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Let me see if I can get you closer to me. Are you alright, Nathan? Am I live? Good evening, good evening, my YouTube friends, this is Professor Sheila, for another deep, insightful live stream . Guys, I managed to get in. I'm live here to talk about Howard Marks' most important book for investors . Today, what matters most is patient opportunism.
The market is not a very welcoming machine. He won't offer you high returns just because you need them. And I'm going to start today's chapter by reading a little bit of the first paragraph, because I found it quite relevant. And I always read some excerpts from the book to you, then I come back here so we can do our introduction.
The cycle of rapid growth and collapse associated with the global financial crisis gave us the chance to sell at extremely high levels between 2005 and the beginning of 2007. And then, to buy at panic prices between the end of 2007 and 2008, which was the period of the real estate economic crisis, the subprime crisis in the United States.
Investors with a dissenting viewpoint, who struggle not to be swallowed up by the cycles, had a golden opportunity to distinguish themselves. Sometimes, our greatest contribution lies in remaining discerning and relatively inactive. Patient opportunism, waiting for bargains, is often our best strategy.
So, I'll offer you a tip, a tip from an investor, okay, from Howard Marks. So, I offer a tip: we will have better results if we wait for investments to come to us, instead of us having to go after them. We tend to get better deals when our selection is based on the list of things the sellers are willing to sell, rather than starting with a fixed idea of what we want to own.
Opportunists buy things because they are offered at bargain prices. There's nothing special about buying when prices aren't low. At Oaktree, Howard Marks' company, one of our mottos is: "We don't seek our investments, they find us." A kiss, Adineu. Thank you so much for your support. "We try to wait.
We don't go out with a shopping list. Instead, we wait for the phone to ring. If we call the owner and say, 'You own X, we want to buy,' the price will probably go up. But when the owner calls us and says, 'We have X and we want to sell,' the price will fall. So, instead of initiating negotiations, we prefer to react opportunistically." This one I read to you, this small excerpt here, the marked parts on the first page, because I found it quite interesting, already full of tips, and the author of the book himself says: "I'll give you a tip." So, I thought it was important to bring it here and read it in its entirety for you.
So, Saturday, the day before the election in Brazil, some tempers are running high, others not so much. So today, at the end of our Strategic Mind live stream, I decided to present an economic analysis of the two presidential candidates, and I will share the economic analysis I'm going to do on YouTube.
Anyone who wants to switch to YouTube to see screen sharing, because I won't be able to share it here on TikTok . For anyone who wants to migrate, that's great. I did it today, I took a while to join this live stream, even after reviewing this analysis, it 's quite interesting. So, I find that interesting.
The economy, in my view, is interesting. Show me where the money is, and I'll show you where the problem or the solution is. It's always the same, isn't it? So let's get started with our live stream this Saturday. It's Saturday and here I am again. I wanted to thank everyone who joins me on Saturday.
I know it's a day when we like to either stay with family or go out to celebrate. I'm definitely going to celebrate after this live stream. There's a party waiting for me, but I love being here with you all, sharing the knowledge we acquire through reading. So I want to start our conversation today with a question that might be a little unsettling.
How many times have you lost money because you were afraid of missing an opportunity? Have you ever stopped to think about it? Think about it. Bitcoin is starting to go up, right? You're following a chart, and one day it goes up 3%, the next day it goes up another 5%. Then you go there, open YouTube, open Instagram, open TikTok, and everyone's saying the same thing: "Now it's going to work, this time it's different, the market has changed." So, those who don't join now will be left behind .
And then you start to feel something curious, you see all this information and you're like: "Wow, there's a discomfort here. It's not a conviction you have, it's really a discomfort, a feeling of being stuck, it seems like everyone else is making money and you're not." Then you go there and buy it. But do you know what's most interesting?
You didn't buy it because you found an opportunity. No. Why did you buy it? You bought it because you couldn't stand the pressure around you, the feeling, in fact, of missing out, the famous fear of missing out. That's the real emotion that makes you buy, whether it's Bitcoin or any other asset that's currently in the hype, in the media, okay?
And that feeling, it's the starting point for you to lose money in the market, okay ? I didn't want to tell you this, but that's the truth. And now I want to ask an even more important question. What if I told you that some of the world's best investors go for long periods without finding anything interesting enough to buy?
Not because they don't know how to analyze the market, not because they are inattentive to assets, but because they understand something that the market seems to have already forgotten. And that is: you don't need to be constantly investing in something new just because it's appearing in your mind. No, that's not how it works.
Today we've reached chapter 13. We're already past the halfway point of Howard Marks' book, "What Matters Most to Investors ." The chapter is the most important one; it's patient opportunism. And I want to leave a question open until the end of today's conversation. How can you tell if you're truly being patient or simply letting an opportunity pass you by out of fear?
It's a question. So, welcome everyone to another live stream from Mente Estratégica. I'm Sheila Faria, and here we study the market to develop something far more important than just predictions. Here, we develop the ability to think. And today, in addition to Howard Marks, we will have a very special conversation, because tomorrow we choose our next president, the next president of Brazil.
