The LongVol - What You Missed This Week

Good morning, here is what you missed.

• META with a huge stock buyback of $50B and the first ever dividend

• FOMC this week was bought up but I have some thoughts I wrote here

• Crude sold off Thursday dragging energy down with it

Market Recap & Thoughts

I’m headed back to Puerto Rico today finally after a month back in Arizona and a bit of a delay in getting back. While I was here I spent about 3 days looking at an investment in an SMB (small business) but realized after about 2 hours looking at the balance sheet that it was a pass.

That’s how I feel about investing in the markets anymore as well - if it’s not obvious I just don't want to deal with the headache of it.

I wrote a blog piece Monday night after we finished the final assessment on whether to look into (buying it) more.

Process goes a long way and most small business (like Retail Traders) are ‘just getting by’ so there’s never a need for process or refinement - why fix what’s no broken, right?

That’s how that business was, +40 years, grossed $3M in revenues but the balance sheet and overall business was a mess.

It should have been netting $500K a year but it was way less, and one year, lost money.

We could have instantly fixed errors and added back $150K conservatively to net profits by just fixing a few issues on spending.

Now, think about that from a trading perspective - how much do you waste not executing or maximizing on trades?

What arms/strategies in your playbook (if you even have one) make you the most?

But, I didn’t want to deal with it because old habits die hard and this was a team that had been together for a long time so getting them

a) to agree to a lower deal price and b) getting them to get on board with changes looked like a headache.

So, we passed.

Moving on….

The ES 0.00%↑ / SPX is just not wanting to re-set at all and it seems to be throwing a lot of people off, myself included.

On the daily we held $4870 so the next targets are listed above based off a daily Fib extension. Usually, you never see us just break through the 100% Fib (esp. on a high time frame signal) and get a sell off or sideways consolidation.

But, this market just does not care.

Again - doesn’t matter to me aside from it gives me sentiment reads and direction on SPY 0.00%↑ QQQ 0.00%↑ when I trade the index options.

As for Crude, the actual physical market is strong and so are the equities.

The pullback Thursday hurt some longs (really on the options) but I have to stick with the trade.

Maybe you should, or should not - you probably shouldn’t if your trading business is deponent on cash flow and not growth.

It’s always interesting to me to see people panic out of ideas as if the fundamentals suddenly change - worse, they don't even look into their thesis and they just assume.

Crude futures are technically bearish as of this week but energy names have the same fundamentals in them and if you can’t understand the drivers of a stock/sector (reality is most of you just don’t care too - let’s be honest) then you’ll always technically get shaken out.

Another reason to develop a playbook - day trading, swing trading, core positions.

All separate risk positions, durations and mentality with them - separating that is key.

I’ll wrap this section up with a line from a near billionaire fund manager (in energy) that I heard say: “Why guess what you can know? - Really, why GUESS WHAT YOU CAN KNOW”

The answers are there you just have to do the work to get them.

Enjoy the weekend and see you tomorrow for issue 6.

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