Modern Investing Techniques — Episode 10

Wednesday, halfway through the trading week. Welcome back to Modern Investing Techniques, Episode ten. I’m Patrick, coming to you from Vancouver. Today is April first, 2026. We’re right in the heart of the trading week, which makes this the perfect moment to reassess the positions we opened on Monday, scan the fresh market action, and look for new tactical setups that can give us an edge over simple index holding. Before we dive in, the standard but important reminder: everything we discuss on this show is strictly for educational and entertainment purposes. The Practice Investment of the Day uses completely simulated trades with no real money at risk. I am not a licensed financial advisor, and nothing you hear here constitutes financial advice, investment recommendations, or a solicitation to buy or sell any security. Always do your own thorough research and consult a qualified financial advisor before putting any of your hard-earned capital to work. Past performance is never a guarantee of future results. Let’s start with the big picture. World stocks are rocketing higher this morning on growing optimism that the Iran conflict could be heading toward a rapid conclusion. That hope has sent S&P 500 futures surging as much as 2.9 percent in early trading. Looking at the actual levels, the S&P 500 is currently trading at six thousand five hundred twenty-nine, up a very healthy 2.9 percent on the day. The NASDAQ Composite is performing even stronger, sitting at twenty-one thousand five hundred ninety-one, higher by 3.8 percent. Here at home, the T S X Composite closed at thirty-two thousand seven hundred sixty-eight, posting a solid 2.6 percent gain. The primary catalyst behind this impressive move is clear: investors are breathing a collective sigh of relief as credible signs emerge that the Iran war may de-escalate sooner than many feared just days ago. That easing of geopolitical tension is quickly removing the energy-price premium that had been weighing on global equities for the past couple of weeks. What’s particularly interesting is how this geopolitical relief is completely overpowering some of the other mixed signals we saw earlier in the week. Bank of America’s S&P 500 sentiment indicator dipped into more pessimistic territory, and European growth and inflation revisions came in mixed. Yet the market has chosen to focus almost entirely on the potential end to the Middle East conflict. For Canadian investors, this environment creates several important things to watch. First, any ripple effects from the upcoming Bank of Canada rate decision could interact with this relief rally in unexpected ways. Second, we’re seeing clear sector rotations developing in both T F S A and R R S P accounts, particularly in energy and defense names. These rotations are exactly the kind of tactical opportunities we love to break down on this show. With this kind of rapid repricing underway, today feels like the right moment to dig deeper into exactly how to position yourself for these geopolitical relief rallies without getting caught in false signals or buying the top of a short-lived move. The strategy I call “Geopolitical Relief Rally Positioning” is a short-to-medium-term tactical approach designed to capture the sharp equity rebounds that frequently follow credible signs of de-escalation in major international conflicts. We’ve seen this pattern repeat itself multiple times over the past decade, and today’s premarket surge on Iran hopes is a textbook example of why the framework matters. Here’s what typically happens: when a major conflict pushes energy prices and uncertainty higher, investors sell off risk assets aggressively, creating an uncertainty premium in valuations. Once credible headlines suggest the conflict may be ending, that premium shrinks rapidly and risk assets reprice in a compressed time frame — often within the first five to ten trading days. The practical way to implement this is to identify the sectors that sold off the hardest during the height of the fear. In the current environment, those sectors include energy, defense, and certain industrials that are sensitive to both oil prices and global supply-chain stability. The tactic is to rotate into those beaten-down areas on confirmed positive catalysts while simultaneously trimming positions in pure defensive sectors that had been benefiting from the fear trade. Execution is straightforward on modern Canadian platforms like Questrade or Interactive Brokers. I like to screen for names that showed the largest negative beta to oil-price spikes over the prior thirty days. On the relief day itself, I look for volume that is at least 1.5 times the twenty-day average — that confirms real conviction behind the move rather than low-volume noise. Position sizing is critical here. I never put more than three to five percent of total portfolio equity into any single relief-rally name. I also set a relatively tight stop — typically five to seven percent below the relief-day low — because these moves can reverse quickly if the hoped-for de-escalation falls apart. Historically, this approach delivered average gains of four to twelve percent in the sampled episodes following the 2022 and two thousand nineteen to two thousand twenty flare-ups, but it does carry the obvious risk of false signals if fighting resumes. The key discipline is to treat the entire move as a tactical trade, not a fundamental rewrite of the long-term outlook. Once the initial relief impulse starts to fade and volume normalizes, it’s time to take profits and move on. Mastering this requires a solid