And I want to show how we can interpret possible economic scenarios without turning an election into a bet on the dollar, the stock market, or Bitcoin. But first we need to understand the lesson that brought us here. In our last live session on strategic thinking, we learned that a price drop doesn't automatically transform an investment into a bargain.
Do you remember the message from the last live stream? Because in every live stream I bring up a word that I connect to that chapter. In our last meeting , the key word was discernment, which is the ability to distinguish what seems cheap from what truly deserves investigation and our investment. And before that, we worked with the word independence.
And before independence, we worked [sighing] For independence. Before the word independence, we worked with autonomy. Now, look how our thinking is evolving each weekend that we meet. It is an evolution. It's a continuation of the line of reasoning. It's true? [snoring] First, we learn not to be led by emotions and the crowd.
Then, we learned to form our own interpretation of the market. Next, we learned to recognize potential opportunities. But then a new problem arises. What if the opportunity we want doesn't exist yet? Am I going to force a purchase because of the market turmoil? Am I going to invest? Am I going to invent a justification for investing in something that's currently trendy?
Am I going to keep looking for something just so I feel like I'm participating, that I'm not left out? This is where our author, Howard Marks, introduces us to patient opportunism. And the word from the live stream, everyone knows I always connect a chapter to a word. The word that came to mind when I read this chapter was readiness.
Wow, Sheila, readiness has nothing to do with opportunism. I'll prove to you that it's possible. Because opportunism doesn't mean passivity, it means being ready to act at the right moment, being on standby. So I chose that word because patience can easily be confused with passivity. And that is not what the author Howard Marks is proposing in this chapter, not at all .
The patient investor continues analyzing, continues studying the market, continues assessing risks, and continues building criteria. He simply doesn't feel obligated to turn every piece of information that comes to him into an operation. And patience is a behavior. Readiness is the ability, built up while waiting, to act the moment you encounter an opportunity.
That's why I chose the word "readiness" to summarize the essence of today's chapter, okay? So I wanted to ask you guys, if you could tell me here in the chat, what's the most difficult thing for you? Should you wait to buy or resist the urge to sell when the market falls? Can you answer this question for me here in the chat?
Which is more difficult? I would be very happy to receive any help that can be given to me. Which is more difficult? Is it about being able to wait to buy, or are you able to resist selling when the price drops? Buy or sell? What is the most difficult thing? Buy or sell? Should you wait to buy or sell when the asset price falls?
I want to know. I'll give you some time to think about it. I'm going to get some water, right? The second thing, I also believe, Robinho, is that the most difficult thing is when the business is going down, to hold on and not sell. Thanks. Selling at a loss is common. Yes, that's right. You are right.
For me too, it's that second factor . It's true? So, I want to read one more passage before we begin, continue. Oh, at all times, the investment environment is a given, and we have no alternative but to accept it and invest within its limits. There is n't always a pendulum or end of a cycle to bet against.
Sometimes, greed and fear, optimism and pessimism, credulity and skepticism are in balance. Therefore, people are not making clear mistakes. Instead of being obviously overpriced or underpriced, most things appear to be trading at a reasonably fair price, and in that case, there may not be any great bargains to buy or sell.
That's it, folks. Therefore, for an investment to be successful, it is important that we recognize the market conditions and, taking this into account, decide on our actions. It's true? Robinho, you're right. That's exactly it, and we have to understand the asset, understand the asset's cycle, and not sell at a loss, not sell to realize a loss, since we understand that everything is cyclical and that there will be appreciation.
Sometimes, during a downturn, that's the opportune moment to invest. We also have to analyze it from another point of view, right? So let's continue here. So, as I've already told you, I read it at the beginning, but I wanted to emphasize it. Ah, I want to tell you a story that helps to understand how Howard Marks thinks.
I'll tell you, I read it at the beginning, but sometimes it goes unnoticed by someone. Howard Marks is one of the founders of Oaktree Capital Management. So, it is a very well-known asset manager, known for its work in credit and investments in special situations. In a 2009 memo, he described a very interesting practice at his company: the team didn't need to go out chasing a list of assets they wanted to acquire.
Okay ? Instead, the team researched, studied, analyzed, and waited for situations to arise in which salespeople were motivated to negotiate. And the image that Marx uses is very good. Which one is it? He, he says he was expecting the phone. Imagine two situations. In the first scenario, you call someone and say, "Wow, I really want to buy your apartment.
I found it beautiful online. You made a gorgeous listing. I loved the layout of the rooms." So you're going after the seller, you understand? When you want to buy something, the seller notices your interest. So maybe he's not in such a hurry to sell. He starts using his connection to his advantage. And perhaps he will raise the price, depending on the interest you show.
It is true? Now imagine a second situation. The owner of a beautiful apartment calls you and says, "Wow, I'm having a problem. I need to sell because I need cash right now. Do you think you could buy my apartment? It's worth this much." That gives you room to negotiate. I have n't read that one yet, Robinho.
It is good? If you recommend it to me, I can read it and bring it over for us to discuss. I find reading books really amazing. I'm going to put it here for myself, okay? So, folks, it's a matter of, uh, opportunity. Do you realize how the negotiation has changed? You are no longer chasing the asset.
