Risk Adjusted. Ep 41
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This is the weekly article and Pod/Video Show 42. If you’re new here welcome, make sure to subscribe on YouTube and/or Spotify – you can get free daily market updates on LongVolReport.com
The market is still just inching higher this week and there’s not too much new to report on as we await the election so we can get flows moving again on many things. We have a webinar with Sam Evans (COO of Bustamante & Co) this week and also a mentor for LongVol FOPT in 2025 – he will be discussing Using the Swing Monitor to Swing Trade.
Friday, 4PM EST – Get Tickets Here (Free)!
- Articles of Interest from This Week
- Broad Market Overview
- Boeing Update after Earnings
- Tesla Quick Look
- TSMC Arizona Factory is Doing Numbers
- Education: Risk Adjusted Returns
- Weekly Q&A
If you’re new – this is not investment advice. We may discuss investments we own for our clients in our fund and in management portfolios in this post. Please due your own analysis when listening/reading.
Quote of The Week
Favorite Articles This Week
Now on Spotify
The Market at Large
- Not much this week changed in the broad market that is worth noting
- We did have a surprise risk-off move Wednesday that felt more like an unwind/de-risk more than anything but a rally Friday
- Tesla bulls win big, biggest gain in 11 years
- TSMC Arizona factory is putting up great numbers
A note to the day-traders, Meta this week was a great example of having sell signals but then creating just a tough trade to execute on.
- Still waiting to get back in on TSMC – was a big win for us this year but post election is probably when we get back to putting money to work
Boeing Earnings
- Earnings were as expected and the stock stabilized even with the report generally well given the news
- Need to solve the strike, once they do the stock should rally
- I need a weekly close above $165s to give sign of technical strength – if we can get that then maybe we can start some rally into November
Boeing backlog: not to be ignored and the question to be asked is – “Is the bad news just already priced in and is this the spot to start a position?”
RISK ADJUSTED INVESTING
Risk is the divergence from an expected outcome. It can be expressed as it relates to a market benchmark and can either be positive or negative. If an investor wants to achieve large returns on an investment in the long term, they need to be open to incurring losses in the short term. The level of volatility depends on the risk tolerance of the investor.
Risk-adjusted return measures how much risk is associated with producing a certain return. The concept is used to measure the returns of different investments with different levels of risk against a benchmark. If an asset shows a lower risk than the overall market, any return on the asset above the risk-free rate will be considered a gain.
Risk-adjusted return metrics offer the following benefits:
- Allows you to compare the risk between two or more investments
- Examines the changes in the risk-free rate that are not done by other risk-return ratios
- You can compare actual returns with those of a benchmarked index
- Sam Evans who is my COO is helping w/ The LongVol into 2025 so we’ll be bringing back a 3 and 12 month mentee program to learn to use the FOPT frameworks – many of what I talk about on this show.
- Great for you DIY folks – but even great just to learn
- Read that members article that was posted to the blog this week here.
Final Word.
- Issue 43 out Sunday (only 4 left for 2024)
- Using the Swing Monitor to Swing Trade w/ Sam Evans next Friday webinar make sure you get a spot here
- Still waiting until post election to do much – no rush here plenty of ideas coming and in the hopper
- Will be prepping for 2025 and on-boarding new partners for the firm
- Q&A for the week
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About the Author
Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital Management L.L.C., a multi-strategy investment management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.
He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.
