To investors,

Perception is reality. At least that is how markets work in the short-term. Benjamin Graham said it best when he said “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

We can see this playing out in real time.

New polls over the weekend suggest that perception from the population is significantly different than mainstream media coverage would suggest.

I don’t care what your political party affiliation is. Capital allocators have to do their best to seek truth, regardless of where it takes you. It is hard to do. It can be uncomfortable, especially when truth runs counter to your political preferences. It is a necessary process and skill though if you want to make money.

Opinions about political parties is only one part of the current story. We are also seeing perception becoming reality in the economy.

Mike Zaccardi points out a recent Apollo report claiming consumer inflation expectations have risen at an unprecedented rate. Americans believe inflation is going to come back. This is the case even though inflation is likely crashing under 2% right now.

At some point, if business owners and consumers begin acting like inflation is coming, then odds of inflation rising increase because these individuals start hiking prices and allocating their capital in anticipation of the incoming inflation.

Perception drives action. Action drives outcomes. This is how perception becomes reality.

One area where you can explicitly see perception being acted on is high net worth individuals buying the stock market dip. Adam Kobeissi writes in The Kobeissi Letter:

Wealthy individuals are rushing into US stocks. Affluent and high-net-worth investors’ inflows to US equities hit 2% as a share of BofA’s assets under management (AUM) last week, the third-highest on record. This follows the fourth-largest outflow seen in the prior week, at ~1% of AUM. Such a surge in purchases has not been seen for 2.5 years when the group's inflows hit 6% of AUM in September 2022, near the bottom of the bear market. Recent inflows were also just shy of those posted in January 2021. High-net-worth individuals are adding stocks to their portfolios as the S&P 500 has recorded its fastest 3-week decline since 2020. Wealthy investors are deploying cash.

If you think inflation is coming back, then what do you do? You get out of cash and you start buying investment assets as fast as you possibly can. Apollo is telling us inflation expectations are surging. Stocks are simultaneously falling, which created the perfect entry point for wealthy investors to deploy their cash and position themselves for future potential inflation.

Here is the interesting part though — I don’t believe inflation is going to come roaring back. In fact, I think the opposite is happening. We are seeing a disinflationary period that suggests the Federal Reserve should be cutting interest rates, rather than holding them steady.

Truflation is reporting the real time inflation number at 1.68% as of yesterday.

That is a slight increase from 1.35% inflation that was reported last week by Truflation, but it is still substantially lower than the latest government inflation reading of 2.8%.

While professional investors are debating inflation metrics and whether to buy stocks or not, the administration is fully focused on improving the economic situation for the working class. Treasury Secretary Scott Bessent posted publicly yesterday the following:

“Our Administration and the American people are focused on the real economy, not fake news polling or “vibecessions.” After four disastrous years for families and workers, President Trump has the track record and vision to deliver the most vibrant economy and capital markets in world history.”

A few data points that suggest this is working include gas prices hitting a 4-year low and egg prices dropping more than 25% in recent weeks. These welcomed developments for millions of Americans don’t tell the whole story, but they definitely signal financial relief is on the way for a large portion of the population.

A key challenge for investors in this environment is to stay on top of the day-to-day or week-to-week changes. Tariffs are on, then they are off. Inflation was high, now it is low. Things can change at a rapid pace. There is value in understanding what is happening in the world, but the secret is to not allow these changes to affect your portfolio or decision-making.

Buy great assets. Hold them for a very long time. The short term gyrations are noise. Those who can ignore the chaos and uncertainty while holding resilient assets will do just fine.

Hope you all have a great start to your week. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Chaos in Stocks & Bitcoin Explained By Jordi Visser

Jordi Visser is a macro investor with over 30 years of Wall Street experience. He also writes a Substack called “VisserLabs” and puts out investing YouTube videos.

In this conversation we discuss Trump’s economic plan, tariffs, tax proposals, Trump vs Powell, inflation, gold, stocks, and the relationships and uncertainty from the Trump admin.

Enjoy!

Podcast Sponsors

1. Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit here to learn more.

2. Reed Smith - Smart legal solutions for complex disputes, transactions, and regulations. Learn more at www.reedsmith.com.

3. Franzy - Ready to leave the 9-to-5, start a side hustle, or expand your portfolio? Franzy is your gateway to franchise ownership—research, compare, and fund the right opportunity with confidence and transparency.

4. Bitwise - America’s largest crypto index fund manager and the only Bitcoin ETF issuer that publishes its wallet address plus donates 10% of profits to open source developers. Learn more at BitwisePomp.com

5. BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.

6. Bitdeer - A global technology company focused on Bitcoin mining, ASIC development and HPC for AI, backed by advanced R&D and a massive 2.5 GW global power portfolio.

7. BitcoinOS - The operating system for bitcoin applications powered by zero-knowledge technology. Check out @BTC_OS on twitter to learn more.

8. Gemini - The future is being built today. Go Where Dollar’s Won’t. With Gemini.

9. Xapo - Xapo Bank is the only way to bank with Bitcoin.

10. Polkadot - a scalable, secure, and decentralized blockchain technology aimed at creating Web3. Innovation leader, making it a preferred choice for big names.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren't finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.