It's the owner who needs to sell. So you start evaluating an opportunity that arose because someone needs liquidity. And that's one of the most important ideas in today's chapter. And now comes the part I want you to pay attention to. Which one is it? It doesn't mean that every pushy salesperson is offering you a bargain or an opportunity, but the need to sell can create different negotiation conditions than those found when everyone wants to buy.
Because usually when the market is hot, everyone wants to buy, so what happens? Prices are going up, are n't they? So it's a difference between the urgency of the seller and the preparedness of the buyer. Did you understand? That's where the great opportunities arise. The difference lies in the urgency of the seller and the preparedness of the buyer.
Because the person who is buying it is aware. It's that... I think it's very common on the internet, that person who researches cars, who wants to... likes cars. Men generally love cars. Women like handbags. I don't like bags that much. I like dresses and shoes. So what attracts me most are dresses, like the one I'm wearing today, beautiful, wonderful, and shoes, that's what I like.
But let's talk about cars, which is a more interesting example. Men watch YouTube channels about cars, research, and then when they find an opportunity in the market for that specific vehicle they've been following, they buy it. So that's the question. When an investor wants to buy an asset, they 're also concerned about the price, right?
Some people say, "Oh, price doesn't matter because it's a long-term investment." Guys, I don't subscribe to that line of thinking, that school of thought. I believe we need to have a good risk-reward ratio. And that's it, Rafael. Okay, folks, when there's a risk-reward relationship, that's when we have to take advantage of the opportunity to buy that asset, and it's in accordance with what's projected for the market to deliver the return we expect, okay?
So, I mentioned the car example, but I really appreciate good shoes; I'm not that into cars . But I love shoes and bags, and that's great. And I love books too. But honestly, I don't think twice about buying a book that I like. Okay ? So, when the market panics, will you be prepared to analyze an opportunity, or will you be one of the people forced to sell?
Think about it this way. Keep that question in mind. Because she is very important. That's one of the most important questions for us to think about regarding the next market downturn. Okay ? So, I wanted to say that here, an economic crisis doesn't create equal opportunities for everyone, obviously not.
Okay ? Let's do another mental exercise. Imagine two people during a financial crisis. Both study investments, both recognize that certain assets may be trading below their normal value, but there is a difference. The first person used money they needed in just a few months and is excessively exposed and may also have debts.
Or you may be operating with leverage. When the market crashes, she can't wait. No, because she has commitments. Think about it. Now let's think about the second person and compare the two people. The second person, she preserved a liquid capital reserve for her needs. Therefore, she did not assume obligations that depend on the immediate appreciation of assets.
This person, the second person, is aware of the risks and has criteria. And she feels fear too. But she doesn't need to turn that fear into a forced sale. Now, answer me. Which of the two is in a better position to assess a potential market opportunity? The second one, guys. The second person who prepared.
The money we invest, we can't possibly need it in the short term. We need to think about him being there to work for us. He is an employee who will have to deliver, generate profits. It is not? So, uh, you can't control when the market will present an opportunity. Many times there's no way for us to predict.
The famous black swans of Nassim Taleb are happening. But we can work to not lose our ability to choose when a black swan, an opportunity, appears. That's readiness. He understands? That's what I want to bring to you. Now let's think about Bitcoin. Let's think about Bitcoin. We have already witnessed periods in which volatility increased significantly.
And in some downturns, leveraged investors suffer liquidations. Others need to sell to cover obligations. And investors with different time horizons end up evaluating the same market under completely different conditions. Okay ? A drop in prices can create more attractive prices, but it can also reflect a deterioration in liquidity, a change in expectations, or an increase in risk at that moment.
Therefore, patient opportunism does not mean buying every dip. That's why I'm saying this, folks. The price is eye-catching, but it's the context that generates wealth. And that means being able to ask yourself during a fall: What changed? Who is selling it? Why are you selling? Is my investment thesis still valid?
Do I have the financial and emotional capacity to take this risk? And perhaps the most important question: If the price continues to fall, will my situation remain sustainable, or will I be able to live my life comfortably despite the market downturn? That's what you need to think about. You have to think about yourself, your obligations, your family.
Forget about your classmate's wallet, the influencer's wallet, the YouTuber's wallet, or Professor Sheila's wallet. Okay ? That's why I don't talk about what I'm doing as much. Sometimes I speak, but not always. Why? Each situation, each person has its own peculiarities. It's specific. And for those who want to improve their strategies, I've just set up a mentorship program, an express consulting service .
You will choose three main questions, I will send you a questionnaire, and we will meet in 90 minutes to solve these questions in practice. So, for anyone who wants to, I'll leave the link later on YouTube, in the description, to the form for you to fill out so we can make this meeting happen and you can get things going, okay?
It was a need I saw from you all, for quicker meetings. People who just want, oh, a strategy adjustment, a horizon, some insight that can be done in 90 minutes—it's perfectly feasible. I've had very good responses from my consultants, okay? So, let's talk about the trap of the perfect opportunity that's in this book.
And I want to correct here an interpretation that may arise. Perhaps someone thought: So, the best strategy is to just wait for the crisis? What if the crisis doesn't arrive so soon? It's not necessarily the best strategy . Because if she doesn't come anytime soon, it's good to have that reserve of opportunity.
