Please remember that this newsletter is for entertainment and educational purposes only. I am not a financial advisor, and this is not financial advice. I'm just sharing my personal research, opinions, and what I'm doing in my own portfolio. Investing is risky, and you are solely responsible for your own decisions. Please do your own homework and consider speaking with a professional before making any moves with your money. I am not responsible for any of your gains or losses.

20 Oct 2025 5 min read

What I've Been Doing (1/n)

California courts and regulators doing their thing.

Well, one thing I've been doing is not writing articles for this site!

After the first two write-ups, I did exactly what I swore I would not do... go silent for two months. Oops. We went on a family trip for a few weeks, then I spent a bit over a month interviewing for jobs. Have that squared away, so now back to regular programming.

One thing I need to do is lower the bar a bit for myself. In that two month hiatus I started half a dozen articles and never published (or even finished) them because none of them felt punchy enough. So this post is going to be a bit more of a brain dump.

Reading

A nice thing about traveling is I often get an excuse to read for extended periods. Lounges, planes, being awake at 2am due to jet lag. All good moments for a book.

I'll spare you the fiction, but two investing-related books I got into:

More Than A Numbers Game (A Brief History of Accounting) - This was a very well written book that motivates accounting (mostly financial accounting) using the historical narrative of its development. I wish I had found this book 10 years ago. Most of the accounting content is familiar, but the historical development is interesting and it made for a fluid/easy read, almost like a novel. Chapters 1-4, 10, and 11 would make for a good "intro to financial statements" mini-course, and would highly recommend to anyone new to financial statements. The last two chapters focus on the accounting games of the 1990s and early 2000s that led to a series of frauds (Enron, Worldcom, et al), which was interesting and reminded me of another book I love: Quality of Earnings
Hedge Fund Market Wizards - Everyone has probably heard of this book. To be honest, the title put me off for years, but I finally picked it up when I realized there was a chapter with Ed Thorp. That chapter was great, but nothing I hadn't already read in Fortune's Formula and A Man For All Markets. What stands out so far is actually in the first chapter, about a trader name Colm O'Shea. Mr. O'Shea talks about setting stops, and makes a very clear point: Most traders size the position, decide on the max pain (loss) they can stomach, then set the loss at that level. O'Shea argues this is stupid and backwards. Instead, one should set the loss at the point where it is clear the trade thesis is wrong, then figure out how much pain that will be, then size the position accordingly.

Stop Losses

Consider a hypothetical long gold trade (since that is hot at the moment). Gold has been ripping for two months. Day after day straight up. Even the bulls can't believe it. People are announcing shorts. Maybe you want to make the bet that things truly get insane so you want to go long. But you want a stop in case you're buying the top.

What most people do is to buy a gold position in some size. Maybe its 5% because that is the position you always buy. Then they say "I don't want to lose more than X%" and set the stop there. Maybe you don't want to risk more than 0.5% of your capital, so you set your stop 10% lower.

O'Shea points out that this is backwards. The market doesn't care what your pain threshold is. It's trading on fundamentals, or price levels, not on how much money you've made or lost. Also, a 10% stop on gold is probably too low. Gold tends to trend for many days, and it is likely to be clear the trend is over well before it hits a 10% drawdown.

Instead, he argues, one should start with deciding what price would indicate the trade is broken. Going back to your original thesis, the bet is just that momentum will continue longer than everyone expects. You don't have a fundamental view on gold (because there isn't really one... it's a pet rock). Gold has been green almost every day, and is moving 1-2% a day. Three or four down days probably means the momentum is broken, so set the stop 3-8% below the buy price.

Once you have a stop, you can size the position. If you want the max drawdown to be 0.5% of your total capital, then your position can be 6-16% with a 3-8% stop. You may decide to size smaller anyway, but at least your stop is in the right place.

I thought this is a great insight. I use stops mostly when I'm bottom-fishing. I usually set arbitrary 10% stops, but I'm also usually eyeing the chart, looking for new lower highs or higher lows to signal whether to bail or add, respectively. I should probably just set my stops around those levels, since those are the points I'm using to prove/disprove my hunch that a bottom has been found.

Stocks

Despite reassuring you that I'm not a trader, I have made a few trades lately that paid off.

Sable Offshore ($SOC) - I've been exposed to this battleground stock mostly via fintwit osmosis, and only really took an interest because I got annoyed with seeing it so much. The bull case never made sense to me at $30/sh, when I started looking, and the situation has a natural deadline due to the PIK debt, so I went short via January put options. Very small position (<50 bps), but doubled my money in about 30 days. Of course, sold too soon and missed another double and a bit. C'est la vie.
Gold ($GLD) - I've never owned gold before, and think it's a pet rock. But I couldn't help but notice it held up better, and rebounded more strongly, than the rest of the market during the Tariff Tantrum in April. Also, Trump's policy goal seems to be a weaker dollar, or did early in the year anyway. I bought some Jan 2027 calls on April 16th, and added in July when it looked like the chart was consolidating in a wedge (up to 50 bps position). Got lucky as things took off at the end of August and it paid off more quickly than expected. Shorter-dated calls would've paid off better, but still exited for +163%.
Ferrellgas ($FGPR and $FGPR.B) - This is a more long-term holding. I'm not going to write a full article on it, because Nat Stewart brought it to my attention via his excellent substack article: Left for dead to launchpad. I'd recommend you just read that. I accumulated the B shares (very slowly) in August and September between $135 and $145. If the thesis plays out, each B share will receive an ~$82 dividend and convert to five A shares by March 31, 2026. (If it takes longer, the conversion ratio goes up, and the employees own the A shares, so the company is incentivized to hit this deadline.)

FGPR has a pretty busted cap stack, but ample cash flow, and the core of the thesis is that they are going to use the latter to clean up the former. The company dropped a truckload of good news on October 15th with its pre-market earnings release. A ratings upgrade, refinanced the current debt on decent terms, and upsized the revolver. With the refi wall of worry removed and enough revolver capacity to cover the B share dividend/conversion, the thesis is majorly de-risked.

I tripled my position (buying A shares this time in the interest of speed) between Oct 15th and 17th. Post market on the 17th it announce the pricing for the refi, and so far this morning the stock has been off to the races.

You can find a more thorough treatment in Nat's detailed 10/17 update.

Well that ended up being longer than I expected, but in the interest of lowering the bar for myself and publishing more often, I'm just going to ship it. See you next week!