A 15-Year Shift: From Financial Statements to Market Structure
A four-phase framework for sizing risk when fundamentals stop explaining price.
I have been in the market for nearly fifteen years.
I started where everyone starts: trusting the textbook. Today, I trade based on liquidity, leverage, and forced selling.
The journey wasn’t a straight line. It involved novice arrogance, near-death experiences with margin calls, and lucky wins that I mistook for skill.
My evolution happened in four distinct phases. Here is how I went from reading financial statements to reading the market’s plumbing.
Phase 1: The Value Trap
“The spreadsheet will save me.”
Like many, I started as a disciple of Warren Buffett. I treated value investing as a religion. I believed that if a company had a clean balance sheet and steady earnings, the market would eventually reward me.
My portfolio was a classic “defensive” basket: high-dividend financials, utilities, and telecom stocks. I ignored charts. I thought technical analysis was voodoo.
Two things broke my faith:
Underperformance: After years of picking “undervalued” stocks, I realized I was losing to the broad index. I was working hard to be mediocre.
Dirty Data: I learned that financial statements are often engineered. A company can look like a model student on paper but be a ticking time bomb in reality. The accounting was legal, but the risk was hidden in the footnotes.
I realized I couldn’t trust the micro data. So, I zoomed out.
Phase 2: The Macro Pivot
“If companies lie, countries won’t.”
I stopped picking stocks and started buying countries.
My logic was simple: A single company can go to zero overnight due to fraud. An entire country’s index (usually) does not.
I became a student of macroeconomics. I stopped obsession over P/E ratios and started obsessing over inflation prints, central bank policy, and yield curves.
I looked for global arbitrage. Which country is being unfairly punished by sentiment? Which market is in a liquidity bubble?
This was safer, but my execution was clumsy. I would buy because a country looked “cheap,” but I had no system for when to buy. I often entered too early and got run over.
Phase 3: Reading the Tape
“Technicals are just data visualization.”
For years, I dismissed technical analysis. It felt like astrology.
But as my position sizing grew—and as I started using leverage—I couldn’t afford to be “right but early.” Being early with leverage is the same as being wrong.
A trader friend gave me a wake-up call. He didn’t tell me to worship moving averages. He told me to respect the language of the market.
Volume is conviction.
Volatility is fear.
Price action is the collective vote of every participant.
I stopped fighting the tape. I started using technicals not to predict the future, but to optimize my entry and exit. Macro tells me what to buy. Technicals tell me when to pull the trigger.
Phase 4: Market Structure & Sentiment
“Who is forced to sell?”
This is where I am today.
I no longer just ask “Is this asset good?” I ask, “Who holds this asset, and are they in trouble?”
I realized that short-term price movements have nothing to do with fundamentals. They are driven by Liquidity, Leverage, and Positioning.
Valuation is a mood. In a bull market, investors will pay any multiple for a “story.” In a bear market, earnings don’t matter.
Institutional constraints. Big money is not free money. Pension funds, insurers, and quant funds operate under strict rule sets (VaR models, stop-loss limits). When a key level breaks, they must sell. It’s not a choice; it’s an algorithm.
The Leverage Chain. The market is a web of debt. When rates rise or volatility spikes, the weakest links (highly leveraged funds) get margin called. This triggers forced selling, which drives prices lower, which triggers more selling.
My edge now is identifying these structural breaking points. I look for “forced sellers”—people who have to liquidate good assets at bad prices. That is when I buy.
The One Edge Retail Has Over Wall Street
After 15 years, I learned something counter-intuitive: The retail investor has one massive advantage over the professional.
Time.
Institutional investors are slaves to the calendar.
They have quarterly performance reviews.
They have risk committees breathing down their necks.
If they underperform for two quarters, they get fired.
If their volatility spikes, their risk model forces them to deleverage at the bottom.
This creates the “Institutional Trap”: They are often forced to sell at the worst possible moment because their rules demand it.
You do not have these rules.
If you use your own capital, use no leverage (or safe leverage), and have a long time horizon, you can do the one thing a fund manager cannot: You can do nothing.
You can hold through a 20% drawdown without a risk manager tapping you on the shoulder. You can buy when the institutions are panic-selling because their VaR model turned red.
The Strategy:
Identify high-quality assets (Indices, Top-tier Tech, Treasuries).
Wait for the “forced selling” event where institutions are puking positions.
Step in.
Let time do the work.
This is the only way a small player wins a rigged game. You don’t outsmart them. You outlast them.
Disclaimer
This memo is for educational discussion and internal-style research notes. It is not investment, legal, or tax advice. Rules and tax regimes change, and outcomes depend on individual facts and jurisdiction. Consult qualified professionals before implementing leverage or tax planning.
Kuan, Founder of Miyama Capital