Sometimes, trading demands putting your own views aside and going with the odds. For those whose experience is based on the Hollywood version of trading as epitomized in “The Big Short”, that may seem like a strange thing to say. Most movies based on trading are stories of a plucky individual, convinced that a big move is coming, defying the negativity of all around them who follow the conventional wisdom, and emerging victorious (and very rich) after getting to the brink of bankruptcy. What Hollywood doesn’t tell is the far more common story of a trader who, convinced that they are right and the thousands of other very smart people who make up the market are wrong, loses millions by running a loser into the ground.
Of course, both of those are extreme examples. A far more common conundrum is that which I face now. I am, like most people who are paying attention, worried about global growth and the trade war. But, worry or not, the fact is that U.S. stocks overall have proved remarkably resilient. There have been wobbles such as we saw last week, but the major indices are still very close to all-time highs. That means that, whatever your long-term view, market weakness brings short-term opportunities.
There is just such an opportunity right now in Petrobras (PBR).
Regular readers of my musings will know that PBR is a stock that I frequently use to trade in both directions. Its pricing is complex, being subject as it is to multiple…