Look At The Macro

Cashflow Is King

When assessing stocks to purchase, whether it’s value, swing, or day trades, the strength of a company narrows down to cash flow. Sure, in day trade you’re driven by the price volatility, but there may be certain trades you do that you’d prefer to hold onto either as a swing or value investment. You can pull potential dividends from it, and use it to hedge against the market.

Hedging Your Bets

Price volatility in the AI boom has been an adrenaline rush. CNN’s Fear & Greed Index shows strong indication of a potential bubble. If this is the case, then there needs to be adequate hedge against this AI bubble. How do we achieve this?

1. First, we will determine which industries trade at an inverse correlation to AI & tech sector. When investors are feeling risky and riding the wave, the opposite effect would be “slow and steady” — nothing says this like Consumer staples and CPG brands. Aside from boring, we also need to think about what is anti-fragile in the Taleb-like context. Everyone is going to eventually die, so investing in a company like SCI that handles funeral and death services seems like a safe bet.

The See-Saw Lever

Taking two stocks that trade at an inverse, one could buy when one stock is low, cash in on the other while that is high, then do the inverse when the other is high, and the latter is low.