But what if the asset you want continues its upward trend, increasing in value? What if you spend years waiting for a price that will never appear? So, we can't turn patience into rigidity. Patient opportunism is not a universal rule of keeping all assets in cash until disaster strikes. That's not how it works, is it?
Neither too much nor too little, right? It's actually a patient opportunistic approach, a calm one, where you monitor the market and, according to the conditions, your investment expectations, and your goals, you recognize the opportunity at that moment. A person who invests regularly for retirement may have a completely different strategy from someone at a credit and distressed asset management firm, such as Oaktree, owned by our friend Howard Marks.
And that matters, which is why I say that everyone has their own investment profile. Ultimately, the wallet also has an emotional aspect to it. Sometimes you... Thank you, Lourival. Sometimes you want a specific asset, and you're going to wait until that asset is at a good price. Everyone has a profile.
Well, I don't want to invest in a company that is, a very profitable company, because I don't like that company. What's the problem ? From the company? Your? Nobody has anything to do with this. You need to be comfortable with your investment strategy, and I'm going to tell you a secret. There are no shortcuts.
There are no shortcuts. There are no shortcuts. It's about doing a little bit, studying a little bit every week, making a small, scheduled contribution each month or week. There isn't one, one big shortcut, okay, folks? This is very important that you understand, okay? And don't fall into traps, into people who are promising high returns on investments that don't exist, because most of these fundraising efforts that happen in private are just about, "Oh, you know, you want to get involved with Forex, you want to get involved with trading?" Guys, please don't fall for it .
The majority, 60% I can say, is a scam. These are people trying to take your money and leave you with nothing, plain and simple. He's not going to give you a magnificent return, okay? So, be careful on social media when you are approached. My profile has been cloned countless times, and people offer a 90% return, but I don't even bother with you; you're the ones who come to me.
So, I'm not the one sending you messages. I'll answer. When you send messages, I usually reply with an audio message. So, you're going to get to know my voice, because I'm going to respond, and I'm generally going to respond with respect and responsibility, okay? So, differentiate my stance here from the stance of the coup plotters.
Guys, I'm sweating buckets here because it's so hot . I also have two lights up here above me. And today I didn't turn on the air conditioning because my voice suffers when I turn it on, okay? So, it's a more selective stance from the investor who has a patient opportunism. Depending on the market conditions he observes and interprets, he makes his investments consciously and calmly.
I even joke around here, we align our chakras, breathe, and study. Does this make sense within my wealth management strategy? Does it make sense within the time horizon I want to invest in? Does that make sense to me? It's true? And that depends entirely on you. You don't have to be staring at anyone.
That's why I say here that I want to develop people who think autonomously and independently. Is it closed? This is very important. So, we can't copy the behavior of a person, of an institution—excuse the "institution" here— without considering our own personal needs. And the principle we can learn is another one.
Don't lower your standards just because you're tired of waiting, but also don't turn the idealized price of an asset into an impossible condition to meet. Discipline needs to engage with reality. And in a moment I'll present some situations, three or four situations, where waiting might be a wise decision.
And one in which waiting can be, ah, an attitude of hiding, in fact, a great fear. Okay ? And now I want to introduce you to a tool that I developed while reading the chapter, so that we can use it when we are facing a market situation and we can identify whether it is a moment for us to act with promptness or with patience.
So, I prepared six questions to help distinguish strategic patience from purposeless waiting . The tool, as I always say, is: "Take notes." The tool, and I'll write it down because I'm going to dictate it to you, if you want, so you don't have to rewind the video. And I always write this down here for you all, because the teacher is from way back when I'm just kidding, right, guys?
It's the time of the Mayans, Incas, and Aztecs; she uses paper. Look at my notebook. Highly mature. Ready to go? I'm going to dictate the tool that I developed based on this chapter. It's not Howard Marks, that's my dream. It's mine, okay? The tool calls for a quick response. P R O N T. Look how I'm going to write it.
Ready. P R N T. O. O at the end. Ready. The P, folks, stands for price. And the price, we, when we see one, when we come, right, the correct way is to come in Portuguese. When we look at whether the price of an asset is within its fair value, or whether it is overpriced or underpriced. So, first of all, when we see an asset, we have to question its price.
You don't just buy things because you're caught up in the hype. You don't go out and buy just because it's going up. You don't just start buying things because prices are falling. You have to understand the relationship between price and value. Do you two understand each other? The value is the fair value, what it is worth according to the return it will offer, or, if it is a company, according to its assets, as shown in its balance sheet.
So, we have to keep that estimate in mind. Price, the first point of the ready. First point of the deal: price. So, that's the difference between price and value. What is the price at the moment? It is worth it? Second, R, risk. You need to understand the potential risks of the asset, okay? Does this asset have a level of risk that I am willing to take?
The Promise, the opportunity. What facts make this asset an attractive opportunity? That's because today's chapter is about patient opportunism, which is why I developed this tool that I'm sharing with you here. The N stands for need. Am I feeling the urge to act urgently, or am I reacting to emotional pressure?
