ruthless prioritization | Outlier Insights
Welcome to Outlier Insights!
Each week I work hard to gather and curate information for your convenience. There are two main topics to the newsletter:
Market Analysis is where I share 15 high summary points for the market from the week prior.
Erik’s Brainstorming is where I share a couple ideas to watch each week along with my perspectives; often market related, sometimes not.
If what I do helps you out, please consider either subscribing on Substack or joining the Patreon to support my work and join the Outlier Community! You can also simply share the content, which is a big help as well.
Be an Outlier!
-Erik
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1. Market Analysis.
Here is a summary of this week's market news in 15 bullet points:
Major Indices Post Gains: The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all finished the holiday-shortened trading week with gains.
Record Highs for S&P 500 and Nasdaq: Both the S&P 500 and the Nasdaq Composite closed at new all-time highs, continuing their upward momentum.
Strong June Jobs Report: The U.S. economy added 147,000 jobs in June, significantly exceeding economists' forecasts and signaling a resilient labor market.
Unemployment Rate Dips: The national unemployment rate edged down to 4.1%, its lowest level in several months.
Small-Cap Stocks Outperform: The Russell 2000, an index tracking small-capitalization stocks, surged, indicating a broadening of market participation beyond large-cap names.
Treasury Yields Rise on Jobs Data: The 10-year Treasury yield briefly rose to 4.35% following the strong employment report as expectations for an imminent Federal Reserve rate cut diminished.
U.S.-Vietnam Trade Deal Announced: The White House announced a new trade agreement with Vietnam, which includes the lowering of tariffs and was positively received by the market.
Services Sector Rebounds: The ISM Services Purchasing Managers' Index (PMI) showed a return to expansionary territory in June after a brief contraction in May.
Manufacturing Sector Still in Contraction: The ISM Manufacturing PMI for June, while showing a slight improvement from the previous month, remained in contraction territory for the fourth consecutive month.
Nike and Tesla See Stock Gains: Shares of Nike rallied on the back of the Vietnam trade deal, and Tesla's stock rose following its latest vehicle delivery update.
Crude Oil Prices Fluctuate: Crude oil prices experienced some volatility but ended the week with modest changes.
Gold Prices Show Modest Gains: The price of gold saw a slight increase over the week, influenced by movements in the U.S. dollar and Treasury yields.
Quiet Trading Sessions Mid-Week: Trading volumes were notably lighter during the middle of the week leading into the Independence Day holiday.
Second Quarter Earnings Season on the Horizon: Investors are now looking ahead to the start of the Q2 earnings season, which is expected to provide further insight into corporate health.
Geopolitical Tensions Remain a Watchpoint: While the Vietnam trade deal was a positive development, broader geopolitical uncertainties continue to be a factor for investors.
Economic Events for Next Week.
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2. Erik’s Brainstorming.
Options trading goes pretty deep, like any field. I’ve always sought to prioritize the must know from the nice to know. While I am the kind of person to seek comprehensive knowledge of something I’m interested in, I still found it important to prioritize.
This lends to the importance of planning and creating structure in what you do as a trader. By reverse engineering your goals, overlaying your bandwidth, risk tolerance, etc you naturally back into strategy choices.
Your job as a trader is to create the clarity you need to make good decisions and prioritize well. If you work a full time job, have a family, and play a sport - you likely are strapped for time. This scenario would necessitate a different approach than when I started trading where I had an abundance of time.
For the time compressed, you want to implement the Pareto principle where possible. In reality, this is dollar cost averaging into an index etf. It’s timeless and provides the majority of returns with the least amount of effort.
Yet, even if DCAing is your choice, there still is value in exploring your capabilities in the trading arena. While you won’t know your true skill until at least 3 years in, you will learn a lot about yourself and decision making.
For those that find a natural inclination or interest, trading offers a truly uncapped upside potential. If you choose to maximize returns, balance returns and portfolio volatility, or prioritize creating a stable income - the routes are available to you.
Yet, if you choose to go down the rabbit hole, you need to define these things at least loosely. The way I would approach trading in the three scenarios above would vary widely. If you want to strike the balance of creating a positive financial impact for yourself and doing so earlier than standard retirement age, you need to prioritize.
To prioritize you need to plan and define. For me, it was choosing to specialize in trading derivatives. I opted for the comprehensive route because I had time and interest.
Your task for this week is to take a good look at what you want to accomplish. Quantify things. Then work backwards from there to brainstorm how you can achieve your goals and prioritize.
Be an Outlier
Erik
DISCLAIMER:
The content presented is for informational purposes only and any opinions, news, research, analyses, or other information contained are provided as general market commentary and do not constitute investment advice. Outlier Trading, its affiliates, and employees are not responsible for any investment decisions made based on the information presented. We do not guarantee the accuracy, completeness, or reliability of any information presented and are not liable for any losses or damages arising from the use of or reliance on this information. By accessing this content, you acknowledge and agree to these disclosures and terms of use.