HX Trader Position Update

We started our career as a professional investor thirty years ago. Across that time, we have developed strategies that can consistently generate returns across a stock market cycle.

We have also refined these strategies and learned how to adapt to the existing environment.

Our long-term hit rate in HX Trader is 75%. This means that three-quarters of our ideas have generated a profit.

We also have managed to outperform the S&P 500.

Importantly, in the terrible stock market year of 2022 we made a positive return with a 70%+ hit rate. This is with only long positions in a year where the stock market got hit hard.

One of the evolutions we have made is closing positions if we believe that the risk profile doesn’t look as attractive to the particular stock market environment.

We are recommending readers close two such positions today - software company Zscaler, Inc. (NASDAQ: ZS) and cosmetics retailer ULTA Beauty, Inc. (NASDAQ: ULTA).

Both companies that have great products, a long track record of successful execution and have been incredible stocks.

We recommended entering them as a trade once they stumbled. We believe they will recover across time.

Unfortunately, we believe the environment for both sectors - software and consumer - is at a point right now where it is an unfavorable risk/reward.

The shares of companies that beat are not well rewarded or go up for a brief period of time. Those that miss get destroyed.

This situation is not always the case and wasn’t necessarily true when we entered the positions. It is our view, though, that it IS the situation now.

As a result, we are going to adapt to our environment and close out both positions.

Again - we think the long-term future is bright for each company, but they no longer fit our risk/reward for HX Trader. We will realize the losses and move on.

We recommend selling shares of Zscaler, Inc. (NASDAQ: ZS) and ULTA Beauty, Inc. (NASDAQ: ULTA).