Thread by @DougKass

@realmoney

Jun 29, 2020 | 03:20 PM EDT DOUG KASS
Navigating the Noise
* How to capitalize on the market without memory from day to day?
* Read Rich Bernstein's 'Navigating the Noise: Investing in the New Age of Media and Hype'
* I used today's strength to expand my short

exposure
In the market without memory from day to day, the daily "noise" is deafening - but it is full of sound and fury signifying very little.
Commentators will often and authoritatively give a confident view on the reasons for the day's movements. (That is a load of B.S. as

daily moves are predominantly random noise). Stick with those that provide rigorous analysis and that remain consistent in view while others are losing their heads and responding to the day's fluctuations.
How do I try to capitalize on the "noise" and the heightened regime of

volatility?
Establish A Market View: I possess a negative perspective, strong days like this, much like the recovery in stocks in the middle of last week, provides me with a shorting opportunity - which I have taken advantage of this afternoon. However, on days like Friday,

characterized by a steep market swoon, I do not press my shorts on weakness - as better entry points - and better reward vs. risk - almost inevitably lie ahead.
Develop a Sense of "Fair Market Value": I live at 2750 based on the probabilities associated to five scenarios. Abrupt

and large moves change the upside reward vs. downside risk. Respond to changing values. I often trade around core positions if individual stock moves are meaningful.
Always Reevaluate the Assumptions Underlying "Fair Market Value": When the fundamentals change, we must change.

Develop a Sense of the Trading Range: In addition to this calculus (I am 2500-3100 on the S&P Index) - buy the lower end of the range, sell the upper end of the range - I often ask myself what is the primary short and intermediate trend in the markets. That is helpful to me in

placing individual orders in a wide range bound market.
Be Emotionless: If one is negative, when stocks ramp - sell and/or expand short positions. If one is positive, when stocks fall - buy and expand long positions.
Read Richard Bernstein's Navigating the Noise- Investing in the

New Age of Media and Hype
Rich's book deals with differentiating useful from useless information.
Apropos to this column, and in light of today's "noise", I am ending the day with a larger net short exposure than I started the day. @tomkeene @FerroTV @cnbcfastmoney @SquawkCNBC

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