I initiated defensive action in client accounts today with a small purchase. You can read about the trade and my reasoning as to why I believe the odds that a bear market has started have increased. A few pictures from Kauai last week.
I’ve had a lot going on lately. I have resigned from AdvisorShares (I will have more on that soon) but have still been doing a lot of writing at TheMaven. Some of my recent posts include; A humorous take on hedge funds. A new look at the permanent portfolio. Whether UBI is insane or brilliant. Currently we are in Kauai doing some hiking, having a tough time finding beaches (the ones we usually go to here have been rendered unsafe for now due to the floods in Hanalei). But in the meantime here are some pictures from the hikes we have done so far, some of the scenery and of course a fire truck. From Sleeping Giant Trail that starts out in Kapa’a Awa’awapuhi Trail lookout in Kokee State Park near Waimea Canyon. Part of Waimea Canyon on Highway 550. Bali Hai near sunset. Fire Truck
I have resigned from AdvisorShares effective April 30th. This is my last regular blog post at Alpha Baskets, although I will be writing one more weekly Market Update next Monday. I will of course still be posting at TheMaven, Seeking Alpha and of course here at randomroger.com. From the post; This will be my final post here at Alpha Baskets, I am moving on from AdvisorShares after a little over four years. For my parting shot I wanted to try to summarize some of the bigger picture ideas that we’ve discussed here and tie them together on my way out the door. And from my page at TheMaven; Has a bear market started? Is active management dead?
The weekly Market Update is posted at Alpha Baskets and includes the following; Barron’s devoted a lot of pixels to the latest goings on with the slope of the yield curve. Earlier in the week the 2-10 treasury spread got close to 40 basis points before widening out to 49 basis points at the end of the week. This is something we have been closely following here for months. It is important to understand at a basic level why yield curve dynamics are so important. When the curve is positively sloped, which is the normal relationship, then access to capital is easier from the standpoint that lending money is a profitable endeavor for the banks. Accessing capital is crucial for growth, plant expansion, capacity expansion and so on. When the yield curve inverts, borrowing money as a means of accessing capital becomes harder to do thus it can be contractionary
Continue reading "Markets Don’t Close 4/20 On A High"
My latest post at Alpha Baskets is up and includes the following; As I write this post on Monday afternoon Bitcoin is just under $6800. At that figure Yahoo Finance has it down 60% from its early January high. Obviously, people were buying at/near the highs. How many of those folks are looking back at merely a bad trade and how many have been crushed by over allocating to something that is down 60%? And from my page at TheMaven; Ben Carlson takes down the 200 DMA; I respond. Speaking of TheMaven, I am up in British Columbia for a conference with TheMaven. We landed in Vancouver last night, up to Whistler now until Friday and then back to Vancouver until Sunday. The view from our Airbnb last night in Vancouver. Deep Cove Whistler
The weekly Market Update is up at Alpha Baskets and includes the following; Bitcoin had a bit of a tumble last week down as much as 10%, trading in the $6500’s for a time on Friday before snapping back to $7000 over the weekend. The cryptocurrencies continue to be fascinating on several levels including what seems like compressed bull and bear market cycles, it was up over 1000% in about a year, YTD in 2018 it is down more than 50%. If it turns out to go poof (not a prediction on our part) then the hindsight bias will come from all corners pointing out it was never backed by anything, never tied to anything, it was simply created and started trading. Despite the large YTD decline though it is tough to finds signs of panic. Depending on your Twitter feed, the people who were skeptical at $19,000 are probably
Continue reading "Tariffs Throw A Cat Amongst The Pigeons"
My latest post for Alpha Baskets is published and includes the following; There was one sentence that made me laugh out loud; “Passive investors who want to avoid the overconcentration risk from cap-weighted indexes can buy funds that own equal proportions of each stock in an index …” The idea may be perfectly valid but it is clear to me that the person who decides to switch to an index fund that uses an alternative weighting process is not a passive investor, they are making a very active decision, using what might be a passive vehicle to do it. And from my page at TheMaven; A two part dissection of the S&P 500’s current flirtation with its 200 DMA and what I am doing about it. Part 1 and Part 2.
The weekly Market Update is posted at Alpha Baskets and includes the following; Tech was also seen a driver of volatility after leading the market higher in January. While you might think that tech had a relatively bad quarter that was not the case. Looking at the more heavily traded, broad tech sector funds they were actually higher on the quarter as were narrower tech-themed niche funds. While there were some very loud news stories and painful declines in select names, the gains in tech broadly might serve as a reminder that most investors would be better off not trying to trade fast, short term moves. And a couple of recent posts from my page at TheMaven; There’s a lot of morons giving out investment advice. Is it over for the cryptos? Age related steps to take for retirement planning. On Friday I hiked with a couple of
Continue reading "Did Anyone Get The License Plate?"
My latest post for Alpha Baskets is posted and includes the following; Reading a headline like that, a cynic might immediately think of the famous BusinessWeek cover from 1979 proclaiming the Death of Equities or Irving Fisher declaring equites having reached “what looks like a permanently high plateau” on October 16, 1929. And from my page at TheMaven; A look at a crappy 401k plan. Should you cancel your health insurance?
The weekly Market Update is posted at Alpha Baskets and includes the following; As a qualitative observation this drop doesn’t feel as panicky as the one in early February but interestingly both declines in SPX terms stopped at that index’ 200 day moving average at least that was the case at the close on Friday. And from my page at TheMaven; Thoughts on the 200 DMA holding. Is the new shipping futures ETF a third degree burn waiting to happen?
