Welcome to the free version of the Art of the Bubble! 1.2 Labs offers this Art of the Bubble bulletin for educational purposes. Our paid plans make use of the same base algorithm that our crypto hedge fund, 1.2 Capital Management, does. We have two primary data offerings for stocks: (1) a risk parity “Bubble Portfolio” and (2) a “Leveraged Index Portfolio”. They are pictured below relative to their benchmark: the QQQ, which is an ETF of the Nasdaq100. (Data updated quarterly). Click to Upgrade

Hello Bubble Riders!

The last newsletter covered the motivation for learning how to use crypto trading bots. Their key advantages are double: (1) they offer speed which you cannot achieve manually and (2) the ability to work while you sleep.

To make any money, however, you’ll need to put those advantages to use in executing on a strategy. Broadly, there are only three strategies that people are successfully deploying at present:

1. Copy Trading
   1. The bot: use Maestro Bot for this (UniBot soon)
   2. The problem: finding a successful strategy
2. Airdrop Farming
   1. The bot: use LootBot for this
   2. The problem: you can’t airdrop farm everything you’d like
3. Token Flips
   1. The bot: use UniBot for this
   2. The problem: flips only work well in a frenzy.

A few notes are in order. First, only the UniBot link embeds the referral code that saves you 25% per trade. Maestro doesn’t have a referral code. LootBot has an Invite Code, but our team is still validating it.

That brings me to point 2, our team has used UniBot and Maestro. They are still 3rd party applications, so I think that limiting your overall exposure is a good idea. Trading $50k+ on these things seems … risky.

Third, there are two problems you need to solve for each approach. The first is to learn how to set these things up on your Telegram application. That of course requires that you set things up on Telegram first, and I recommend that you download the desktop version of Telegram for that process.

In this newsletter, I’ll cover the first option: copy trading.

Let’s begin with the first problem: setting up the Maestro Telegram bot.

• The Maestro Telegram bot is the most involved.
• ​Here’s their official tutorial on YouTube. If you watch other videos, you’ll just get a bunch of crypto bros trying to shill dumb stuff, so beware.

When setting up my bot, the following step confused me. For verification, click the 1 time access code surrounded in red.

DO NOT click the “Trending” button at the bottom. That will take you to another channel that won’t verify you. You’ll have to start the entire process over again.

Now onto the real problem: finding a strategy worth copying.

I still think that our best strategy for copy trading is the Crypto Maxi strategy – video overview of the strategy can be found here (or click the image).

Here are some highlights to refresh your memory:

• 800%+ over Bitcoin since 2018.
• Has been validated with a live 21 month walk forward.
• In the 2022 to early 2023 period, BTC lost 40%+ while the Crypto Maxi strategy was positive.
• It only holds BTC or ETH, so it does not deal in exotic cryptos.

I can’t guarantee 800%+ over BTC going forward because no one can guarantee anything. But I will say that its historical performance is impressive.

So far, we have two ways that people can get information on the strategy. Premium Subscribers receive a tailored email as soon as the algo changes its position.

• This strategy trades only once every 3 weeks on average. That means that it’s completely manageable without a bot.
• This option is for people who are looking to invest $5,000 - $100,000
• At over $100k+ you need a hedge fund.

For non-US followers, our fully automated version is set to go live next week, provided you have a Binance, Bybit, or Gate.io account.

We’re now offering a 3rd way to get access to this strategy: join my channel on Friend.Tech.

Here’s a better video covering how to install this app–which is a Twitter add on. Here are 3 invite codes to complete the process:

1. ft-w0m9qqv9
2. ft-prccxqyb
3. ft-2k16pw3n

Hit Dom Viera up for some more on Discord. Those are my last 3 invite codes.

The only thing I offer in my channel on Friend.Tech is a wallet address that follows the Crypto Maxi strategy using 0.33 ETH (about $500). By following what that address is holding, you get relevant data.

Now, if you want, you can copy and paste that address into the Maestro bot and it will automate a copy trade for you.

• Note: you will not be able to use this strategy for more than about $500 as an investment.

That wallet only manages 0.33 ETH. The strategy works by percentages and you will need to invest a similar amount to make it work for you. If you want to invest less or more than 0.33 ETH, this will not work for you even in principle.

It’s our solution for those of you who want to follow with very small amounts. Also, if we detect lots of piracy, we’ll just stop offering it in the Friend.Tech channel.

For those of you who hoped to follow with $5000 - $100,000, the original two formats are going to be the best way to proceed.

That’s all for this one, reach out with any questions.

-Sebastian Purcell, PhD

The Macro Situation

labor power (noun):

• the 12 Labors of Hercules;
• what Hercules discovered by necessity when retrieving Cerberus from the underworld;
• the ability to increase or decrease interest rates by the hour.

― New Entry in the Updated Devil’s Dictionary

It seemed like only yesterday when watching the strength of the labor market was about anticipating the nearest date for a rate cut. Now, it’s more an exercise in finding the end of the “higher for longer” road.

The Friday Jobs report was the latest checkpoint. The jobs market remains unexpectedly and surprisingly strong (gaining 336,000 in September), while the more important statistic of average hourly wages saw a modest increase of 0.2%, or 4.2% year-on-year.

The key takeaway: wage inflation appears to be flattening. But we’re still on course for 25bps hike in November.

Looking ahead, the main concern is avoiding the worst of both worlds—i.e., high interest rates with a cooling economy. The Fed has stated that they are ready to act should the economy begin to deteriorate materially, however.

Crude oil gained slightly on the back of jobs data but looks to experience some resistance given the flow of winter grade fuel into the market. Gold retreated mid-week in anticipation of the Friday jobs numbers and gained slightly from the midweek slump to close up a mere 0.82% (1847.00).

For the moment, long- and mid-term treasuries are down but might benefit as risk appetite shifts and the next rate increase approaches.

The unknown quantity on the horizon is yet another government shutdown debate in November. At least that option would alleviate the need to hike again for the Fed, effectively doing their job for them.

- Todd Mei, PhD and Sebastian Purcell, PhD

AI Sentiment Report

The following sentiment scores use ChatGPT as part of the AI tech stack to track sectors as leading indicators. (Lesson 4 of The Art of The Bubble covers the selection of lead indicators for bubble trades). The scores are most indicative for the next day of trading (a Monday), but they appear to set the general tone for the next week.

The methodology employed is based on this peer reviewed academic article, which produced 550%+ results in backtests over a 2 year time frame. We consider 4 and 5 scores to be positive, but please bear in mind that the AI model is still in its validation phase.

-The Research Team:

Dom Viera, Samantha Russell, Nicole Zinuhova, Aiza Malik

Happy Trading!!

​Join us on Discord​

800%+ Over Bitcoin Since 2018

Our subscriber plans make use of the same base algorithm that our hedge fund, 1.2 Capital Management does, but modified in timeframe so you don’t have to stare at your screen all day.

We have two primary data offerings in cryptocurrencies: (1) AOTB Dynamic and (2) the Crypto Maxi.

Click to Upgrade Disclaimers

This newsletter is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.

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