The Evolution of Opportunity
In trading, name recognition can be misleading. Just because a company like American Airlines is a staple doesn’t mean it’s the best investment choice today. Markets shift as people change, technology advances, and businesses pivot, creating new landscapes of opportunity. Investing means staying in tune with these changes, repositioning funds not based on brand loyalty, but on where the best potential lies.
Narrative Follows Price Action
“Narrative follows price action” is a vital concept. A company’s story often evolves after the stock price moves, not before. It is human nature to want to see evidence to support beliefs. Many won’t believe until it’s smacking them in the face. It is also human nature to need a causal relationship for events. We are susceptible to far too many fallacies, biases, and heuristics that sometimes we just piece together a narrative based on what’s easily available, spoken by an “authority”, or cherry picking variables that confirms our own biases.
Take CrowdStrike or Palantir: both were overlooked and undervalued at lower price points, but once they gained momentum, they became the stock in that industry. People dismissed Palantir as a blackbox AI company, and CrowdStrike in the crowd of cybersecurity competition. Once price action broke out, the story transformed and suddenly, they were the future of enterprise AI. Investors loved them at $300 after they ignored them at $200. The story changed simply because the price action made them impossible to ignore.
Treat Each Year as a New Chapter
Every year brings new challenges and changes for companies. Just because a stock has seen highs in the past doesn’t mean it’s bound to revisit them. Repositioning means treating each year as a new chapter. No assumptions, just analysis. For every Apple or Tesla that sustains its growth, there’s an Intel or Beyond Meat stuck in yesterday’s hype. This perspective allows you to pivot, letting go of the companies that no longer meet your goals and reallocating to where the narrative might shift in your favor.
Repositioning: The Power of Alpha
Repositioning isn’t about abandoning the fundamentals. It’s about maximizing “alpha”, those high-potential moves with carefully managed risk. For instance, if a well-known stock like American Airlines isn’t outperforming or offering the dividends you’re looking for, why not move that capital to a company with higher growth potential and a similar risk profile? Not only does this keep your money working for you, but it also avoids emotional attachment to outdated narratives. The market may still “respect” names like American Airlines, but it’s often the fresh, growth-oriented plays that carry the real alpha with the highest potential for positive returns.
Disconnect from Nostalgia; Connect to Momentum
Investing is about future potential, not past glory. Think of your capital as a workforce: where can it generate the most returns? Opportunities are everywhere, but only if we’re open to moving away from brands that don’t drive our portfolios forward. Jeff Bezos, for example, has built Amazon into a company that many investors now see as recession-proof, thanks to its AWS, retail, and automation capabilities. But even Amazon might not always be the best play; in a fast-changing landscape, repositioning is key to staying ahead.
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Fundamentals tell you what. Technicals show you where and when. How do both fit into the larger context of the market? There is an importance here in really discerning the reasons why you like a company. What variables are most important for a specific company within the theme of the times? How about in different sectors? How to research - What to value - Thesis building - Monitoring - Reflection - Adapt.. Just as there are cycles in the market, our thesis and positions need to adapt and evolve to survive.
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Beyond the Headlines
Too often, traders stick with big names because it feels safe or familiar. But innovation, emerging technologies, and market trends don’t wait for nostalgia. Narrative follows price action. The story changes once the price moves, and that’s when everyone wants in. To succeed, get ahead of the narrative. Stay open to repositioning, know when to pivot, and seek opportunities that align with your goals, even if they’re not “household names.” The market’s direction isn’t dictated by past legends; it’s led by future potential. Every year is a new chapter, and if you’re ready, it can be your best one yet.
