President Trump teaches me the art of negotiation

Special Weekend Edition

I try to read at least one business book every week.

It keeps me sharp, plus I like reading and I’m really fast.

I just wrapped up Trump: The Art of the Deal. Regardless of your politics, this is a great book on negotiation. It’s mostly told through stories, so I felt like I was in a room listening to Trump share these fascinating stories about how he made deals happen in the 70s and 80s.

The principles of what he does are sprinkled throughout, and you can see that Trump negotiates the same way even today.

His most important aspect of deal-making?

Risk management.

Trump doesn’t get caught up in the hype of the potential profits (of course there have to be some potential profits for a deal to make sense), but he does hunt for opportunities that are on discount.

Everyone knows the adage “buy low, sell high,” but few actually keep their emotions in check long enough to actually do that.

Traders included.

Instead -- and I’ve been guilty of this myself -- we get caught up in the glamor of the potential profits and jump in high, hoping that it will soar higher. It’s better to patiently wait for the markets to show you a discount.

And that’s why I like selling Puts, because it forces me to make good selling decisions and enter a trade where I think a good discount might be had.

If you’re looking for a good read, I can recommend Trump’s flagship book ... after you finish today’s newsletter of course. 😉

Despite a mostly green opening on Friday morning and the overall bullish week, the markets finished down a smidgen. That’s not surprising considering that yesterday was Witching expiration and the markets tend to “unwind” positions then. A lot of money moves around when the monthly options expire.

Premium subscribers will get a look at the upcoming week later in this email. For now, know that I’ve also “unwound” myself from a lot of bullish positions and am sitting very cash rich (relative to my accounts sizes) going into Monday. If there are trades to be had on Monday, I will be jumping in (and sharing some of them with Premium subscribers for their own research).

We’re actually sitting on the exact same Fear and Greed index level as last week. I’ve been saying that the markets have steadily climbed the “wall of worry” higher, and this week was more of the same. 

Because we’re in “Extreme Greed” territory, many trading frameworks suggest keeping back at least 25% cash. Of course those frameworks are designed for more of the “buy-and-hold” investors and not the kind of trading that I do.

CNN Business

Financial Times

Why it matters…

For the foreseeable future, there’s two major market dramas that’s driving the news -- aside from individual stock news that will especially happen during the earnings season we are in. (1) The feud between the Fed chairman and President Trump. (2) Tariffs.

Both of them sort of boil down to a “will they / won’t they” when it comes to how they might affect the market. Will Trump fire Powell? Will Powell resign? When will the Fed lower rates? Will tariffs spell doom for the markets? Will the trade deals actually come through? ... 

You get it. 

Until some more compelling action is taken, my opinion remains that I think the Fed will wait to lower rates until September, Powell will remain chairman until his term is up, and that the markets will continue to shrug off the tariffs (at least for the month of July).

Real Trade Report:

4 trades for a total Return on Risk (ROR) of 2.26% (that’s 220.64% annualized, a weeeee bit crazy and not sustainable every week, but I’m not complaining.)

Sample Trade Ideas:

An average ROR of 1.24%, much more normal for my trading. And, yes, that 90.60% annualized ROR for my money IS a more normal return for my trading system.

To see the details of these trades & sample trade ideas, you’ll need to upgrade to Premium.

Because it’s Saturday, Premium subscribers also get the Special Weekend Edition, including: