Think Like a Market Professional

Introduction with Brent Donnelly

Block 1: Cycles

Lesson 1: Big Cycles and Megatrends

1 Quiz

Lesson 2: Debt and Financial Cycles

1 Quiz

Learning From Legends: Tony Greer

Lesson 3: Surfing the Narrative Cycle

1 Quiz

Learning From Legends: Ben Hunt

Lesson 4: Bubbles and the Madness of Crowds

1 Quiz

Learning From Legends: Jim Grant

Block 2: Money, Debt and Capitalism

Lesson 5: The Evolution of Money

1 Quiz

Lesson 6: The Evolution of Economic Theory

1 Quiz

Lesson 7: The Big Global Markets Machine

1 Quiz

Lesson 8: Everything Has Changed

1 Quiz

Learning From Legends: Leland Miller

Block 3: Analyzing Central Banks, Economic Data, and Market Events

Lesson 9: A Brief History of Central Banking

1 Quiz

Learning From Legends: Danielle Di Martino Booth

Lesson 10: Data Releases and Economic Events, Part 1

1 Quiz

Learning From Legends: Sam Rines

Lesson 11: Data Releases and Economic Events, Part 2

1 Quiz

Learning From Legends: Alfonso Peccatiello

Block 4: Non-linear Markets

Lesson 12: Volatility and Options

1 Quiz

Learning From Legends: Matt Gittins

Lesson 13: Liquidity, Fat Tails, and Crashes

1 Quiz

Block 5: Think and Act Like a Market Professional

Lesson 14: See the Bias, Don’t Be the Bias

1 Quiz

Lesson 15: Communicate Like a Market Professional

1 Quiz

Lesson 16: Think Like a Market Professional

1 Quiz

Previous Lesson

Lesson 3 Quiz

Think Like a Market Professional Lesson 3: Surfing the Narrative Cycle Lesson 3 Quiz

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Question 1 of 19

1. Question
1. Why has fundamental analysis become less valuable in recent decades?
- Nobody cares about fundamentals anymore
- Computing power and information are widely and cheaply available
- Too many CFAs and equity analysts
- Interest rates are at zero
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Question 2 of 19

2. Question
2. How do narratives and fundamentals interact to determine market prices?
- Market prices are exclusively determined by fundamentals
- Market prices are exclusively determined by narratives
- Fundamentals are a long-term anchor for prices and they oscillate around fair value according to market narratives
- Central banks set the narrative and that determines the price
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Question 3 of 19

3. Question
3. Which of the following applies to homo economicus?
- Infinite capacity to make rational decisions
- Perfect access to information
- Exclusively motivated by self-interest
- All of the above
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Question 4 of 19

4. Question
4. According to Aswath Damodaran, the highly respected NYU Professor of Finance, what is the best way to determine an investment’s valuation?
- By paying attention to only the most respected financial journalists
- By extrapolating the story that the market is telling at the moment
- By combining the story and the numbers
- By using financial models that ignore biased human emotion
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Question 5 of 19

5. Question
5. True or false: finance is far ahead of other disciplines when it comes to studying the importance and impact of narratives.
- True
- False
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Question 6 of 19

6. Question
6. Which of the following has the steps of the narrative cycle in the correct order?
- Momentum builds, under the radar, the peak and the turn, the end
- Momentum builds, first cracks, final hype wave, momentum builds
- Under the radar, momentum builds, first cracks, the peak and the turn
- momentum builds, first cracks, under the radar, final hype wave
Correct

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Question 7 of 19

7. Question
7. What price path did oil follow in its 2021/2022 narrative cycle?
- 35, 45, 55, 65, 75, 125
- 130, 60, 80, 130
- 35, 130, 75, 100, 75
- 35, 45, 70, 80, 60, 130, 75
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Question 8 of 19

8. Question
8. When you are a long a market and it appears as a bullish story on the front of The Economist Magazine…
- This validates your thesis, and you should double down
- It means the market is roughly halfway through its current trend
- It is a warning sign that your narrative is well-known and heavily subscribed
- It means you should immediately short that asset
Correct

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Question 9 of 19

9. Question
9. Who is Robert Shiller?
- Father of the 2006 US Housing Bubble
- A German physician and philosopher
- A Nobel Prize winning economist specializing in behavioral economics
- Owner of “Epsilon Theory”
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Question 10 of 19

10. Question
10. When Glencore went public via IPO in May 2011
- It outperformed stock indices for the next 5 years
- It was the top for commodities and the IPO performed very poorly
- China entered a bull market
- Oil prices tripled
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Question 11 of 19

11. Question
11. When an exchange launches a new product,
- It can be a warning sign of the top for that asset class
- You need to get involved and get long
- Trading volumes and the price of the asset increase due to greater public interest
- It’s meaningless and random
Correct

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Question 12 of 19

12. Question
12. Narrative turns can be profitable because
- They make you look smart, and your friends will ask for investing advice in future
- They help you get long at the turn, once everyone else is already long
- You can buy and sell narrative futures on the CBOT
- Stories drive asset prices and predicting asset price moves is an important way to make money in financial markets
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Question 13 of 19

13. Question
13. True or false: price never drives narrative because narrative is always driven by fundamental information.
- True
- False
Correct

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Question 14 of 19

14. Question
14. What is the “short-term voting machine” that Ben Graham described?
- The mechanism whereby emotional human decisions can drive asset prices
- The electronic election polling machines made famous by Dominion Voting Systems around the 2020 US Presidential Election
- The market structure where stock prices go up and down based on sealed votes
- Shareholder proxy votes
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Question 15 of 19

15. Question
15. Who said: “In the long run we are all dead.”
- Zerohedge
- John Maynard Keynes
- Maynard James Keenan
- Albert Einstein
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Question 16 of 19

16. Question
16. Which tend to trigger more emotional reactions from human beings?
- Stories
- Data
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Question 17 of 19

17. Question
17. Asset prices can disconnect from fair value…
- But they will always return to fair value eventually
- But they will reach fair value if you hold to maturity
- And they can stay disconnected forever or revert to fair value at any time
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Question 18 of 19

18. Question
18. Extrapolation of a current narrative:
- Can work well for a trade
- Can be very dangerous, because the narrative may turn
- Both
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Question 19 of 19

19. Question
19. If you are a concerned about Chinese demographics, an appropriate way to express this in the markets could be:
- Buy a 1-week option on China A shares
- Reduce exposure to China in your long-term retirement account
- Buy copper in the hopes of selling it in a few years
- Sell copper and hope it drops before the end of the year
Correct

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