DONT TRADE FADE (EP 5): Barron's Takes the Lead

Summary

In this video, Jason Shapiro from Crowded Market Report revisits the 'Don't Trade Fade Series', examining various stock portfolios against the S&P 500. He notes that Dan Nathan's current trades are underperforming, with stocks like Nike and Walmart not working in his favor. The Baron's Round Table portfolio, comprised of top stock picks, has significantly underperformed the S&P 500, which is up nearly 12%. Other portfolios, including a random selection and one chosen by an AI (Chat GPT), also lag behind the S&P 500. Shapiro concludes that going against the consensus of these experts can be profitable, as evidenced by the long-short hedge fund Equity index outperforming by 10%. He encourages viewers to subscribe for more insights.

Takeaways

• 📈 The video discusses a series called 'Don't Trade Fade', which tracks the performance of various portfolios against the S&P 500.
• 👤 Jason Shapiro mentions Dan Nathan as a prominent trader known for his 'fade' strategies, but notes difficulties in tracking his trades due to lack of price details and delayed disclosures.
• 📉 Dan Nathan's current disclosed trades are mostly underperforming, with positions in Nike, XLE, XLK, USO, Tesla, and Walmart all showing losses over the last month.
• 🎯 The 'Baron's Round Table' portfolio, consisting of picks by top stock market experts, has underperformed the S&P 500, being up only 1.67% versus the S&P's nearly 12%.
• 🤔 The 'Consensus Spade' portfolio, derived from CNBC's end-of-year picks, has slightly outperformed the Baron's portfolio but still underperformed the S&P 500, returning 6%.
• 🔤 An alphabetically selected portfolio of the first 24 S&P 500 stocks has outperformed the expert picks but still underperformed the S&P 500, returning 2.79%.
• 🤖 The 'chat GDP chat GPT' portfolio, which randomly picked 24 stocks from the S&P 500, has performed better than the expert picks but still underperformed the S&P 500.
• 🚀 Nvidia was highlighted as a stock picked by chat GPT, which has done well, but even this best-performing portfolio did not outperform the S&P 500.
• 📊 The video concludes that going against the consensus of expert traders, or 'trading fade', has proven to be profitable, as demonstrated by the outperformance of the S&P 500 over the expert-selected portfolios.
• 📝 The speaker encourages viewers to check out 'crowdedmarketreport.com', sign up for their free Substack newsletter, and like the video if they found it enjoyable.

Q & A

What is the main theme of the video by Jason Shapiro?

The main theme of the video is the 'Don't Trade Fade Series' where Jason Shapiro reviews the performance of various stock portfolios relative to the S&P 500.

Who is Dan Nathan and what is his role in the video?

Dan Nathan is mentioned as one of the biggest Fades in the stock market, and Jason Shapiro discusses his trades and their current performance.

How has Nike performed in the last month according to Dan Nathan's disclosure?

According to Dan Nathan's disclosure, Nike has gone down by 2.5% in the last month.

What is the performance of the 'Baron's Round Table' portfolio compared to the S&P 500?

The 'Baron's Round Table' portfolio is up by 1.67% while the S&P 500 is up almost 12%, indicating that the portfolio has underperformed.

What is the 'Consensus Spade' and how has it performed?

The 'Consensus Spade' is a portfolio created from CNBC's end of year picks. It has performed slightly better than the 'Baron's Round Table', being up by 6% compared to the S&P 500's 12%.

How did the random portfolio of the first 24 stocks from the S&P 500 perform?

The random portfolio of the first 24 stocks from the S&P 500, taken alphabetically, has performed better than the expert picks but still underperformed the S&P 500, being up by 2.79%.

What is the performance of the 'Chat GPT' portfolio?

The 'Chat GPT' portfolio, which selected 24 stocks from the S&P 500, has done quite well but still underperformed the S&P 500 by a small margin.

Why did Jason Shapiro choose Nvidia as an example from the 'Chat GPT' portfolio?

Nvidia was chosen as an example because it was one of the stocks picked by 'Chat GPT', and it demonstrates that even the best portfolio in the comparison still underperformed the S&P 500.

What is the performance of Dan Nathan's trades mentioned in the video?

Dan Nathan's trades, as mentioned in the video, are all losing, with none of them working in his favor.

What is the final message or conclusion of the video?

The final message is that going opposite the consensus of these experts works, and it's a strategy that has been successful in various forms.