We need to identify why our mind often lies to us; it's not actually our mind, it's our emotions. That's why I mentioned necessity. T stands for time. What is the time horizon I have to invest in this asset? Is it compatible with its cyclical return? Pay attention, this tool, which is still missing the O, is a tool to bring rationality and clarity when we analyze an asset.
The O stands for observation. What evidence would confirm or invalidate my investment thesis for this asset? So the tool "pronto" means these words that I spoke. Price, risk, opportunity, need, time, and observation. Remember that this ready-made structure is an educational mnemonic structure that I put together.
It has nothing to do with Howard Marks; I designed it inspired by Howard Marks. And I always put together some kind of tool and deliver it to you in the strategic reading guide , which is only 19.90, it will be available on Hotmart after the live stream. I haven't uploaded it yet because I'm still revising it.
So I haven't uploaded it today yet, but it will be available soon via the link in the YouTube description and in the first pinned comment. What is this strategic reading guide? It's a guide that I, uh, I developed the chapter reading part with practical application so that you, on your own at home, can also develop this skill of, uh, interpreting the asset according to the chapter we're reading.
It's an evolution of knowledge. So now I want you to realize what this tool that I brought did. She won't tell you if you want to buy or sell. She'll organize her thoughts before you make the decision, okay? So, I'll quickly show you how I would use it. First, I want an asset, but this asset has risen too much, and expectations are excessively optimistic, so I can't justify the price of this asset.
So, in this case, with this asset, in this first situation, it would make sense to me to wait and monitor the situation, okay? Because if it's a really good asset and it possibly experiences a price pullback, I can enter at another opportunity, okay? Secondly, in the second situation, the asset fell, but I still don't understand why it fell.
What do I need? Investigate before acting. That's what I would do, in my opinion. Three, for example, there is a possible opportunity, but I would need to commit money that is earmarked for my essential expenses. In that situation, I wouldn't do anything. It's an opportunity, but it puts me at risk.
Then she could get me into trouble. So I don't want to cause trouble. Why? Because I prioritize my peace of mind over the adrenaline rush of the game. When we prioritize our peace of mind, sleeping soundly, over the adrenaline of the game, we find peace and are happy with our family, our daily lives, and our pets.
I have five now. I have an extra cat, guys. These are Francisco, Helena, and Sofia, rescued cats. And two Pomeranian puppies, because everything is a matter of balance. I have Brigitte and Bianca. They don't bark as much these days, do they? Francisco didn't even come here to jump on me and unravel my crocheted dress.
So let's go. And that. We need to prioritize our peace over the adrenaline of the game. And prioritizing financial security brings the peace of mind we all crave, okay? So now let's do a fourth situation here. You perform an analysis of the asset. You understand the risks, the opportunity meets your criteria, but you keep postponing the decision because you're afraid of being wrong.
In this case, this waiting is not strategic patience. It can be a paralyzing wait. Do you notice how things change? So strategic patience has criteria, and paralysis usually depends on a certainty that the market will never give you. Then you need to have courage. I have the money available to invest, the opportunity is now, the price has dropped, so I'm going to go for it.
That's how it is. It's all about courage, right? It 's very difficult to do that now, isn't it? If it were easy, everyone would be rich, folks. Don't worry , but here we learn and we tend to get richer, right? Let's go . Just a little longer because I want to analyze the presidential candidates later today.
So now I want to talk again with those who are following the evolution of our strategic thinking library. Look where we've already arrived, chapter 13. In volume 10 we worked on autonomy, in volume 11 we worked on independence, in volume 12 we worked on discernment, and today, in volume 13, which will be available on Hotmart right after the live stream, we're going to develop readiness.
So there is a very important progression of knowledge, because it's not enough to recognize an opportunity; you need to be prepared for it and have the courage to act. So it's necessary to distinguish between the moment when taking action makes sense and the moment when the best decision might be to observe and monitor.
So it was with this idea in mind that I conceived today's reading guide , the strategic reading guide volume 13, the most important thing is patient opportunism. And I want it to be a laboratory for decision-making, not just an explanation of the chapter, because I don't do chapter summaries in the strategic reading guide either .
Here we do a review, and I include practical applications in the strategic reading guide, and I also provide practical examples here. So the idea is that you can build your own readiness criteria. So let's imagine two scenarios. In the first scenario, the market falls by 20%. But fundamental conditions are deteriorating.
In the second scenario, the price falls less and the fundamentals remain consistent. AND . Did you see how cool that was? And the third scenario would be that you don't have the liquidity to act. What are you going to do? Did you see the difference? In the first scenario, things are really bad; you can't do anything, the market drops 20%, conditions deteriorate, and you're left out.
Or look for bargains to buy. In the second scenario, the price falls less, but the fundamentals remain the same? Wow, great time to invest. In the third scenario, you have no capital, you have no liquidity, pay attention my dear , pay attention so that when it happens again you're prepared to go in with both feet, right?
So that's it. This is the kind of thinking we need to develop, because opportunity doesn't exist separately from your ability to seize it. And in the live session I think along with you here, but in the guide you think and organize those thoughts on your own, alone, to solidify the knowledge. I want to leave a provocation.
