Meta Strategy Trading Portfolio – Probability Map Update.

– Positioning Update Monday –

The Q1 Correction Riddle

Uncertainty causes volatility, but volatility leads to opportunity.

As investors reflect on the beginning of a new year, confidence and exuberance wane, while uncertainty about major policy decisions of a new US president over the next months rises to the forefront.

The futures cone of probable paths for stocks has widened leading to an increasingly low-edge environment – the corresponding illustration in this report can be used as an aid to visualize the current opportunity set probabilistically.

Great opportunities arise when one particular primary scenario can be assigned a much larger probability with higher confidence than others.

Often that is simply not the case and these are the times when it is best to concentrate on protecting capital.

My best bet, albeit with decreasing conviction, continues to be on the long side: Several paths from a variety of possible scenarios cluster around a short-term resolution to the upside.

However, the first quarter of 2025 is fraught with danger and a serious pullback between now and April is very likely – many astute analysts even expect a correction of 10-20%.