recognition in 2021.

With that federal recognition also came a stock market holiday and a broader holiday for employees nationwide. It is one of only five date-specific federal holidays (New Year's Day, Independence Day, Veterans Day, and Christmas Day) and is the first new federal holiday since Martin Luther King Jr. Day was declared a holiday in 1986.

There is even a Juneteenth flag that was created in the late 1990s…

The lone star represents the state of Texas, and the rays bursting from it represent the expansion of the celebration to other states. The red and blue represent a “new horizon” for African Americans in the United States.

 Writing this piece acquainted me with the holiday, and now I will share this story with my children. It also got me thinking about the meaning of this holiday and the American experience.

For me, Juneteenth represents America's ability to recognize its mistakes and work to improve ourselves going forward.

While some may think that America is going backward on many fronts.

We STRONGLY disagree.

Here at HX Research, we believe that the American experience has always been an evolution in which many have suffered and sacrificed to give us the freedoms we enjoy.

The American experience is one where constructive optimism moves us forward to a better society for all. Our responsibility is to work hard to maintain this positive outlook and continue this success.

Optimism is also your MOST powerful tool in long-term investing. America, our economy and our stock market are built to succeed. Our optimism in this success not only ensures this outcome but also helps you grow your portfolio.

With our optimism – and willingness to work with our fellow Americans – we honor those who have sacrificed for us to have these freedoms and continue to build a better world.

The Market Wizard’s Apprentice

Over the years on Wall Street there have been “family lines” established amongst great investors.

The most famous of these is the relationship between famed value investor Benjamin Graham and Warren Buffett. Graham was his professor, mentor, and employer. Buffett went on to become one of the greatest investors of all time.

In the hedge fund business, Julian Robertson’s Tiger Management is known for its many Tiger “Cubs” and “Grand Cubs” hedge fund. I worked at one of these “Grand Cubs” for several years.

Another one of the famous lineages in the hedge fund business is that of George Soros and his Quantum Fund. The current U.S. Treasury Secretary Scott Bessent comes from this line.

Like Buffett and Graham, though, one of the apprentices stands out as even greater than the master.

His name is Stanley Druckenmiller.

Druckenmiller was born on June 14, 1953, in Pittsburgh, PA and just recently celebrated his 73rd birthday.

He began his financial career in 1977 as a trainee at Pittsburgh National Bank, and in just one year, became the head of the bank’s equity research group. Just four years later, in 1981, he founded his own firm, Duquesne Capital Management.

While running Duquesne he also was named the head of the Dreyfus Fund. This led to him being hired by Soros to replace Victor Niderhoffer at Quantum Fund in 1988. He worked there for a dozen years and Soros and him famously “broke” the Bank of England in the 1992 currency crisis.

Throughout this period, Druckenmiller managed Duquesne and put up one of the most impressive track records of any investor in history. Over those three decades he posted an average annual return of over +30% and did not have a single down year!

While his name is not as well known as Soros, Druckenmiller is truly one of the greatest investors of all time.

Here is some of his wisdom…

We are starting with a quote where we agree with one part of it, but not necessarily the other part.

Over time, earnings DO drive the market. If earnings go higher, stocks go higher. Both individually, and as a group.

It is market liquidity – the availability of money – that is the fuel to move higher.

The difference between a tepid rally and a raging BULL market is driven by liquidity.

It is ALWAYS the catalyst for an eventual downturn in stocks.

Watch market liquidity to understand the tides driving stocks.

This is such a simple insight, yet so many investors struggle with it.

Hedging can be useful for very particular risks, if you are THAT worried about an investment then perhaps you should be looking for a different investment.

Druckenmiller pointed out that Soros was the best he ever saw at taking losses.

The most successful investors understand that taking losses is part of the process. In fact, it can be one of the most powerful parts of the process.

It frees up that capital to be put into better investments. Most importantly, it frees up your psychology to focus on winning investments.

This is the most powerful of the quotes in this note.

First, Druckenmiller rightly points out that the absolute level of earnings doesn’t matter. The only variable that matters is the perception of where those earnings are going.

To make real money, long or short, you need to develop a “variant perception.” This was the term we used in the Tiger Management world.

If you can find a company everyone thinks is going to earn $1 but you think they are going to earn $2 – you have found yourself a winning stock!

This is another concept that most investors really struggle to embrace.

Managing risk can keep you in the game.

To REALLY beat the markets, though, you need to make the big returns when they are available to be made.

This means pushing your bets in the BULL markets or on your best positions.

There is an old English proverb that says, “make hay while the sun shines” and it is absolutely true in the stock market!

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

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].