Michael Michaud

The Short Case for Nustar Energy

Closed NS Sell Position last week with small profit. Off to the next low-risk high-reward trade opportunity.

The Short Case for Nustar Energy

The reason why we are shorting Nustar is our low-risk high-reward auto-trade trading model placed the trade. Short, intermediate, and long term there are trade opportunities long and short even on the same stock. We take advantage of the low-risk high-reward trades in the markets. If you want to be a long term investor in Nustar, to protect your long position, you might want to hedge it by shorting it, or selling calls or buying puts on it from time to time. This will put the risk reward ratio in your favor. Of course you would want a disciplined trade plan to execute positions like this to always have low-risk high-reward investing trading in your favor.

Knowledge > Goals > Plan > Action > Success

The Short Case for Nustar Energy

Very interesting and notable comment above about why we would go short on Nustar days before the ex-dividend that just hit yesterday Feb 3. Lots of reasons actually.

Main Answer: The news is already baked into the cake, and buying stocks for just the dividend play is not that great a way to earn money from stocks in our opinion especially in this current market.

Is investing in dividends theme is a strategy of last resort to somehow justify that its time to buy stocks for whatever reason?

Buying just for the dividend? What happens if the stock tanks more than the dividend?

We are expecting stocks to take another big hit to the downside anytime now. After that, we might consider buying into a dividend buy theme. The worst is yet to come right now, and just because stocks have been and are oversold relative to recent history does not make them a buy right now. Sentiment, fear, greed drive people to buy and sell stocks no matter who they are. The fundamentals don't work when the trend is your friend, whether to the upside or the downside.

Currently we are sitting on a 3.5% profit shorting NS. We shall see if we are rewarded with more or not. We saw this trade as a short-term low-risk high-reward position and so far we've been proven right. If we are wrong later on, we take small stop-loss and move on to the next buy or sell opportunity.

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