understanding of how liquidity behaves in fast-moving geopolitical markets — which leads us directly into today’s practical lesson on trading costs during these volatile events. Let me paint a very realistic picture. Imagine you decided to buy five hundred shares of an energy E T F last week when oil prices spiked on the initial Iran headlines. Your market order filled at forty-eight dollars and seventy-five cents, yet the E T F’s official last traded price at that exact moment showed only forty-eight dollars and forty cents. What happened? The bid-ask spread had blown out dramatically — from a normal three cents on quiet days all the way to twenty-eight cents in the first fifteen minutes of heavy news flow. Your order essentially walked the book, paying up for liquidity that had temporarily disappeared as market makers widened spreads to protect themselves. In today’s environment, we saw the average energy-sector E T F spread widen to 0.42 percent of price during the heaviest war-news hours, compared with just 0.09 percent on normal trading days. That 0.33 percent slippage on a ten-thousand-dollar trade equals thirty-three dollars evaporated instantly. On a round-trip trade, that hidden cost doubles. Professional traders always check the Level two tape or the E T F’s intraday indicative value before hitting market orders during geopolitical spikes. The biggest mistake I see retail investors make is treating all market orders as equal regardless of the volatility regime they’re operating in. Instead, during these fast markets, I strongly recommend using limit orders placed within five to ten cents of the current national best bid or offer. On platforms that offer them, volume-weighted average price (VWAP) or arrival-price algorithms can also dramatically improve execution quality. Once you truly understand how spreads and temporary liquidity evaporation work, what used to be a hidden cost becomes a manageable variable you can actually plan around. Now that we’ve covered how to protect ourselves on execution, let’s move to this week’s Practice Investment of the Day. Remember, this is a simulated trade for educational purposes only. No real money is being risked, and this is absolutely not financial advice. Our Practice Investment of the Day is a Weekly Hold on T S L A — Tesla Incorporated, listed on the NASDAQ. The strategy here is a contrarian fade of extremely negative analyst sentiment that built up during the recent price weakness. We’re essentially betting that once the broader geopolitical relief takes hold, we could see a meaningful rebound in the name. The specific catalyst we’re watching is a recent Seeking Alpha commentary that explicitly stated “this is not the right time to buy the dip.” In my experience, when respected but sometimes late-to-turn commentators reach that level of bearishness, it frequently marks an extreme sentiment point that precedes mean-reversion bounces — especially when a broader market catalyst like today’s relief rally appears. On the technical side, we’re looking for the stock to hold above its two-hundred-day moving average on the daily chart, with clear volume confirmation on any relief-rally days. Risk assessment includes the chance of renewed escalation in the Middle East or additional negative headlines that could drive the stock through recent swing lows. I’ve suggested an eight percent stop-loss below entry and a target range of four to nine percent upside by Friday’s close. My confidence level on this setup is Medium. We have two solid factors aligned — an extreme negative sentiment reading plus today’s broad market relief rally — but that is offset by the explicitly bearish article and the lack of any confirming earnings catalyst in the immediate future. This trade is a great teaching example of how to use contrarian signals from respected analyst commentary as a sentiment filter rather than treating it as gospel. I encourage all of you to start logging the exact headline tone on days when broad relief rallies appear and then track the subsequent five-day forward returns. Doing this consistently builds a repeatable edge in spotting when negative narratives become overcrowded. Even if this simulated position ends up losing money, the discipline of documenting sentiment extremes will sharpen your pattern recognition for future setups. That’s ultimately how you turn the market’s emotional swings into a personal edge. Yesterday we officially closed our previous Weekly Hold on So-Fi. That was a contrarian mean-reversion play based on elevated short interest against a fundamentally improving digital banking franchise. We entered at seventeen dollars and sixteen cents on Monday’s open and exited at fifteen dollars and eighty-seven cents on Friday’s close. The simulated position lost 7.49 percent, which equals a seventy-four dollars and ninety-one cents loss on a one-thousand-dollar simulated position. Our running total now sits at minus seventy-four dollars and ninety-one cents across two trades. Win rate is zero wins out of two total trades — zero percent. Current streak is one loss. The short-interest thesis simply didn’t overcome broader market pressure last week. This tells us we need tighter confirmation that actual short covering is beginning — things like rising borrow fees or meaningful volume spikes — before repeating this exact setup in the future. Losses like this one highlight the importance of waiting for at least two confirming technical signals rather than relying on a single crowded trade metric in isolation. That’s exactly how we improve the A I driven filters we use behind the scenes. Looking at our overall