Guide: A Short Guide on how to use my Equity Research in 2024
Short Instructional Guide for Members
Note: Our Community is adding new features. This note here below is a guide on how to make the most out of it.
Dear Folks -
I wanted to write a short guide on how to use my research when I mention stock-selection in 2024 in 3 simple steps for my Private Community.
Step 1: Always familiarize oneself with the company we’re discussing. I will do my best to provide context.
Time permitting, I will write an SA article on a name before making an official guidance opinion in our Community so that background knowledge is shared. If I cannot get in an SA Article in time of recommendation (due to fluid nature of markets, my time capacity, and SA’s publication review timelines), I will link to the latest Investor Presentation (or Equivalent Report) of the company and then write the SA Article afterwards.
Essentially, any stock that I guide upon going forward for members will have an associated SA article - only question is whether I am able to produce it before/after my Entry opinion due to time sensitive nature of markets.
Obviously, my top priority is evaluating best Entry Levels for members.
This here is a sample SA Article I wrote on JD for the public.
This JD Article happened to have price targets as I wanted to give a free idea to the public. And it wasn’t just JD, I also gave price targets on Miniso and Penn Entertainment.
Like I said, I pay it forward for good karma.
Going forward, specific price targets, upside/downside ranges and Execution is information that I will keep for members-only as I clearly distinguish what is public vs. private content.
My SA articles will focus on overall education on the business model and company updates.
My private content will focus on how to optimally Invest in/Trade the name.
Step 2: Look for language in my Daily Market Notes that discusses my lean/positioning opinions.
Sometimes, I have to use a bit of conditional language such as if I see X, I will do Y.
For instance, when I said once I see U-Shape structure in China EVs, that’s the entry. This highlights that I’m planning ahead of time with clear intent as price structure is forming, it’s close, but just a need to watch a few more sessions.
Remember, we have to be super patient. There is no rush.
Other times, I will be very direct and write like this below because constructive price structure has formed and it’s a green light based on my observation.
Markets are a very complex place, so I will use as precise language and word choice as I can that best reflects my state of mind at the time of the post.
The vehicle I discuss also implies my confidence level.
Sell Puts means I like the stock but my conviction level is 5-6/10
Direct shares means my conviction level is 7/10
Calls means mean my conviction level is 7+/10
Based on this framework, if a call goes against me, the fact that I’ve decided to be in the Call in the first place means that I am actively looking to buy the dip back up to break-even/profitability.
Step 3: Always Size carefully and conservatively. Hold and manage gains/losses on a subjective basis.
This is the subjective part, and my risk-management framework will be another written post that I write for Members.
Long-time members who have followed my work since 2022 have seen that I have gained a particular set of skills that I am now ready to share.
Throughout 2023, I was very big on Selling Puts, and I still am. However, recognizing that Selling Puts is a strategy that may not work for all account sizes, I have spent significant time to up-skill myself in learning Call Options of varying Durations and Strikes and their impacts.
My general framework is to Sell Puts first, and redirect profits from that high-probability income strategy into upside vehicles like owning the Stock directly (common shares) or buying Call Options when I believe the outlook merits this speculative position.
To manage expectations, understand that Calls can go to 0. In return for this risk, they can increase substantially in value.
When I do Calls, I always go for calls that are long-dated (60 days or longer) in nature. I will never guide on Calls with weekly expirations.
Notice that 60-90 days till expiration (or longer) aligns exactly to my intermediate-term timeframe. This is what I mean when I my edge is intermediate-term, my expirations reflect this!
The Upside Target that I often give for stocks IS the Strike Price Region.
So, for instance, when I say my research suggests JD may head to 30, then levels around 30 IS my Strike Price.
My Community has evolved from pure-play research in 2022 to integrate my research findings into practice with Selling Puts & Direct Shares in 2023 and now Call Buying (when appropriate).
I sincerely believe that mastering these 3 Powerful Skills (Sell Puts, Direct Shares, Call Buying) is more than enough to create an additional source of income in 2024. In fact, I view it as a lifetime skill that carries WITH you regardless of what the S&P 500 does.
Above all, I believe in simplicity over complexity as volatility returns in 2024. If one is trying to get best entry as possible, then rough, careful sizing, decisive is better than perfectionism and indecision. Time is a competitive advantage in markets, so I’d rather get an important Main Point (however brief) out than to flesh it in perfect detail but by then the opportunity has passed.
Other Notes:
Just a reminder that my Seeking Alpha articles are intended to be educational in nature and help readers understand the business model. They take considerable time to write so the expectation is that I can only write several articles per week.
I expect that within 4-6 months (by late Q2 2024), I will be able to have an equity research library assembled for about every Stock that I’ve ever referenced in our Community (and more).
This content takes a significant amount of time to produce.
In 2024, I will also involve my Community Members in voting Polls that ask them which companies/names/stocks/ETFs they wish to see published on Seeking Alpha to make members feel that their voice has a direct input on my publication content.
Because the up-keep of such equity research is extraordinarily time intensive, my follow-ups per name will be briefer in nature.
For members, I will provide direct input on Step 1 (Research) and Step 2 (Execution). For Step 3, this becomes a subjective and personal decision in terms of how much of a gain is enough or when to cut the loss.
I will write a risk-management guide on how I execute for Members in early 2024, but please remember that is simply my personal framework based on my own situation.
Cool? Let’s gear up for the New Year.
If you haven’t yet already, take advantage of our Community’s 25% special pricing heading into 2024 before it expires on January 1st.
Your support is seriously vital to our research efforts, so if my work has benefitted you, we want to scale the magnitude of the benefit to you as a Premium Member in making our efforts sustainable.
I am one of the few Strategists on all of Substack who cover China and the Hang Seng (H-Shares) in addition to U.S. Stocks. China/Hang Seng can absolutely add portfolio alpha as I’ve demonstrated on Twitter repeatedly and consistently. This sector has been detested by Investors, but that’s because they navigate it through an investment lens and not a deliberately designed trading lens.
Let yourself learn this sector’s unique characteristics as it provides another avenue for portfolio diversification in a very top-heavy S&P 500. In addition, given China’s volatile nature, implied volatility on its stocks are high, making Selling Puts on the sector’s names a particularly useful strategy which I provide guidance on.
Throughout 2024, there will be more innovation and up-skilling for our Community.
This is just the beginning. Lock in your low rates today as value-added content continues to rise.
Best Regards,
Larry
My opinion: If you can survive the Hang Seng, you can and will survive any major S&P 500 intense selloff.
Which by the way, I believe will return in 2024.
It is very unlikely that 2024 will be this easy for investors.
