The landscape of day trading has changed a lot since the emergence of the coronavirus pandemic.
While the recent market crashes have been terrifying, but it’s not all bad news for traders. There are always opportunities in the market — it’s a matter of adapting your trading strategy. Right now, there are a lot of great trades around the coronavirus sector and sympathy plays.
But from a broader perspective, what are the ripple effects on the global economy?
In today’s episode, co-hosts Tim Bohen and Kim Ann Curtin talk with NYU professor and global macro portfolio manager Zack Michaelson. They discuss the macro effects of the virus and how it could affect traders.
Note: Where’s Stephen? Unfortunately, Stephen was exposed to someone who tested positive for coronavirus … He’s in self-quarantine! By all accounts, he’s doing well, but his at-home internet isn’t great, so he’s sitting this episode out.
About Zack Michaelson
Zack’s been a professor at NYU since 2008. He teaches about applications of neuroscience and complex systems research to finance. He’s also been a global macro portfolio manager for hedge funds at the Fortress Investment Group, Graham Capital Management, and FORT LP.
Zack’s a graduate of the Wharton School of Business, where he did doctoral work in physics, statistics, and systems engineering at Penn. He’s also a graduate of Harvard, where he studied neuroscience and behavior economics.
So yeah, he’s a smart guy and worth listening to.
The Current Situation
The episode begins with a conversation about how the novel coronavirus is affecting the economy in general. Then it segues into how it might affect traders.
Zack explains his point of view about the virus. According to Zack, It’s a “big issue” for the global economy, and he looks at how the virus has evolved and traveled to the U.S.
He considers the big picture — like the effects on other large economies and cultures and what could happen in our own country.
Don’t miss his educated thoughts on what we might be looking forward to in the near future…
What Should Day Traders Look For?
Kim wants to know what day traders should think about right now…
According to Zack, it’s not just about finding hot stocks and trading opportunities. Before that’s even possible, traders need to consider their mindset and mental well-being.
As he notes, “From the behavioral finance standpoint, it’s hard to disentangle your own personal life and feelings and what you want to happen from the trades you put on.”
Everyone experiences this phenomenon. The world is in a state of uncertainty right now, and things are confusing.
You likely have an opinion on the market, the stimulus package, or the country’s leadership…
These things can — and probably do — affect your trading. Simply acknowledging it is the first step. You may not be able to dismiss fears or thoughts about the future. But once you’re aware of them, you can try to figure out how to work with these feelings. It’s all about trading psychology!
Remember: the market doesn’t care what your feelings are. Or as Zack puts it, “Caution to the trader who trades based on feelings and emotions.”
A Macro Look at the Current World Situation
According to Zack, in the market, people are usually talking about earnings or valuation. He explains both in detail and offers a macro approach to both.
You’ll learn about some potential outcomes for company earnings. Zack introduces a bullish and bearish viewpoint and talks about short- and long-term effects of the recent market crashes and the coronavirus pandemic.
He also addresses what he believes is under-discussed — why earnings might not bounce back.
The group digs into the idea that GDP growth might not return to its previous level, and how that’s connected to things like corporate earnings.
Zack explains that while on many levels capitalism works, it can suffer during times of crisis. Learn what that means for traders … and so much more!
Got Something to Say?
Did this episode inspire questions, comments, or any other response? Hit us up!
If your question is chosen as an on-air topic, you could win a SteadyTrade mystery gift box. Leave a comment below or on YouTube!
Thanks for tuning in to the SteadyTrade podcast. Stay tuned for weekly episodes featuring the hottest topics for aspiring traders.
Love this episode? Please leave a review on iTunes.