While the financial press was writing ethics stories, the most consequential trader of our generation was repositioning. I caught it. Now you can too.
For three months I have been telling my Clear Alpha subscribers that the next great move in American markets would be a return to conviction trading. Last Thursday, the U.S. Office of Government Ethics validated me. I do not mean a little. I mean comprehensively. Last week’s filings showed somewhere between $220 million and $750 million of Q1 reallocation across more than 3,700 transactions, and the press has decided the story is the paperwork. The story is not the paperwork. The story is the thesis.
Take the Oracle position. The president was reportedly accumulating Oracle around the same time his administration was helping the company secure the deal to keep operating TikTok in the United States. The financial press wants you to call that a conflict. I call it skin in the game. A trader bought into a thesis he was simultaneously building. In my Lehman days, we had a saying about traders who did that. The saying was: those are the ones who make money.
The Framework On Conviction Trading
Before the usual watchdog groups start their usual reports, let me get out ahead of the framework. Donald Sherman at CREW has already, predictably, issued a statement about conflicts of interest, public trust, and the historic norm of presidents avoiding regulated-industry stocks. The historic norm was a norm built for presidents who did not understand markets. This president understands markets. He has built more than one hundred swimming pools. He has trademarked an airport. The norm assumed conflict. This president is generating alpha. Those are not the same activity.
The trades themselves tell the story. February 10, a one-to-five-million-dollar position in Nvidia. March 2, a comparable position in Apple. Boeing. Adobe. Procter and Gamble. This is a barbell. Defensive cash flow on one end, high-conviction technology on the other. Anybody with a terminal and a thesis can read it. Most people do not have a terminal and a thesis. Most people have a phone and a feeling.
What The Press Got Wrong
Some critics have observed that the OGE filings do not specify which accounts or personnel handled the trades. I view that as a feature. The best trades happen quietly. This is what desks do. When you are running institutional size, you do not advertise. You execute. The fact that the financial press cannot figure out who pressed the button is, frankly, the kind of detail that separates the analyst from the bystander.
My own Q1 was, candidly, a rebuilding period. Janet has been very supportive. The Clear Alpha model portfolio is down a touch year-to-date, but it is down for instructive reasons. The president’s portfolio teaches us where the model went wrong, which is the kind of educational value most newsletters do not provide. As I told my subscribers in last month’s note: when the principal is moving, the analyst is learning.
What we are watching is one of the great traders of our era executing in real time, and the financial press is too busy reading ethics filings to read the tape. Read the tape. I have. Janet asked me last night whether I had personally made any of these trades. I told her that is a question for someone who does not understand the difference between the analyst and the principal. She did not seem fully satisfied with that answer, but Janet is an orthodontist. She does not see what I see.
This is what conviction trading looks like when the trader has the courage to act on a thesis the rest of the market is still pricing. The watchdogs will keep watching. I will keep analyzing. But what do I know?
About the Author
