Private Trader - The skews, the bait, the switch

Educational only. This Market Log entry reflects the personal market views and interpretations of a private trader investing only their own capital. It is impersonal, does not consider your objectives, financial situation, or needs, and does not constitute financial advice, financial planning, portfolio management, or a recommendation or solicitation to buy or sell any security. All content is for educational and informational purposes only.

Date published: 2025-11-20

Alrighty, here we go!

The downward skew

Many weeks ago in previous posts, I stated I'm in the zone of crypto being a on downward/negative skew, and that I initiated a position within an ETF that focuses on this negative skew. Many weeks in, crypto has indeed gone down significantly (approx -30%) and I exited my ETF position a few days ago at profit.

The purpose here wasn't to bank profit, even though thats an ultimate goal, the purpose was to test an equation, an equation I never deployed onto the crypto-sphere. When I decided to exit, I felt that I've reached a point in the equation where holding longer could be detrimental, as it would mean inviting further unknowns and potential "shakes" that the equation was not ready to handle, for many reasons, but foremost, its reached the point of maximum validity where the highest percentage of a safe-exit-with-profit has occurred.

The position itself held low weight, purposefully so, and now having it closed, provided profit of low value, yet data of extremely high value. Data that is now used to further develop another equation, picking pieces of the decayed previous, and building anew onto the next.

What is this next?

Quite simply, GOLD.

Many weeks ago, I also shared that I was significantly invested into gold mining stocks, to the tune of approx 20% of my entire portfolio; and having had that investment skyrocket, decided to sell that entire portion to lock in my profits, as in my eyes, locking them in is the commission I charge using my realized-capital-efficiency approach; more on that in a bit.

I have now taken multiple ETF positions that are focused on the negative skew of GOLD, whereas I anticipate, contrary to popular belief, that GOLD is now embarking on a new journey, one that consolidates, slows-down, and begins to move in a negatively-skewed fashion. Now keep in mind, this is not some hunch, not some wild thought; rather, validated by my equations, research and so on. A multitude of variables and everything inbetween; this by no means is a guaranteed move, not in the slightest, and this is why I've only allocated a maximum of 5% of my entire portfolio weight to back this move. After all, nothing is ever guaranteed.

Mind you, I never short, nor do I play options, leverage or else, but purely purchase open-market publicly-available-shares, and in the case for my GOLD moves, are actually ETFs that focus on GOLDs negative-skew. Why? Because with this ETF, I still maintain downside control; theoretically, I determine if I want to be in the maximum -20% and sell, or -50% and sell, rather than a standard short position where my downside could be absolutely uncontrollable. And I always aim to maintain the maximum control possible throughout any investment/trade etc.

Realized Capital Efficiency (RCE)

RCE captures what was actually realized, not mark-to-market swings or simulated outcomes. It basically measures how efficiently capital compounded through closed-trades, net of fees, deposits and any withdrawals. To me, it provides the cleanest representation of execution skill over market noise.

2025 year-to-date, I've an RCE of: +22%...and counting

After hitting any +15% YTD RCE to any given year, I automatically switch to a higher defensive mode strategy, as is the case today, not only because of this, but also because the market warrants a significantly higher prudence to being extremely defensive. I do not for one second, believe that the market is a-ok, on the contrary, is increasingly flashing alarm bells, signals and whistles and even if one does not stand on that side, one must not ignore todays market conditions.

Too many unknowns are at play, and the market hates unknowns, even though it might not showcase it to the naked-eye, but it surely showcases it in other forms. One must search for them, and one must make a determination on what to do with them; both approaches of being invested or not make sense, the real question is, invested in what?

The Bait-and-Switch

I'm personally fully invested in the market as of today:

• 75% within highly-defensive equities
• 20% within US treasuries
• 5% within negatively-skewed-GOLD-ETFs

That said, my aim as of now is capital preservation, with every single equity I own generating some sort of dividend, and if a stock-market-hit-actually-occurs, I've not only limited my downside holding such defensive equities, but am still generating income through the use of these dividends.

We however, how no assurances on whether or not the dividends will cease to exist or be severely impaired due to any potential market-shock, however to me, those odds are extremely slim; not eliminated, yet slim.

Thus taking an approach where stocks are currently undergoing a bait-and-switch-approach, whereas some stocks on the surface are seemingly superb, while others are seemingly not-so-superb, and now, I'm positioned within multiple of these "not-so-superb" stocks, that on the surface don't look appealing, yet once the "hit" occurs, they'll be in the highly favored pile.

My position on this will not change for many months, currently, my timeframe is until Q1/Q2 2026 where I anticipate, according to my hypothesis/equations/etc, that the time for a new shift occurs. Keep in mind, the "radar" we all have must be on 24/7, 365 days of the year, as the market is highly organic, and one must parallel themselves to this if one is to make the most benefit; AKA profit, and maximum capital preservation. One must be able to shift their approach and never hold onto it for the sake of worrying about a change of stance/opinion etc. Aint got time for ego.

Your Equation

To determine the best approach, you must take your experience into account; all of it, wins, losses, time in market, trades in market, your "edge", your "non-ego" approach, your "gut", your "learning", and a million things inbetween.

It's never so pin-pointed to state them, as each of these provides your equation with a different weighted-scale. The more blunt you are to your equation, the more you understand how to distribute the "weights" within each variable, the better your equation delivers results.

Theres an infinite amount of inputs and variables, and you simply do not know what you do not know, so keep learning, keep an open mind, throw away any and all ego, and learn. Imitate, innovate and find your path. We all have an edge, some more-so than others, and theres not one person that has a single cell beyond what you already have within. Find it, nourish it and continue the build.

My equations took years to build and continue non-stop; only through immense hardships of destroying my entire portfolio to the tune of -40% from 2020-2022 to a now +10% total portfolio from 2022-2025 did I get to where I am today. There's no "I made it" no "lets party"; its a continuation to the next day, the next month, the next year, onwards and upwards is the name of the game.

Never give up and continue to learn, adapt and mold; the harder you fall or fell today, the stronger your learning tomorrow, and the more powerful the journey ahead.

Be overly defensive in times of today; peace out and till the next one!