Perhaps the greatest benefit of patience isn't buying cheaper, it's avoiding decisions you didn't even need to make. And if that's the point you want to develop, chapter 13, volume 13 of the strategic reading guide that I made with the ready-made mnemonic that I showed here will be available soon, because I'm still revising some points, okay?
But I'm going to make it amazing. Now, how about we talk a little about the election? So let's talk, this chapter here, folks, is special because I'm going to talk about what the patient investor, according to Howard Marks, according to the book we're analyzing, needs to observe at this moment. Look, the market, I don't know if you've noticed, but the market buys expectations before it even knows the results.
And now we're going to connect everything we've learned here with events that could influence our Brazilian market. And tomorrow, right? Tomorrow is the second round of the presidential elections, and I want to start with a question: if the market already knows who the two candidates are, why could the result still cause so much volatility?
And I'm bringing up this question because this week a very dear follower, whom I consider not only a follower but also a friend and client, José, asked this question: "Sheila, I'm worried about the market." He asked that question, I answered him privately, and even said I was going to make a video, but I still haven't.
But I'll do it after the election, because then we'll have a more tangible scenario to work with. So, why does the market do that? That's because he doesn't just negotiate events. He refuses to negotiate expectations about events. Imagine that many investors are already positioned in anticipation of a particular economic policy.
If the result confirms what he's expecting, that's already priced in, and the market reaction will be small. But if the outcome goes against the expectations of most investors, prices can adjust quickly, and that's when we see volatility. And there's another possibility: if the result confirms market expectations, but the economic discourse is surprisingly good later, the reaction also changes.
Therefore, I want to separate three moments with you: the election results, the formation of expectations about the government, and the actual implementation of economic policies. These are three completely different stages; we're in the expectation stage, and the market is in expectation. And I'm going to show you the website that 's banned in Brazil, Polymarket, which is currently measuring the presidential election results.
I'll show it to you at the end, okay? And, ah, the election, it determines who will govern, it doesn't predict all the economic outcomes in advance, we'll only see that when...? In practice. So now, I'm going to share here on YouTube the presentation of the economic plans of the two candidates, the two presidential hopefuls.
And where did I get that from? Where did I get this information? On the TSE website, okay? To do a purely economic analysis of the two candidates, I looked at, well, their economic programs. So, we're now going to look at the programs presented by Lula and Flávio Bolsonaro. We're not going to discuss who I'm going to vote for or who you should vote for; we're going to understand what each proposal represents in terms of economic mechanisms and, most importantly, what would need to happen for expectations to translate into results.
So, for anyone who is curious, their official plans, Flávio's and Lula's, are available on the Superior Electoral Court's website. And the comparison I'm going to make summarizes their documented proposals and separates the possible effects, which remain uncertain since they are proposals. So, let's keep that in mind.
So, folks, for anyone who wants to go to YouTube, I'm going to share what I just got from the TSE website. So, here's the presentation. Can you guys see this? Are you seeing the economic proposals? So, I put it like this: " Economic proposals in 2026. What's at stake?" It's a comparative analysis, and I tried to be as impartial as possible regarding the economic programs of Lula and Flávio Bolsonaro, not to say who to vote for, but to understand the mechanisms, the conditions, and what would need to happen for the candidates' promises to actually translate into concrete results, because that's what we want, right?
So, it's a purely economic analysis, okay? So, let's go. Let me see. Here. The starting point, for anyone who wants to see me sharing it on YouTube, turn on both, leave it on TikTok and go watch the presentation, because it's really cool. It's purely, folks, taken from the proposals of both candidates, which are both available on the Superior Electoral Court's website.
So, the starting point is that these are two distinct logics. The official plans are available on the Superior Electoral portal, and the comparison I made below summarizes the documented proposals and separates their possible effects, which remain uncertain because they are proposals. So, you see, these are different proposals, but there's a question we need to ask about both.
I'll start here with Lula's proposal. Lula's proposal. What does he propose? He proposes continuity. Yes, the continuity of the government would mean a greater role for the State, a greater role for public investment, progressive taxation, and social policies. So, what do we have? Greater role for the State, increased public investment, progressive taxation, and social policies.
This is the summary, okay? Now let's talk about Flávio Bolsonaro. What does Flávio Bolsonaro propose? He proposes a change involving a smaller state, privatizations, deregulation, and greater private sector participation. So, what does it produce? It proposes reducing the size of the state, privatizations, deregulation, and greater private sector participation.
So, let's compare the proposals by dimension. I'll talk all about Lula after Flávio, okay? So, Lula's perspective on fiscal policy. What does he want? Maintain the fiscal framework, control expenses, corporate credit cards, and travel, and seek fiscal improvement through growth and revenue collection.
What is the role of the State in Lula's government? Greater emphasis on public investment, industries, and social policies. Taxation: greater progressivity and review of tax benefits. State-owned companies, what does he propose? Restructuring and use in development policies. What is his main challenge?
To reconcile expenses, investments, and stabilization of public debt. Now Flávio Bolsonaro is the one who would bring about change. Regarding fiscal policy, he proposes replacing the fiscal rule, containing expenses, and seeking debt stabilization. Regarding the role of the state, he proposes greater emphasis on reducing the size of the state, deregulation, and private investment.