simulated portfolio performance: total trades stand at two. Win rate remains at zero percent with zero wins, one loss, and one breakeven trade. Cumulative profit and loss is minus seventy-four dollars and ninety-one cents. Average return per trade sits at minus 3.75 percent. Our best trade was flat at zero percent; our worst was down 7.49 percent. Current streak is one loss. Our A I analysis is actively learning from these patterns and adjusting the filters accordingly. Remember, this is all part of the learning journey. Even the best investors endure strings of losses while they refine their process. While we track the new T S L A position through the rest of the week, there are several other developments worth keeping on your radar. First, KKR is planning to take Japan’s Taiyo Private private in a three point two billion dollars deal. The fact that private equity firms are showing this level of interest in Japanese industrials at a 500 billion yen valuation signals continued strong appetite for quality Asian assets even amid global geopolitical uncertainty. Canadian investors should watch for similar take-private themes developing among T S X listed industrials — these can often create attractive liquidity events. Second, India’s I P O market continues to show remarkable resilience. Despite subdued broader equity sentiment globally, India posted its second-highest month ever for I P O filings in March. This underlying entrepreneurial optimism could eventually spill over into emerging-market E T F's held inside Canadian RRSPs and TFSAs. I’ll be monitoring for follow-through strength over the next thirty to sixty days. Third, Warren Buffett’s Berkshire Hathaway reportedly added to its cash holdings again this week. In an environment filled with geopolitical shocks and shifting growth forecasts, maintaining ten to fifteen percent cash inside a T F S A can give you valuable dry powder to deploy into relief rallies without being forced to sell other positions at inopportune times. Finally, the European Union is weighing new strategies to calm high energy prices tied to the latest Iran developments, including possibly reactivating post-2022 energy measures. This could create short-term volatility in both oil and utility names. Canadian investors with energy exposure should be prepared for possible policy-driven mean-reversion trades in the coming weeks. To stay on top of these fast-moving stories, having the right tools really does make all the difference. Two platforms I frequently recommend to serious Canadian and U.S. investors are the Bloomberg Terminal Lite and the Bloomberg Mobile App. These give you scaled-down but still powerful versions of Bloomberg’s legendary data feeds and can often be accessed through premium brokerage relationships or directly via the mobile application. The real edge comes from the real-time G E O and NI news filters that let you scan for Iran-related headlines while simultaneously seeing energy-price impact scores. I suggest setting custom alerts for phrases like “de-escalation” or “ceasefire talks” and pairing them with price alerts on key energy E T F's. Even the mobile version is sufficient for daily monitoring and can be had without paying for the full terminal cost. This tool effectively turns noisy geopolitical news into a sortable, quantifiable signal stream. Another practical option is the Seeking Alpha Sentiment and Article Alert System. The platform’s free and premium article feeds can be filtered by author rating and bullish or bearish tags. I like to create watchlist alerts for any new article on a held name that carries an explicitly negative headline within forty-eight hours of a broad market relief rally. This has historically been an effective way to flag potential short-term reversal points. Premium subscribers can set email or text alerts. The key is to use it to cross-reference your own thesis rather than treating it as a sole decision driver. Before we wrap up today’s episode, let me give you one thing to watch closely tomorrow: whether our simulated T S L A position can hold firmly above its two-hundred-day moving average as this relief rally continues to mature. That technical level will tell us a lot about whether the contrarian rebound has real legs. That’s your Modern Investing Techniques for today. Every single episode is designed to make you a sharper, more disciplined investor. If you’re finding value here, please subscribe, leave a review, and share the show with fellow investors who want to move beyond simple index-fund returns. We’ll be back tomorrow with fresh market intelligence and another practical lesson you can actually use with your own portfolio. CRITICAL FINANCIAL DISCLAIMER: This podcast is for EDUCATIONAL and ENTERTAINMENT purposes only. Nothing discussed constitutes financial advice, investment recommendations, or solicitations to buy or sell securities. The "Practice Investment of the Day" uses SIMULATED trades with NO real money — it is a learning exercise to demonstrate analytical techniques. Past performance does not predict future results. Markets involve risk of loss. Always do your own research and consult a licensed financial advisor before making investment decisions. The host and Nerra Network have no fiduciary relationship with listeners. This podcast is curated by Patrick but generated using AI voice synthesis of my voice using ElevenLabs. The primary reason to do this is I unfortunately don't have the time to be consistent with generating all the content and wanted to focus on creating consistent and regular episodes for all the themes that I enjoy and I hope others do as well.