GM. This is Dumb Money, the only financial newsletter with a 100% loss rate.
Today was surgical. Not a bloodbath. More like three separate people walking into three separate walls at three separate speeds.
A streaming stock options play. A gold futures bet against the entire safe-haven trade. And a forex position that lasted shorter than a lunch break.
Here's what we've got today:
🏆 320 Disney call contracts vs. one Wall Street Journal headline. The calls lost.
📉 Gold futures short during a geopolitical crisis. Bold strategy.
⚡ 45x long NZD/USD. Liquidated before the Fed minutes finished being read.
📊 The data on today's carnage. It is worse than you think.
|
|||||
| TODAY'S DAMAGE REPORT 📊 | |||||
|
|||||
|
A new type of AI called "Accelerated AI" is about to take the world by storm…
And stocks connected to it are already breaking out: 133%… 210%… and even 320% or more just in the last few months.
But it's just getting started…
If you want to learn more about "Accelerated AI" – and get name and ticker of the #1 pick to play this opportunity…
LOSS OF THE DAY 🏆
Every day we crown one person who made the worst financial decision on the internet.
Today's winner didn't blow up on a memecoin. Didn't get rugged. He bought Disney calls. That's almost worse.
Here's the setup. Disney posted a solid Q3 beat in August. Revenue up. Subscribers growing. Stock at $110.
Our guy bought 320 DIS $115 November calls at $4.475 each. $143,200 in premium.
For two weeks the trade looked fine. Theta was chewing, but the thesis was intact.
Then October 1. The Wall Street Journal reported Disney is merging its television divisions. Hundreds of layoffs. Stock dropped 3.4% to $101.33.
His $115 calls went from $4.475 to $0.12. A 97% loss on $143,200 in premium.
He is still holding. Calls expire November 21. The stock needs to rally 14% just for the calls to be worth anything at expiration-and even more to break even on the premium he paid. In a market where the Fed just hiked rates for the first time in three years.
Brother. Fewer employees does not mean higher stock prices by next month. The premium is gone. The layoffs are real.
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
TOTAL RETURN -$139,360.00 ▼ $143,200.00 (-97.32%) All Time 1D 1W 1M 3M ALL | ||||||||||||||||||||||||
|
"DIS calls down 97%. The restructuring is bullish." Loaded 320 DIS $115 Nov calls at $4.475 after the Q3 beat. Stock was $110. Then the WSJ TV division merger story dropped. Stock went to $101. Calls went to $0.12. My thesis hasn't changed. This is a buying opportunity. Top comment: "The thesis changed when the stock fell 8%. You just didn't update it."
|
| Quick math on out-of-the-money calls for non-options people: When a stock drops below the strike price, the call loses value fast. A $115 call on a $101 stock needs a 14% rally just to be worth anything at expiration. With the Fed hiking and five weeks left, that is not a thesis. It is a prayer. |
| 💀 |
TODAY'S CASUALTIES 💀
Not everybody can be Loss of the Day. But these two gave it a real shot.
Let's run through the tape.
Casualty #1: The Gold Contrarian
There are two types of traders. Those who trade with the trend. And those who short gold during a geopolitical crisis.
This guy was type two. He shorted 8 gold futures contracts at $2,580 per ounce. His thesis: gold was "overextended" and "due for a pullback."
One problem: the entire world was buying gold. Brent crude above $101. Iran tensions escalating. Every institutional desk on the planet adding gold as a hedge.
Gold didn't pull back. It rallied to $2,658.
That's a $78 move against him on 8 contracts. $62,400 in losses before he could blink.
He got margin called Tuesday afternoon. His broker closed the position for him. Gold is down 3% this year. The dust is not settling.
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
DAY P&L -$62,400.00 ▼ MARGIN CALL ISSUED 14:22 ET 1H 4H 1D 1W ALL | ||||||||||||||||||||||||
|
"Shorted gold at $2,580. AMA about what it feels like to fight the entire market." Gold was overextended after its recent rally. Shorted 8 contracts. Gold went to $2,658 instead. Broker margin called me at 2:22 PM Tuesday. Didn't even get to close it myself. Top comment: "You shorted the safe haven during the war. What was plan B?"
|
Casualty #2: The FOMC Minutes Speculator
The Fed released the minutes of its September meeting on Wednesday at 2:00 PM ET. Our guy had a plan.
His plan: the minutes would reveal internal dissent. Doves would push back. The dollar would weaken. The New Zealand dollar would rally.
He went 45x long NZD/USD at 0.5715.
The minutes dropped. No dissent. Several officials discussed the need for further tightening. The dollar strengthened across the board.
NZD/USD dropped from 0.5715 to 0.5588. A 2.2% move. Exactly enough.
Liquidated in 34 minutes. $29,400 gone.
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
POSITION VALUE -$29,400.00 ▼ LIQUIDATED - 34 MIN HELD 15M 1H 4H 1D ALL | ||||||||||||||||||||||||
|
| Quick math on 45x leverage for non-forex people: At 45x, you control $1,323,000 worth of currency with $29,400 of your own money. A 2.2% move wipes you out. NZD/USD moves 2% in a single session about once a month. He needed it to not do that. It did that. |
He is now on a forex forum explaining that the Fed "mistimed the hike cycle." The Fed did not mistime anything. That is not a thesis. That is a coin flip with extra steps.
| 💸 |
TODAY BY THE NUMBERS 📊
We track the data because the data is funnier than anything we could make up.
|
|
||
|
|
The pattern holds: the word "thesis" appeared in every loss post today. The word "stop loss" appeared in none of them.
We've been tracking it all month. Ninety-four percent of five-figure loss posts include the word "thesis." Six percent include the phrase "risk management." The data is not subtle.
See you tomorrow. The numbers will be different. The behavior won't be.
| 📊 |
