Hello!
I'm glad to be writing for this exciting project! If you're reading this for the first time, welcome! If you were directed here from another one of my articles, skip down to "about my ratings."
About Me
I go by SteelAndQuill as a reference to the steel-tipped quill pen I use to write letters to friends and family. You could say it's my...pen name. Call me Steel. Finance and the markets are a passion for me, but far from my everyday life. Professionally, I hold a BS in Chemical Engineering and work as a nuclear engineer. My days are consumed by line charts, long reports, and tables of data, but of a much different flavor than what The Street deals in.
I started my career as a plant operator and instructor, then went on to take on my current field oversight role. It's a lot like regulation. In all those roles, I had to master complex systems and technologies, apply them properly in high-pressure situations, assimilate mass amounts of data, and then go on to teach those same skills, whether to my students in my instructor role, or to my peers as a mentor. Eventually, I would go on to teach key concepts at a higher level to senior executives.
In these articles, I'll seek to replicate the same approaches I used to teach complicated topics to those senior executives. At the end of every article, I'll give you key takeaways and a simplified description of what we covered. The idea is that after reading one of my articles, you would be able to go on and explain what you read to someone else in a simple way. (This was the way I learned the hardest things fastest. As the saying goes, "if you can't explain it to someone else, you don't understand it.")
About My Investing Style
Given what I do, I don't often have the time to watch the markets all day and make short-term trades. Because of that, I generally tend to invest long-only in three different accounts, with exit or rotation targets determined by each account's time horizon. When I do have time, you can find me trading short-term swing ideas with Brent.
Since my timelines far exceed that of your typical sell-side analyst, I study companies within the context of their industry trend, their role in the world, and their unique business relationships to divine their long-term prospects. Above all, I look for the core incentives driving the corporate leadership, its workforce, and its customers. I believe that conviction to hold a company through volatility and downturns only comes once you answer the ancient auditor's question: "Cui bono?"
Once I have that answer in hand, day-to-day movements matter little to me beyond triggering limit buys or guaranteeing that I collect profit from written options.
About My Ratings
Many are familiar with the Zacks ratings of Strong Sell, Sell, Hold, Buy, and Strong Buy. I won't rehash their explanations here, but I'll occasionally use them in my articles when appropriate.
Given that I'll rarely cover a single stock in isolation however, I consider using the Zacks rating system inappropriate for my articles, especially since I'll frequently zoom out to look at geopolitical factors, industry trends, and cross-sector interactions to inform my writing. As such, I've developed a view of some industries and sectors that goes beyond the short-term binary buy/sell, so these are the ratings you'll see me use more often:
Divest and Stay Away
Rotate (sector-only)
Allocate (sector-only)
Volatility Ahead
Hedge Down (Dump upcoming)
Hedge Up (Pump upcoming)
Scale In All-in
These ratings are specially intended for the longer-term horizons of buy-and-hold investors who don't frequently cycle in and out of stocks.
Within sectors, I'll also further categorize certain companies as Trend-Setting, Trend-Following, or Trend-Agnostic.
When I use these ratings, I'll point back to this article to explain. Here they are again, in detail:
Divest and Stay Away
There is a major threat to the company/industry leading to bankruptcy/delisting, or a combination of factors which make it likely your investment won't go anywhere for a very long time. Don't buy in. If you're in, sell out and don't look back.
Rotate (sector-only)
This is specific to sectors that experience seasonality or are experiencing a major shift relative to another specific industry. This rating means to shift your investment from one industry into another industry. Individual companies in the sector may be highlighted. (Example: a prolonged crash in metallurgical coal will have knock-on effects in steel)
Allocate (sector-only)
An event has occurred that beneficially affects most or all companies in a sector equally, such that it may not matter much which company in the sector you buy. Specific weightings for allocation may be suggested. (Example: a multinational mandate to adopt a minimum percent of wind power is enacted. As a result, copper miners experience outsized demand beyond the industry's production capacity)
Volatility Ahead
This one speaks for itself. Due to an upcoming event or unfolding series of events, the company and/or sector is expected to have dramatic price action, whether up, down, or oscillatory, but is overall expected to revert to the mean. I'll likely be unsure of what direction. This will be a short-lived opportunity when it happens. Set limit buys, limit sells, limit writes/buybacks for options, spreads, etc. to take advantage.
Hedge Down (Dump upcoming)
A sector or company is overbought or overextended, and is due for a large correction in the short term. Risks and triggering events will be outlined. Cash extraction, short calls, or stop-losses are recommended to hedge the holders, and limit buys and/or short puts are recommended for the opportunists.
Hedge Up (Pump upcoming)
A sector or company is oversold or beaten down, and is due for value recognition or popular discovery, so a short-lived pump is anticipated. Potential opportunities and their triggers will be suggested. Short puts, long calls, high-limit short calls, and/or take-profit limits are recommended for holders to profit from the pump, while opportunists will need to position for the move up and down.
Scale In
Slow, consistent growth is expected. Buy in and grow your position consistent with your income.
All-in
Sustained, rapid growth, or a permanent upward offset is expected soon, so buy in a significant amount now
Stock Info addition: Last but not least, if you are excited to learn more from Steel and the others make sure to subscribe to our substack and get our newest publications directly in your inbox!
Looking forward to the start of a good thing!