≈ But it was just Platonic Love. ≈
The markets are informationally very efficient. Everything from news to corporate events, to tweets, is baked into the prices, in real time. Everyone knows everything, including the candlesticks in your chart and the Uber driver. We are not Warren Buffett in the 50s devouring financial statements, balance sheets and calculating the intrinsic value of stocks when no one else was doing that.
In addition, Wall Street pays obscene sums of money to research teams just so they can beat the market. These teams—make no mistake about it—, are composed of really smart, and intelligent people.
However, it seems that no one is beating the market these days. No fund managers. Not even the Sage of Omaha. And that makes us question ourselves about the search for Alpha.
If you follow the trend, markets, the consensus, will you generate additional returns or will you just mirror whatever the consensus is?
If you mirror the consensus, then it is just Beta. You are just following the markets and Alpha becomes pure Platonic love.
If you generate additional returns, either following the trend or being a contrarian trader, then you are generating Alpha.
We, retail traders, have an enormous advantage when it comes to generating additional returns, especially educated traders like #TeamTackle. It doesn’t matter if we are trading Vega, Theta or Delta strategies. Structure, rules, and discipline are at the very core of the Alpha we want to generate. On an irrational environment like the financial markets, that is quite of an edge to have.
Thanks to #TeamTackle member Pearl Li, the Alpha discussion is now under the spotlight. We recommend you access her latest article where she interviews Coach Noah Davidson.
Chart of the Day
Coach Noah Trade Playbook
I got one question for you: Do you think, really think (be honest), that fund managers have a playbook like this to morph their trading strategies according to the markets, like a good chameleon? No wonder these guys can’t beat the market. With billions of dollars in AUM (Assets Under Management) it is literally impossible to trade the markets as we do.
A playbook like this one could be one of the keys to generating alpha. That is also quite of an edge to have.
Video of the day
What Are Options Greeks (BONUS: FREE Guide)
In this video, you will learn what are the Options Greeks and how to utilize them in your trading routine in order to perform better in the market.
Today’s line up
Traders Lounge 11PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Halftime Report 12:30PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.
Financial freedom is a journey
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