My latest post at TheMaven looks at Howard Mark’s thoughts on managing volatility over the course of the stock market cycle and includes the following; If you knew you could get an 8% return every single year for the next 20 years, I mean exactly 8% every year, and that the stock market would have a volatile ride to come out at the same spot in 20 years you’d take reliable 8% instead of the volatility. And my latest post at AlphaBaskets has this; If volatility is back, it makes sense for investors to ask themselves whether they should attempt to manage or smooth out their portfolio’s volatility. To my way of thinking, this is clearly part of an active investment strategy, but I would remind readers that active strategies don’t have to be implemented using only active funds they can be implemented with index (passive) funds.
This week’s Market Update is posted at Alpha Baskets and includes the following; The ten year anniversary of Bear Stearns going under was last week. It was an amazing period of history for markets as Bear was of course a venerable name on Wall Street and its failure created more awareness that any company can fail and of course even bigger names than Bear went on to fail or otherwise be rescued by the government. Barry Ritholtz quipped on Twitter that Bear Stearns was bought for less than what the Yankees paid to Alex Rodriguez. And from my page at TheMaven; The cost of retirement might be vastly overstated. A look at a couple of well known fund managers who are changing their strategies to invest in Bitcoin.
The weekly Market Update is posted at Alpha Baskets and includes the following; We now know a little more about the steel and aluminum tariffs. While actual trade wars can’t be good for anyone, the detail we have now implies that this all may be a negotiating ploy. Canada and Mexico have a very visible path to being exempt and other countries can negotiate out of them. Last week we said that Trump supporters would say this is the Art of the Deal at work. That hope is alive and well. And from my page at TheMaven; The investment merits of putting your head in the sand. The real meaning of success.
My latest post for Alpha Baskets is posted and includes the following; The idea of reducing stress by placing yourself in fewer stress-inducing situations resonates with me personally and professionally. Personally, in that I have been working from home since my mid-thirties so no traffic and far fewer frustrating encounters with people at the office and professionally in that I have long advocated using diversifiers (now called alternatives) to manage portfolio volatility. We know that volatility causes people to reach a breaking point where they do self-destructive things, portfolio-wise. Managing volatility provides the opportunity to put clients in fewer situations where they might reach their breaking point. And from my page at TheMaven; The importance of proper position sizing. An update on the active/passive debate. Chiricahua National Monument The ghost town of Lowell which is near Bisbee, AZ.
This week’s Market Update is posted at Alpha Baskets and includes the following; It was widely reported that technology grew to take up 25% of S&P 500. Sector weightings in the index can give great clues for signs of excess in markets as was the case with energy growing to more than 30% of the S&P 500 in the early 1980’s, tech getting to 30% 18 years ago and financials at 22% at the peak in 2007. Where tech is often the largest sector in the index, 25% is less troublesome than if some other, usually smaller sector had become that large. For our money, 30% is unsustainable and tech at 25% is merely troublesome and an overweight now, to tech might not be prudent. Please click through to read the entire update. Here’s a link to my post at TheMaven about more poor decisions coming to light at the
Continue reading "Trade Wars! Give Me Those Trade Wars!"
My latest post at Alpha Baskets is posted and includes the following; Meb Faber Tweeted out portfolio return expectations from various market participants looking out over the next ten years. Vanguard was at the low end looking for 4.5%, the “average investor” was in the middle at 10.2% and hedge funds think they will generate 13.0%. Depending on who you read you can find expectations in the three’s as well. Please click through to read the entire post.
The weekly market update is posted at Alpha Baskets and looks at the huge treasury auction and the poor returns from Greenlight Capital. Last week at Alpha Baskets I took a look at dilemma of depriving yourself today for a retirement with many unknowns. And from over at TheMaven; A look at whether Dennis Gartman really blew up betting on a blockchain stock. Hedging your portfolio incorrectly can make it much worse. The latest from the Walker Fire Department and how volunteering will enhance your health and your retirement.
The weekly market update is posted at Alpha Baskets and includes the following; We think increased volatility of volatility could be a net positive that perhaps indicates complacency has been shaken out of the market. Save for the last year or so, a little bit of nervousness has been good for equities. From my page at TheMaven; A look at multi-factor sector funds. The role of volatility in portfolio construction.
My latest post for Alpha Baskets takes a look at the recent crash….and snapback. The dip/correction/crash of the last couple of weeks has provided a useful litmus test for certain alternative strategies, it has reminded us how risky some of the more complicated strategies can be and reminded us that equities are not a one-way trade; after nine years of going up, maybe after peaking at 2872 the path to 3000 on the S&P 500 or even 4000 includes a trip down to 2000 first. And please remember to check out my page at TheMaven.
The weekly Market Update is posted at Alpha Baskets is posted an includes the following; The CBOE Volatility Index took center stage last week with very dramatic action Monday and Tuesday. Monday, the VIX jumped over 100%, bringing an end to the one way nature of the short volatility trade. VIX had been going down for so long that a couple of the exchanged traded products became very popular for their massive gains. You may have heard the story of a Target employee to turned his life savings into a $13 million fortune by shorting the VIX via one of the ETPs. On Monday the VelocityShares Daily Inverse VIX Short Term ETN, one of the two big ETPs had an event acceleration, effectively terminating the product. Per the prospectus, a single day rise in VIX of 80% would allow the issuer to cancel the product, which they are choosing
Continue reading "Volatility Is Back in Town and It’s Angry"