By now, it is no secret that the energy trade is an important one to me right now. My good friend George Noble likes to poke fun at me. “Hey Sam, what’s your next report going to be about? Another energy stock? I got it. You like energy. Josh Young’s office called, and he wants his energy newsletter back.”
And, of course, right now I still view the energy trade, which has been paying us extremely well in the past month and, I think, will continue to do so through October. As Don Johnson’s line goes: “patience through October”.
However George does have a point. I’ve been thinking: exposure of the Babylon Burns portfolio needs to go beyond simply the energy trade. Ultimately, we will be either right or wrong, and while preliminary indications are showing that this trade is going our way, I also want to have more distinct trades being placed within the portfolio.
To that end, we already have an allocation to healthcare positions, which have an idiosyncratic nature, and a handpicked selection of misfit software and payment stocks, which I believe balance out the portfolio nicely.
Today, I am adding 4 longs and 4 shorts, all of them framed as long-short pairs to the portfolio.
The idea here will be to expose my macro views through a handful of small trades, which I believe will add up to alpha.
As I put it in a post the other day, the best diversifier to my energy position should be skill. In investing, there is no better way to measure skill than through a long-short trade because you not only have to be right about what goes up, you have to be right about what goes down.
I’m keeping it extremely simple: Longs at 2%, Shorts at 2%.
So I’ll be adding 0% net exposure, but 16% of gross directional exposure to the portfolio.
These will all take the views of country ETF long-shorts, which should provide absolute diversification against US systemic moves.
In many cases, though, they still do express the bias that the energy trade expresses, which only reinforces my view on these (because I did a full analysis of the setups for basically any country that has an ETF and concluded that these were the four I wanted to go long the most and the four I wanted to go short the most).
I am giving away for free the first of the four pairs. However, if you want to get all eight of my recommendations, the four longs and the four shorts, there is no better time than today to subscribe to Babylon Burns.
The energy thesis is playing out nicely, and it is still time, I believe, to get in on this trade. Not only will you get all of my diversifying book, which has been initiated today, but you will also get all of my energy book so that you can be best positioned for this market, which is rapidly changing.
When you sign up to Babylon Burns, you will get:
Access to all of my archive of research here on Substack
Access to today’s report as well, obviously
Access to my web application, which gives you the live Babylon Burns portfolio where members receive live notifications when things are published
My charting software for free, as well as all of my charts, so they can view them as the situation evolves.
Just one successful trade can more than pay for your Babylon Burns subscription. We just closed today a trade in Illumina (ILMN) for a 38% gain since inception.
I was not interested in holding this stock going into earnings and after the S&P 500 re-inclusion. A lot of the momentum has waned. One trade like this could pay for way more than one year’s dues to Babylon Burns.
That being said, all of this is for information purposes, and you should do your research. We are all adults here. We need to be responsible and take accountability for our actions. I do not know your risk profile or what trades are right for you. Click below to get started.
You’ll get the first one for free today, and if you sign up you get all the trades today, and the reports on the other trades coming out tomorrow.
To get the first trade, all I’m asking of you is your email. I put a lot of work into my reports, and give a fair amount away for free, all I ask in exchange is for you to give me your email. I feel like that’s a pretty sweet deal for alpha, coverage of macro, and in general an honest voice with a solid track record.