Erik Smolinski, a 33-year-old investor, has a keen interest in markets and has been actively trading since his teenage years in 2007. Despite starting with two negative years, he has consistently delivered impressive returns, with an average of 24.6% between 2018 and 2022, outperforming the S&P 500 index. His most remarkable year was 2023, where he achieved a return on invested capital of 243%.
Smolinski attributes his success to actively seeking distinct arbitrage opportunities in the market. He utilizes various resources such as thinkorswim, Financial Juice, Benzinga, and Barchart.com, along with his own dataset that he analyzes using Python.
His current market outlook revolves around anticipating a shift in the Federal Reserve's rate policy, which he believes will benefit small-cap stocks. Smolinski has positioned himself in small-cap leaders and holds long positions in iShares Russell 2000 ETF and iShares 20+ Year Treasury Bond ETF, while also trading a leveraged product called TQQQ.
His strategy involves a bullish options approach known as a covered strangle, focusing on potential appreciation as inflation cools and rates lower. Smolinski emphasizes the importance of understanding the risks involved in active trading and advises investors to be prepared for market fluctuations.
For those seeking a more passive investment approach, Smolinski recommends the iShares Russell 2000 ETF, providing exposure to a broad range of small-cap stocks. He suggests further enhancing this strategy by analyzing individual sectors within the Russell 2000 and identifying strong-performing sub-sectors for speculative allocations.
By 'stacking strengths,' investors can align their portfolios with sectors and sub-sectors showing positive momentum before delving into individual stock selection. Smolinski's approach aims to capitalize on market trends and maximize potential returns for investors willing to take a more hands-on approach.