Outlines

00:00

📉 Stock Market Performance Review

In this segment, Jason Shapiro from crowdedmarketreport.com reviews the performance of various stock portfolios relative to the S&P 500. He begins by discussing Dan Nathan's trades, highlighting several positions that have not performed well in the last month, such as Nike, XLE, XLK, USO, and Tesla. Jason then moves on to analyze different portfolios, including The Baron's Round Table, which underperformed significantly with only a 1.67% gain compared to the S&P 500's 12%. He also covers the 'consensus Spade' portfolio, made up of CNBC's end-of-year picks, which has done slightly better with a 6% gain. Jason further discusses a random selection of the first 24 S&P 500 stocks alphabetically, which surprisingly outperformed the Baron experts' picks. Lastly, he mentions a portfolio created by an AI chatbot, which, despite being the best-performing of the non-expert portfolios, still underperformed the S&P 500. Jason concludes by emphasizing the point that following the consensus of experts can be a losing strategy.

05:00

📈 The Risks of Trading Against Expert Consensus

Jason Shapiro wraps up the video by reiterating the key takeaway: trading in the opposite direction of expert consensus can be profitable. He points out that the portfolio based on the best picks by the Barons, if shorted while being long on the S&P 500, would have resulted in a 10% gain for the year, which is essentially a market-neutral strategy. He encourages viewers to visit crowdedmarketreport.com for more insights, to sign up for their free Substack newsletter, and to like the video if they found it valuable. Jason ends by wishing everyone a good holiday weekend and promises to be back with more discussions soon.

Keywords

💡Don't trade fade Series

The 'Don't trade fade Series' refers to a concept where the video creator, Jason Shapiro, is exploring the idea of not following the fading strategy in trading, which typically involves betting against a trader's position. In the video's context, it's used to analyze various portfolios and their performance against the S&P 500, showing that going against the consensus of expert traders can be profitable.

💡Dan Nathan

Dan Nathan is mentioned as a significant figure in trading, particularly known for his fades. In the video, his current trades are reviewed, and it's noted that most of them are not performing well, which serves as an example of the potential pitfalls of following high-profile traders' positions without consideration.

💡Options trades

Options trades involve buying or selling contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price before a certain date. In the script, it's mentioned that Dan Nathan does a lot of options trades, but the lack of specific prices and delayed information makes it difficult to track his performance accurately.

💡Portfolios

A portfolio in the context of the video refers to a collection of financial assets such as stocks, bonds, or options that are managed together. Jason Shapiro discusses several portfolios, including those based on the picks of experts like Dan Nathan and others, to compare their performance against the S&P 500.

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It serves as a benchmark in the video to compare the performance of various portfolios and individual stock picks.

💡Underperform

To underperform means to produce a return that is lower than expected or in comparison to a benchmark. In the video, several portfolios and individual stock picks are said to underperform the S&P 500, indicating that they have not kept pace with the market's overall growth.

💡Consensus picks

Consensus picks refer to the choices that are widely agreed upon by a group of people, in this case, experts. The video discusses a portfolio made up of consensus picks from CNBC's end-of-year selections, which interestingly underperformed the S&P 500.

💡Risk-free

In finance, 'risk-free' typically refers to an investment that is expected to yield a certain return without the possibility of losing the principal. In the video, the term is used to describe a strategy where if one were long on the S&P 500 and short on the Baron's picks, they would have made a profit without taking on much market risk.

💡Chat GPT

Chat GPT seems to be a system or method used to select stocks, as mentioned in the video. It is highlighted as having picked Nvidia, which performed well, and its portfolio slightly underperformed the S&P 500 but outperformed the other portfolios discussed in the video.

💡Market neutral

A market-neutral strategy aims to achieve returns that are not directly affected by overall market conditions. In the script, the term is used to describe a situation where an investor could potentially profit from a market-neutral position by being long on the S&P 500 and shorting the Baron's picks.

💡Long short hedge fund

A long short hedge fund is an investment vehicle that takes both long and short positions in various assets. The video mentions the Long Short Equity Index, which is 100% long on the S&P and short on selected stocks, as an example of a strategy that has performed well in the year discussed.

Highlights

Introduction to the 'Don't Trade Fade' series by Jason Shapiro from Crowded Market Report.

Review of Dan Nathan's trades and their underperformance in comparison to the S&P 500.

Nike's stock performance being down 2.5% in the last month.

XLE and XLK's stock performance with July call spread and June put spread, respectively, both underperforming.

Uso's oil call spread performance, down 6.3% in the last month.

Tesla's stock increase and its put option not working as expected.

Walmart's stock surge post-earnings and the ineffective June put spread.

Introduction of The Baron's Round Table portfolio and its underperformance.

