Friday, March 31, 2017

Patience/ The last few percentage points



Since closing my Emerging Markets + Total World Stock Market
positions on March 15, how have the positions fared?  EEM rallied
another +1.6% (on a closing basis) within a week, but has since pulled back.
 VT hasn't made any headway, and is trading about -0.5% lower
this morning.

Reaching for the last few percentage points can be
expensive, as swift declines become more likely.  The total gains in EEMVT from 1/21/16 to 3/15/17 were +40%+25% respectively.
Gains in EWZ (Brazil)/ RSX (Russia)?  +220%+160%!

It's prudent to leave the party early!  There will be
lower-risk entries down the road.

Thursday, March 16, 2017

(3/16/17) Easy/ The Long Bond



Opening positions in TLT ('the long bond') @ 117.80.  Will add a position in RYGBX (Rydex 1.2x Government Long Bond) at the close.

A bet on rising yields has historically been the easy trade following increases in the Federal Funds Rate.  Over a time frame of 5 years, that's probably true.  However, there's a good chance yields will drop significantly (let's say over the next few months) before they're ready to take off.


Friday, February 17, 2017

2/17/17 DJIA 33450



The selloff in global markets this morning
provides the perfect backdrop to consider Nigam Arora's latest post: 

http://www.marketwatch.com/story/heres-the-case-for-dow-30000-in-trumps-first-term-2017-02-17?mod=

Nigam is a smart guy.  We know the market abhors
smart-guy opinions, which has fostered an industry built by guys who are less
intrepid and attempt to simply 'let the market tell them where it's headed.'
 (They haven't done so well either.)

With regard to the current rally, however, I think Nigam may
be right.  The Trump factor is so far out of left field that it has the
potential to take the DJIA up to 30000 (33450, actually) and the SPX up to 3800
(a +65% gain) over the next four years.  Why?  Think back to the 'Dow
50000' baloney from the late Nineties.  Investors 'understood' the dot.com
rationale behind it.  No one understands Trump.  Which is exactly why
Nigam's forecast may prove accurate. 

Friday, January 27, 2017

1/27/17 Unbreakable

How many of you recall the 2000 M. Night Shyamalan film?  The powerful rally off the March '09 lows has survived every attempt at derailment, and I expect it will finish 2017 unscathed as well.  We should listen carefully to what the market is saying-> it wants to go higher.  Perhaps much higher.  No one saw the Nineties dot.com boom coming, nor did anyone foresee what many refer to as a 'once in a lifetime rally in the Nasdaq.'  No one saw the Trump Rally coming, nor is it possible now to say how long it continues or how far it takes us.  They may refer to it as a 'twice in a lifetime rally.'  That's the thing about markets.  We're only able to correctly characterize crowd behavior in hindsight.

Saturday, January 21, 2017

1/21/17 The Undoing Project/ 'A cloud of possibilities'



https://www.amazon.com/dp/B01GI6S7EK/ref...

Book recommendations are few and far between these days, but this one's worth
it. A quote from an interview with author Michael Lewis gives you an idea of
what's in store:

“One of the lessons these guys [Israeli psychologists Daniel Kahneman and Amos
Tversky] delivered is, the world is a far less certain place than our mind is
prepared to be in,” Lewis said. “Reality is, as Amos said, reality is not a
point; it’s a cloud of possibilities. At any given time, you’re in a
probabilistic situation. But people don’t think that way and they should. They
should think probabilistically and statistically about many problems. If you
are seeking the advice of some expert, a financial adviser, a doctor, or a
political pundit, or someone telling you which sports team to bet on, if that
person exhibits total certainty about his predictions, you know you have a
problem already.”

A book Jim Morrison might have carried around had it been written in 1970. In
this case, it's the real deal. As we used to say back then, 'it's a
mind-blower!'

Sunday, January 8, 2017

1/7/17 Welcome to the Hotel California!



After a quiet day touring the shops and galleries of San Jose del Cabo earlier this week, my family and I asked our taxi driver to make a run up to Todos Santos to visit the hotel that inspired the 1976 Eagles song. Not exactly! The drive up 'desert [Highway 19] with the cool wind in our hair' notwithstanding, it turns out that the link between the Hotel California in Todos Santos and the Eagles hit is all myth.

The real story behind the Baja hotel stands well on its own. It was founded by a Chinese immigrant named Mr. Wong in 1947, who lived there with his wife and seven daughters. He added a restaurant and bar, and introduced cold beer to residents by importing ice from La Paz! In the Sixties and Seventies the town began to attract artists and musicians, and today The Lonely Planet describes it as 'one of the most appealing towns in all of Baja, maybe even all of Mexico. A quirky mix of locals, fishers, surfers and New Age spiritualists, the town of ‘All Saints’ has thus far escaped the rampant tourism of the other Cape towns, but still has all kinds of things to see and do.'

Wednesday, December 28, 2016

12/28/16 Route 66-> US Indexes take a dive for the team!



This band reminds me of college friends from Japan or Taiwan who studied hard and socialized little during the week, but amazed me on weekends with their nuanced understanding of American counter-culture. I began to realize that what should amaze us is the degree to which our perspectives are shaped by the media (try listening with your eyes closed!). These five guys (the female singer remains mostly off-camera) are clearly having a great time cutting loose from day jobs, probably trading forex or something (but that would be just another stereotype). Very tight band!

DJIA -100 points, SPX -0.74%, Nasdaq -0.82%. With the media obsessed with 'Dow 20,000,' this is the kind of action we need to set up a real run to (and well beyond) DJIA 20,000.

Away from the US, the global markets continue to look positive. Brazil's iBovespa +1.88% today with its corresponding exchange-traded fund EWZ (Brazil) +1.21%, RSX (Russia) +0.62%, FXI (China 'H' Shares) +0.9%, EEM (emerging markets) +0.74%.