There was a Tweet from the President and the market’s up…sell. There was a Tweet from the President and the market’s down…buy. There was a Tweet from the President and the market’s up…sell. There was a Tweet from the President and the market’s down…buy.

At StockWarrantsHQ.com we don’t really “do” politics. I view it as my job to lay out the trading case for a warrant/stock. Which sometimes needs to take into consideration decisions that politicians may make.

But, as far as whether those decisions are right or wrong, liberal or conservative, crazy or…crazier, I don’t have an opinion here.

You’re here for one reason…and that is to make money. That’s why I leave it to other forums to debate the efficacy, morality, and value of U.S. political discourse at this time in our history.

With that in mind, let’s talk politics!!! (But first, a very brief, but all important point, on arbitrage.)

Movement is Profit

I’ve talked about many, many, many ways to make money with warrants. But, as I recently wrote, there is one trade, the Snorkel Trade, that is almost always available, easy to execute, and profitable in up and down markets.

If you’ve been reading anything I wrote this summer you know it has been my “lazy” summer trade in AIG/AIGWS.

The Snorkel Trade is a classic long/short arbitrage play. I love the trade and have made a LOT of money over the past 20+ years executing it over and over.

But, there is an enemy of the Snorkel Trade. (cue sinister music) It lurks in the darkness and can flat out destroy the profitability of the trade. This enemy takes what is usually a great trade, and turns it into a mind-numbing grind that results in no, to even negative, returns.

This enemy is…wait for it…STAGNATION. (No, not StagFLATION…StagNATION.) NO MOVEMENT. A COMPLETELY FLAT, LIFELESS, BORING as HECK, stock and warrant.

AAAAHHHHH!! It makes me want to cry just thinking about it. Stagnation is utterly soul crushing to the long/short arbitrageur.

The Stagnation Cure All

Luckily, here in the U.S., we have a solution, a cure, a phenomenon that takes stagnation behind the barn and beats it into submission.

The Presidential Tweet!!!

How do I put this… My trading account absolutely LOVES President Trump!!

How did you do last week? Was your account down big, then up, then down, etc. etc. etc. Did you enjoy the ride?

I have one word for the week of August 12-16, 2019…

AWESOME.

Oh, and maybe one more word…PROFITABLE.

And I should probably throw in…a little less worried about college tuition (that S*#% is EXPENSIVE!!) more psyched about Christmas this year (consumer spending down, hahahahahahahaha), and a little closer to that blowout 25th anniversary wedding trip!!

You see, while Stagnation is the death of the long/short trade, volatility (aka, Presidential Tweets, on again/off again/on again/off again Tariff Wars, and generally keeping everyone in both parties off balance and wondering what the NEXT firestorm will be) is the land of milk and honey.

Serpentining in Place

Check your portfolio going back to January of 2018. The market hasn’t actually gone anywhere. We’re basically flat for almost two years now.

But the Tweet Storms and political theater have kept us moving up and down, and down and up, scared and selling… happy (here come the rate cuts!!! earlier this year) and buying… scared (Oh no, we need more rate cuts!!!) and selling…all to get back to flat.

Most investors can’t even employ a “buy and hope” strategy in this atmosphere. One Tweet, or one yield inversion, and they’re selling low and buying back in higher. Did you ride out last October – December? Or pull a “sell, Mortimer, sell” and get whiplashed?

But, if you are taking advantage of what is given to you, you can make a killing in this market. What’s that saying??, “The Lord giveth, and the government taketh away.”

Dude (or dudette), for the arbitrageur, this government is giving till it hurts!! And then giving some more. And do you think it’s going to stop giving anytime soon?? (Do you think we EVER return to “normal” again??…I’ll believe it when I see it.)

And the beauty is, half the time you don’t even need to know what Trump has tweeted. I have a Twitter account, but don’t use it.

I’ll catch flack for this one, but I purposely DON’T watch the news anymore, or read 90% of the things I used to read that I thought gave me a trading advantage.

Nothing to See Here

Why? One, because it’s depressing. The media has one job, to make money (hey, just like us here!!!). And they make money by selling scary, depressing, shocking, and all around not good for your soul stories. (Unlike our “here’s how you make money” stories.)

My favorite is how they’ve even gotten to the weather guys. “15 million AT RISK of high temperatures today!!!!!” In the southern U.S. In the summertime. OK.

Apparently I’ve been “AT RISK” of being hot in the summertime my whole life. Who knew?!?!? Thank goodness the media is now here for me.

And two, if I listen to the media, especially the business news media, I tend to end up rolling my eyes A LOT and generally being disgusted by 90% of the commentary.

My favorite, “Buy quality stocks here.” Because most people are looking to by the crappiest stocks they can most of the time. Again, who knew?!?!

You see, if your goal is to make money. AND, you’re doing long/short arbitrage. AND, you have volatility. You don’t need to know why, or even care why.

Up…sell. Down…buy. Up…sell. Down…buy. (OK, it’s actually SLIGHTLY more complicated than that if you’re hedging, which is what this whole post is about. But come on, it isn’t rocket science we’re talking about.)

Take Care of YOU and YOURS First…That Will Make EVERYTHING Great Again

Now, CAN you actually care about what the President Tweets, and how the Democrats, or the Fed, or the former Fed, or the former Democrats, or the activist (either side, doesn’t matter), or the guy who used to know the guy’s neighbor who is now in charge of the something in Washington…responds? SURE, Go for it!!

But, just before you do care, and rant to your spouse, or coworker, about that latest Presidential Tweet, log into your trading account and make some money off of that TWEET!

Your kids, and their kids, and if you’re a little better than average, maybe even their kids (who will likely never have heard of Twitter, btw) will speak kindly of dear old great, great granddad/grandma who originally bought the family vacation home in the mountains, and set up the college trust fund for the fam.

And if you need a helping hand along the way…you know where to find me.