Comparison of The Baron's portfolio to the S&P 500's 12% increase.

The Consensus S&P trade's performance and its underperformance relative to the S&P 500.

Random alphabetical stock selection outperforming the expert picks.

Introduction of the Chat GPT portfolio and its relative performance to the S&P 500.

Nvidia's stock selection by Chat GPT and its impact on the portfolio's performance.

The Long Short Hedge Fund Equity Index's performance and its market neutrality.

The strategy of going opposite the consensus of experts and its effectiveness.

Invitation to check out Crowded Market Report and sign up for the free Substack.

Closing remarks and holiday weekend wishes.

Transcripts

[Music]

hello today's Sunday

May 26 2024 I'm Jason Shapiro with

crowded Market

report.com

um I thought this week I'd go back and

take a look at what we were doing

earlier in the year which we're calling

this don't trade fade Series where we

put together a bunch of portfolios to

track and see how they did relative the

S&P 500 um and I started with you know

Dan Nathan's trades where he gives his

disclosures because I think he's one of

the biggest Fades out there

um and got lost in a little bit because

he does a lot of options trades he

doesn't really give the price at which

they're done sometimes the trades are a

little delayed so got a little bit lost

in that wasn't able to track it uh

perfectly but I mean just as an example

you look at what he has on right now

according to his disclosure you know

long nike call

okay Nike in the last month is down 2

and a half% probably not working XLE

July call spread XLE is down 4 and a

half% in the last month probably not

working xlk June put spread xlk is up

7.7% in the last month probably not

working Uso which is also oil uh call

spread Uso down 6.3% in the last month

probably not working Tesla July I

put uh Tesla's up 6 and half% in the

last month probably not working Walmart

which he did right before the earnings

by the way June put spread Walmart's up

88.7% last month probably not working

okay so that's the general view of Dan

Nathan um to be a little bit more

specific on portfolios so we did a few

portfolios this one was The Baron's

Round Table okay we took all their picks

and we put an equal amount of dollars

into each one of their picks these are

the top of the top stock market picking

experts right and what they've done so

far this year as you can see um is this

portfolio is up

1.67% while the S&P is up you know

almost

12% and they have just underperformed

the whole way through right these are

the top experts according to bar right

that's that trade uh this I called the

consensus Spade which is what I took

from the CNBC end of year picks for the

year and I took the ones that I thought

were the most consensus by the people um

and this is how they have done they are

doing a little better they're up 6%

versus the S&P uh up about 12 so they've

gotten about half the S&P return um

completely underperformed on the way up

and the way down but um so they've

gotten half the S&P return so if you

were long S&P and short this on a dollar

equal basis uh you've made 6%

essentially

risk-free um

this is alphabetical so we just took the

first 24 stocks alphabetically to be as

random as we could that's clearly

underperformed as well um it's up 2.79%

which by the way is better than the

baron experts okay so just taking the

first 24 stocks on the S&P 500

alphabetically has beaten the experts in

barrass

um but still you know way underperformed

the S&P and then this was chat GDP chat

GPT okay we just said pick 24 stocks

from the S&P 500 and this one's done

quite well right uh under perform the

S&P by a little bit but has done better

than all the other portfolios just going

and and of course that's CU one of the

stocks they picked was Nvidia Nvidia and

we didn't give it any kind of thing we

just said pick 24 stocks watch chat GPT

would come up with Nvidia who knows but

even within its being the best portfolio

here um still underperform the S&P so I

think the point is made here Dan

Nathan's losing on every one of his

trades okay and that doesn't me include

declares he's closing he's probably

closed out a few winners but um he he's

closed out so many losers shorting SM SM

Mage buying puts on SM Mage all the time

you know

um but every one of these pfolio

underperformed and the interesting one

of course being the baron one

um has just gotten destroyed I mean

you're talking about it's it's 10% if

you bought the S&P 500 and shorted all

the picks by these Baron experts you're

up 10% essentially risk-free or at least

Market neutral right a market that's

beating okay the long

short um hedge fund Equity index which

isn't equally long short they're usually

you know leaning to the long side as

they should but they have shorts against

it this is

100% long $100 of S&P short $100

distributed equally among these 24

stocks that were the the best picks by

Barons and you're up 10% on the

year so this is the point don't trade

fade go opposite the consensus of these

experts it works okay in many different

forms all right that's about it thought

I pointed out hope you enjoyed check us

out on crowded marketreport

tocom um sign up for our free substack

and uh and please like the video if if

you enjoyed it thank you I hope

everybody has a good uh holiday weekend

and we'll talk again