"The War of Worry"
They say that the Market likes to climb a “Wall of Worry”.
There is a simple explanation as to why:
A visible risk will keep “worried” market participants out of the Market…
…and these “Panicans” will be forced to buy as the skies become clearer…
…which gets the Market to grind higher into this “Wall of Worry”.
It is why we often get a “Sell the News” event once there are no more bad news left, which is when the last “Panican” has bought back in.
Well, we should rename the current setup as the “War of Worry”.
Every announcement of a ceasefire adds +5% to the Market, whereas every resumption of War takes away -0.5% at best…
An actual Peace deal could be a “Sell the News” event (after all, this is the funniest outcome)…
…but we don’t have to “worry” about that, since Iran didn’t even show up to negotiate with us…
…which means there is only one “true tail risk hedge” to protect against the “War of Worry” dragging on:
Crude itself.
We detailed the trade in “8x-Bagger Tail Risk Hedge”, but it’s quite simple:
Unlike the classic case of the “Wall of Worry” where we are dealing with “paper” assets, the longer this “War of Worry” drags on the more the physical shortages will build up in the real world.
The Equity markets may not care, but the Oil price may eventually adjust, making it the only real tail risk hedge…
…now If we could also figure out how to power my car using “paper oil” …
Good luck out there!
🌳🙏
Disclaimer:
This isn’t financial advice. This is Parody. This is the equivalent of Monty Python for finance, but worse: This is the trading blog of a shrub. For all you know, I could be a 15-year old paper-trading out of my parents’ basement. Don’t be Stupid. Seriously. How many times do I have to repeat this …