Daily Market Brief
Articles Worth Reading:
China’s Third Plenum Will Jolt the Economy (Reuters)
Bank Earnings are Key to More Gains (Barrons)
An AST Swing Trade was Closed Today - 90% Gain on TSM or Just over +$2,500 depending on the capital allocated per account size.
Let me give a bit of color on this and I’ll get into it more on this week’s LongVol Show. The stock reports earnings next week so one view could be to hold this position into that event in hopes that it makes more. Investing is situational, it’s not always a “perfect system” which most amateurs have been told or want to believe in. I get that this throws people off because you do need a framework to operate within and there is one but situation by situation, trade by trade new variables are added.
Understand this because if you do it will allow you to break free to think differently.
In this situation, I expected the stock to rally hard/fast - read the notes above on the alert note that was sent out. Normally, the AST alerts model wants a 90-day minimum duration option, not in this case. This is where a discretionary element has to happen in investing - again, not many can adapt to this but if you can it’s beneficial.
The stock ran straight up in 5 days, the option doubled + some. That is good enough.
Some would hold through earnings to see if they can get more. I don’t believe in that unless the position is a “Core” position - some call that buy and hold investing, I call it core. Plus, the AST Alert Portfolio is “income mentality” not try to be a hero and get “rich” in one month mentality so a double is a win.
I don’t care if the stock rallies +10% after earnings, it makes no difference and it only adds a risk factor to the trade because despite what many believe: you have ZERO CLUE ON WHAT EARNINGS WILL BE WHAT THEY MAY SAY OR GUIDANCE.
That creates a binary outcome and even if you get it “right” how much more is the stock going to move? Enough to justify not selling?
Most like the rush and feel of “being proven right” whether you admit it or not, but I’ve been around too many retail/amateur investors over 15 years to know that is the truth. Me, I really could care less about being proven right: I care about the P&L and if that means securing it and letting the name trade higher, who cares - this is how you stay alive in this business.
This was a good example of a Swing Trade and nothing more, so I hope that helps to give you color into the:
a) Thought process
b) How the AST Alert & Portfolio is operated
If that does help and you’re tired of pretending to be analyst, or worse, following others who think they are, then the weekly report and AST Alert Portfolio should be a benefit.
You can get a 21-day free trial to the AST Alerts and PDF Report here.
Thanks for reading and see ya inside!