Taxation: tax reduction and review of tax rules. Regarding state-owned companies, he foresees a resumption of privatizations and the sale of non- strategic assets. The central challenge for Flávio Bolsonaro, according to his economic proposal, is to reconcile cuts, tax reductions, and the preservation of services.
Next. So, the question that applies to both of them is: how will they finance their priorities and maintain a sustainable trajectory for public debt? This question is essential, why? Economic promises must fit within budgetary, legal, and political constraints. So, it's not enough for the candidate to announce their intention; they need to approve the measures, implement them, and evaluate their results.
Therefore, the first step is to announce the intention. What is this? This is the starting point, the proposal that the candidate promises to make upon assuming office. The second step is to approve the measures, which entirely depends on whom? From Congress, from the political conditions, and from the internal coherence of the proposals.
It's worth remembering that this current election resulted in a congress that is predominantly right-wing. This would make it difficult for the president, the future president Lula, to get his proposals approved. If Bolsonaro is elected, we expect that with a right-leaning Congress, he will facilitate the approval of the projects.
Perfect? And three, what do we actually need to verify? It's about implementing and evaluating. What really matters to us, Brazilian citizens, is the actual implementation, right? That's what separates the candidates' intentions from the results. This will be the president's real test. So, according to Howard Marks, the patient investor, he won't confuse a candidate's promise of change with proof that the change has actually happened.
It's OK? Let 's see, if Lula's government continues, we would then have the maintenance of the fiscal framework, social policies, and public investments with the intention of combining growth and improvement in public finances, which is quite difficult to achieve. What are we seeing? We are seeing a state spending a lot and a progressive increase in taxation to try to balance the government's accounts at this time.
And what should we be monitoring if Lula wins? The trajectory of expenses and revenues, the primary result of GDP, the evolution of debt in relation to GDP, public debt, and inflation expectations, since we have a government with high interest rates, the Central Bank is, uh, trying to monitor and block inflation, in a way, by keeping interest rates high.
So, if the government succeeds, if the Lula government is elected and manages to improve the fiscal trajectory and preserve monetary credibility, this could reduce the risk premium. But if expenses grow in a way that is incompatible with revenues, which is the scenario we have been observing, the market may demand higher returns to finance Brazilian bonds, and this will put pressure on future interest rates.
And, depending on the external context, the exchange rate as well. So, we say that there can be this relationship between increased inflation and an unfavorable exchange rate. However, an important point to note is that public spending does not automatically produce inflation . The effect depends on how it is financed, the productive capacity of the economy, and the response of the Central Bank.
And that's what we also need to analyze: Brazil's productive capacity and, really, whether or not public spending is generating this inflation. In the event of a change in Flávio Bolsonaro's policies, the new fiscal rules for containing expenses, administrative cuts, tax changes, and greater private sector participation in the economy would apply.
What should we be monitoring if Flávio Bolsonaro is elected? Consistency and enforceability of the fiscal adjustment. We need to see if he's really downsizing the public sector. Is he making that reduction? We also need to see what the impact of the tax reductions he proposes will be on revenue. Because this could impact revenue.
And we also have to look at the viability of the reforms in Congress, which tends to be more favorable in the case of Flávio Bolsonaro, since the elected Congress was predominantly right-wing. Furthermore, what else do we need to keep track of? The evolution of public debt. If the ah adjustment is consistent and executable, it can reduce the perception of risk and contribute to lower risk premiums in the future.
But announcing administrative cuts does not, by itself, resolve the entire debt dynamic. Reducing taxes without compensation can decrease revenue and compromise the fiscal outcome. Therefore, a favorable market reaction to the expectation of change does not prove that the measures will be approved or will produce the desired results.
Although, yes, the market reacted positively to the first round of voting, given that Flávio Bolsonaro received the most votes. We saw this in practice in the market. So, in both cases, in both cases of the two presidential candidates, the decisive word that we have to follow is, in fact, execution, right?
For Lula, the central question is whether fiscal execution and growth will be sufficient to sustain public confidence and reduce economic pressures, because we are experiencing rising inflation, widespread difficulty in consumption, and people are very indebted at the moment. Regarding Flávio Bolsonaro, the central question is: would the government be able to transform his proposals into effective, fiscally sustainable, and economically efficient measures?
That's what we need to keep track of. It's true? Now I'm going to talk about what everyone talks about. "Sheila keeps asking me, 'Is the dollar going to go up or down?'" I want to give you a responsible answer. The name of the winner in the presidential election is not enough to determine the dollar's exchange rate.
The Brazilian currency responds to several forces simultaneously; no single election controls all of them . So, we have to look at American interest rates , Brazilian interest rates. The interest rate differential between countries directly influences capital flows and the demand for reais, right? With the highest interest rate, the dollar attracts more global capital than Brazil.
It's true? Why? Because it's a strong currency. The dollar tends to depreciate less than the real. And what about fiscal risk and commodities? The government's risk perception and commodity prices also affect the exchange rate independently of the political scenario. That's why we can't definitively say that if Flávio wins, the dollar will fall, and if Lula wins, the dollar will rise.
