Are You a Bee Mr. Moore?
There’s a scene in the movie Wall Street Mone Never Sleeps where Jacob Moore, played by Shaia LaBeouf walks into the home office of CEO of Churchill Schwartz (mean to be Goldman Sachs.)
The first thing Josh Brolin (Bretton James) asks is “Are you a bee, Mr. Moore? Do you like to sting people?”
Jacob accuses him of causing, in part, the death of his mentor Lou Zabel to which Brolin Replies:
When you don’t know what you’re doing, it’s fatal, Mr. Moore.
When the Fed began hiking it caught amateur investors off guard.
The dreams of “the trend is still up” analysis quickly turned into losses.
And the idea of not knowing what you’re doing is fatal quickly became a reality.
When you don’t understand why things move then you’re walking around these markets without a clue.
And when you don’t have a clue what you’re looking for you become one of two archetypes in this business:
The day trader who scans for stocks daily looking for volatility
The chart poster who plays the “is this the bottom” game over and over
That quote above form PTJ couldn’t ring truer and when I was a piss on back at age 18 reading his, Soros, Druck’s and Seth Klarmanns work I thought I understood.
When you understand what the Fed decision means and then unravel that opinion it gives you a roadmap for where capital should, and begin to, flow.
Not realizing that the underlying driving force of Fed policy creates a cause and effect.
Another example as of recent.
The Russell 2000 which has been effectively sideways all year began to stage a more than +20% rally since the end of October.
Dormant/sideways all year and suddenly awake, in a big way.
Now do technical still matter. You bet they do.
But understanding the flow chart for capital is a must.
Why does that matter and why should you care?
One, it tells you that mid-caps are going to be back in play. Speculators position ahead of the news assuming what it will be or could be (the whisper number) whereas retail investors wait until the newsprints to start making their moves.
It happens all the time, especially to the degenerate day traders.
Two, it tells you that you should start searching for ideas within mid and small caps should come back alive.
Why? For multiple reasons but primarily lending easing will affect them and other sectors.
You need to understand this.
Because this lack of understanding Central Bank policy and the effects it has on equities creates a shit ton of issues for investors.
And it amazes me to see (even smart people) miss this.
For me it matters because I like asymmetry and I like making a lot of money.
And I like making it where I can buy something for nothing and sell it for 5+ baggers.
And not just weekly options like most of you degenerates.
There will be names within the mid and small cap space that are going to be 5/10 baggers in the coming year.
Names where using options serve no purpose but were buying the equity for part of the portfolio to hold as core positions.
And that gets me excited because there is going to be a lot of money to be made.
Pay attention to what they do and what they say because in this wild experiment that we’re in with Central Banks a majority of good investing depends on it.
And without understanding that it can be fatal.
This article is presented for informational purposes only, is an opinion, is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investments. Any such solicitation of an offer to purchase interest will be made by a definitive private placement memorandum or other offering documents.