Here is what you missed this week.
Ep 24 of The LongVol Show: Market Inflection & China Trade
Core Positions v. Trades (Explained Again)
This week’s show is worth a listen - even if you have to rewind it to slow it down and put together what is said. I talk about portfolio construction a bit, which matters, if you’re someone here who is managing a good amount of money - pointless use of time if you’re a trader here just day trading.
The first part of the show I talk about Core Positions - what that means to me and why. You can read more on that here on the page Investment Process.
This week there were a few active/event-drive trades I put into the portfolios:
CWEB
XHB
BABA
I scaled down the risk on most because they moved over +5% in just a few days and if you read this then watch this week’s show where I talk about active trading to generate portfolio P&L this is a real example of it.
The idea is you have trades then core positions - I talk about this a lot on this site and each week in the report but let’s be real - most of you don’t really read any of it or pay attention to any of it; I don’t want to be a dick when I say that but that’s just the reality of it. I’ve had friends I’m close to who are around me IRL do the exact opposite of what I explain to them. I also know it because I had to amend the weekly report and make a how to section on the site because people are too lazy to read some of it when it’s laid out on the actual report in each section.
If you ask me why that is, I’d say instead of trying to figure something out when it causes any sense of stress or thought of “I don’t get it” that people give up and punt into trades.
Here’s the reality; nothing is easy and making products for “people that don’t want to think” is not what I do. If you want real returns then it takes work.
So, before I continue - the show and article of the week are really worth a watch.
XHB 0.00%↑ and BABA 0.00%↑ /China Names are examples of event-driven/active trades. What’s the event? You have China Third Plenum next week - and before you say you don’t know what that means, Google it - that’s how you figure it out and then come to the conclusion that it matters and why.
We tracked it in the Boing Boing Monitor (BIDU) - which uses 90-day calls that are ATM as a way to express the view and then I sent out the AST Swing Trade on $BABA.
Personally, in the portfolios for the fund/clients I added BABA 0.00%↑ JAN26 calls, CWEB equity and JD equity.
You can click this link to see that image.
Side note: shout out to Antrazi - he’s been a member since the start of the year and is legit one of the ones that pays attention. People have taken the Boing Boing monitor and literally bought shares when it explicitly says not to - wild and pure idiocy.
All of those names, “China Trade”, were trimmed but the rest runs into the meeting all next week.
That’s an example of how I look at managing a portfolio.
Core Position
A few weeks ago in the article of the week I talked about PZZA 0.00%↑ - Papa Johns as a potential core position.
I’m not sure that it becomes a Core position just yet, but I’ve been tracking it waiting on both:
Material Change (earnings report and or if they get a new CEO)
Technicals to firm up
Those positions get sized larger and for longer: 6-24 months. I did add some core positions for portfolios this week in the sector discussed in the show.
Overall, this was a big shift this week and I believe there’s an inflection occurring in where money flows start to allocate for the back-half of the year hence some of the core positioning started this week and into this quarter.
Enjoy the article of the week.
Dan
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This article is presented for informational purposes only, is an opinion, and 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.
Thanks Dan! The report is Powerful but like any tool must be used correctly