Overcome Recency Bias and Maximize Gains in New Bull Market

Recency bias causes investors to expect market crashes even after bottoms are in place. Missing bull market runs by not switching from shorts/cash to longs.

Risk asset prices move based on credit creation, fiscal policy, liquidity, and technicals. Inflation is good for risk assets if policy response is not too abrupt.

Reflation provides a tailwind for earnings growth due to pricing power. We may be in early stages of a long bull market with multiples expansion ahead.

To maximize gains, use hedging and over-hedging. Go long the dominant direction but short the countertrend. Reinvest gains from shorts into additional longs.

Consider hedged trades to profit in both directions. Over-hedging protects from picking wrong dominant trend. Freed margin can be used elsewhere.