It's not that simple, but we'll definitely see it in practice in a few days. Global growth flows. Trade and financial flows, the global growth environment, and risk aversion are also important factors determining the exchange rate, specifically the dollar. So, what are the three possible macroeconomic scenarios that I've outlined ?
So, instead of betting on the election results, what should we bet on? In terms of our financial health, right? So, the scene analyst, he works with sets. Economic analysts work with scenarios, conditions that can occur under any government. So, scenario one would be an improved scenario one . It would be a scenario of credit, fiscal credibility, and improvement.
If there are measures, then we need to be able to achieve them, and they need to gain credibility. So, if there are credible measures and consistent implementation, the risk premium could recede, future interest rates could ease, and the real could find support. This doesn't guarantee currency appreciation or an immediate drop in inflation, but it does improve the outlook.
Scenario two would be a scenario of fiscal uncertainty. If the trajectory of Brazilian debt continues to be a concern, investors may demand higher interest rates to finance the government. Raise the interest rate to attract money from the market. And the exchange rate may face pressure, making disinflation more difficult.
In other words, there will be an inflationary scenario in the case of fiscal uncertainty. Scenario three would be an external shock. Even with domestic improvements, we can expect to see high interest rates in the United States, which attracts more capital. We can see geopolitical tensions rising between the United States and Iran.
And this will also have an economic cost for us, which is the increase in the price of the dollar because our oil is also priced in dollars, and we may see pressure on Brazilian assets, okay? And if the shock is external and doesn't occur, if we have a more favorable external macroeconomic environment, we can also have a more favorable internal environment.
So, from the election results and economic analysis, what is the map? Instead of just asking who won, the analyst who wants to protect their assets above any government needs to ask what really matters in economic fundamentals. So we have to look at the results, market expectations, the risk premium, and the exchange rate flow, in addition to what the actual activity will be, and monitor inflation and economic activity, right?
That's what I believe, and without further ado, these are the scenarios I believe could happen. In any case, I'm telling you that we are already invested in Brazil; we pay taxes here, we live here, we consume here, and consuming here is investing in the country, since part of everything we consume is tax and goes to the government.
So we are financing our government. To preserve ourselves, we have to think a little about geographically diversifying our capital, starting to hold dollars and cryptocurrencies, especially Bitcoin, because it's the biggest crypto in the market and has the greatest tendency to have a larger Lindy effect, which is to prove itself over time as a store of value asset, which it was created to be, even though in the short term Bitcoin acts like a technological asset in the sights of large investors.
So now I want to go back to the question I asked at the beginning of the live stream. How can you tell if you're being patient or just letting an opportunity pass you by out of fear? The answer lies in the quality of your process. Get it? You know what you're waiting for. So you know what evidence to look for.
You are aware of the risks. You have a clear understanding of your investment horizon and you know what could make you change your mind. Paralyzing fear, it's different. It demands a certainty from you that the market will never offer you. This also applies to tomorrow's election . You don't need to predict exactly how the dollar will open on Monday.
You don't need to guess what the stock market's reaction will be. You don't need to turn an election result into a hasty operation. You have to observe, compare expectations with the facts, analyze the economic signals, and recognize when you still don't have enough evidence. And I believe that sufficient evidence will only emerge from the actual exercise of the president's mandate.
So, patience, folks, it will never eliminate uncertainty. What will impatience, what will patience do? It will prevent uncertainty from forcing you to act recklessly. So today, Howard Marks taught us something that goes far beyond the financial market. Not every opportunity needs to be pursued. Not every fall needs to be bought.
Not every high price needs to be sold. And not every news story requires an immediate response or decision from you . The strategic investor develops a very special ability. Be prepared to act. That's what it means to be prepared. And also to have the peace of mind not to act when the conditions do not yet justify your action.
So, if you want to delve deeper into this process, the strategic reading guide, volume 13, was designed to help develop this readiness. And because understanding the concept during the live stream is just the beginning. But being able to apply this thinking to any decision you need to make is your next real step.
The link will be in the video description and in the pinned comment when it becomes available, okay? And I want to end here by leaving you with a question for our next meeting. If patience is so important, how do we recognize when patience needs to give way to action? Because waiting too long can also have a cost.
This will be a fundamental reflection in the continuation of our journey of knowledge. So tell me , what's the hardest thing for you? Wait for the opportunity or act when it finally appears? That's the question I want to leave in the comments and come back to read later, okay? I'm Sheila Faria, and I 'm very happy to be here live again this Saturday with our strategic mind live stream.
And remember that markets change, but principles remain. The price is eye-catching, but it's the context that generates wealth. A kiss for you all, and thank you so much to everyone who has followed me this far. I thank you from the bottom of my heart. It's very difficult to follow such an intellectual live stream, I know, but I'm very happy to share Howard Marks' knowledge with you.
So, next week we'll see each other in chapter 14, and with a president already elected, we'll talk about that too. The most important thing is to know what we don't know. Oh, Howard Marks, he always gets me into trouble . So, next week I'll see you all live on Saturday for this blessed strategic mind live stream , a unique live stream for intelligent people.
Thank you very much. A kiss for you all, I'm going to end the broadcast. And I'm going to stay here.
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