Russian Roulette

The small print: this newsletter is mostly stories, pop-psychology, and half-baked trading ideas. This is NOT financial advice. Best to think of this as a community of like-minded gamblers. If you are having a punt, make sure you restrict your trade size to whatever change you can find down the back of the couch.

In 1976, Finnish performer Aimo Leikas went on stage, put a gun to his head, and pulled the trigger.

Russian roulette was part of his act. And the shot was supposed to be a blank.

But it wasn’t. It was a live round.

Aimo Leikas died at the age of 29.

How did this stunt go so wrong?

Leikas was a talented acrobat and illusionist. He’d built a career around dangerous feats: hangings, guillotines, escapes.

And in 1976, he decided to add Russian roulette to his act.

It was terrifyingly simple: some rounds were live, and some were blank. Leikas had to figure out which were which.

For months, the trick worked. Audiences loved it.

Until finally, something went wrong. And Leikas was killed.

Obviously the stunt was dangerous. But for a few months, because the results were okay, it seemed fine. I guess it was fine. Until it wasn’t.

This kind of thinking affects our trading and investing as well.

Now, granted, the stakes are slightly lower when we’re trading. And we don’t want to sound too much like a LinkedIn post (“here’s what a Russian roulette accident means for your portfolio”), but… eh….

Here’s what a Russian roulette accident means for your portfolio…

Outcome Bias is our tendency to judge a decision by its result, instead of by the quality of the decision-making process.

If something works, we assume it was smart.

If something fails, we assume it was stupid.

This is a very human thing to do. But when you’re trading, it’s also a dangerous thing to do.

Let’s say you buy short-dated calls on a stock you don’t fully understand. The company beats earnings. The stock gaps up. You 3x your money.

Result? Great.

Process? Pretty bad.

But because the result was good, your brain tells you it might be a repeatable trading strategy.

That’s what makes the Aimo Leikas story so relatable. For months, the stunt “worked”. But the acceptable outcomes were hiding a dangerous process.

The reverse effect is even worse:

You can research properly, size sensibly, but still lose money because of market manipulation or a stray headline. Your perfect thesis, undone.

Bad result. But good process.

That’s the problem with Outcome Bias - it teaches us the wrong lessons. It can make us abandon good trading strategies, or lead us into a false sense of competence.

Nobody likes the fix for this, but it really does work: keep a trading journal.

That way you can go back and see if you made the best decision with the information you had at the time.

Well, it seems the US and Iran have made a deal to make a deal. Again.

So oil is down. Dollar’s down. And some risk-on assets are waking up.

It’s an interesting setup…

Samba Trading

Last year, we got exposure to Brazilian equities by buying EWZ.

The thesis at the time was that Brazil was unloved, the dollar was weakening, and the 2026 election might not go Lula’s way.

The trade worked.

And now, we’re gonna run it again.

Is this Outcome Bias, or is it genius? As always here at Market PSYOPs, we’ll find out the hard way…

iShares MSCI Brazil ETF (NYSE: EWZ)

There’s a couple reasons our thesis here hasn’t changed much since we last held EWZ:

But if money starts rotating towards non-US, real-economy assets, then Brazil might be well positioned.

There’s plenty of risk here: a hawkish Fed (FOMC meeting later today), sticky inflation, election noise...

But Colombia just showed what can happen when LatAm election odds start shifting. Brazil hasn’t had that moment yet. But if it does, EWZ could move fast.

I’m buying: EWZ outright.

For anyone who wants unnecessary stress in their lives, maybe EWZ October / November calls are for you.

There’s psychological traps everywhere in life. They shape how we think, how we make decisions, and spend money.

But let’s keep the word count low - let’s gamify this:

💲💲Let’s say you identify a company which seems undervalued. So you buy.

Then, for six months, the stock goes sideways and down. You live through an earnings scare, some FUD, and check your brokerage account about 80 times a day.

But finally, the stock rallies. You’re up 25%.

The answer - and the psychology behind it - will be revealed in the next edition.

Last Week’s Answer:

If you’re no rare earths expert, but you made some money on short-dated calls on a rare earth stock…. you should probably take the win and thank the market gods. Thinking you can now profit from every rare earth stock is a shining example of Outcome Bias. Just because the result was good, doesn’t mean the trading strategy was.