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  • Why A 90% Cash Portfolio Will Probably Outperform  [View article]
    Interest rates don't go up without a reason, which is usually the economy doing well and this is good for SPX. This is why SPX usually rises during the hiking cycle. LT treasuries, in spite of what duration maths would suggest, are less sensitive to the hiking cycle as they should, because as rates go up, the market starts pricing in the next recession before the stock market peaks, hence the yield curve inverts. I appreciate that there are some odd years when you do have a positive correlation with this strategy, this is why you cannot over leverage, but I am fine with an odd negative year as long as I have faith in the strategy in the long-term. Its foolish to think your strategy has to make money every single year. Both markets are huge and liquid, about 18tn each in size. Where else can you go with hundreds of billions if you are an insurer, bank or pension fund? There is no real alternative than treasuries and spx for the really big money.
    Dec 8, 2015. 12:05 PM | 1 Like Like |Link to Comment
  • Why A 90% Cash Portfolio Will Probably Outperform  [View article]
    I am long SPY and TLT at about 50/50, with 2x leverage, yearly rebalancing. You either can believe that central banks will be able to successfully reflate the world economy, which is good for SPY, or that structural disinflationary forces are just too strong for them to counter and we are all going to be like Japan, which is good for TLT. In either case, you'd be fine. The portfolio is crash-proof, just backtest allocation it at portfoliovisualizer.com. Also check out their efficient frontier tool, lets you know the ideal allocation between two different asset classes, i.e. the one with the highest sharpe. The key is to pick two assets with a true negative correlation, i.e. one that makes sense from a fundamental point of view. The best is SPY/TLT, but HYG/TLT and TIP/TLT also work. Then you find the best risk/reward proportion, i.e. highest sharpe or sortino ratio, and use some leverage, i.e. borrow some dirty cheap cash from the morons. You can get more return than 100% S&P with less than half of the volatility. No-brainer stuff folks, just trow that cristall ball away and start making some proper money!
    Dec 8, 2015. 07:13 AM | 2 Likes Like |Link to Comment
  • Divergence, Linear Thinking And The Dollar  [View article]
    Marc, I am 100% with you on the eurusd call, even bet a bottle of riesling with a German friend. The eurozone is the new Japan and shorting the euro is the new carry trade. Cheers!
    Nov 14, 2015. 05:01 PM | Likes Like |Link to Comment
  • Is It Safe?  [View article]
    and on the options side, the bid/ask spreads were so wide during the first hours on Monday that there was almost no trading going on, otherwise could have sold some puts.
    Aug 27, 2015. 04:01 AM | Likes Like |Link to Comment
  • The Dollar's Near-Term Vulnerability Is An Opportunity For Medium And Long Term Investors  [View article]
    You are right, I should have elaborated better, what I had in mind is that the process is in its very initial stages and also need to appear in lagging data. Now its still far from complete, let alone being priced in. The green shots story need to start popping here and there until its everywhere. Only this week has HSBC updated its forecast looks like its the first major bank to do so.
    Mar 22, 2015. 02:12 PM | Likes Like |Link to Comment
  • The Dollar's Near-Term Vulnerability Is An Opportunity For Medium And Long Term Investors  [View article]
    I think soon the effect of the weaker euro will start showing up on the data and will start surprinsing to the upside, just as the US is starting to surprise to the downside. Its the effect of the eurozone 'exporting' some of its weakness to the usa via currency devaluation. When the story of the 'green shots' in Europe starts to develop, there might be a temporary recovery to the 1.20 - 1.30 area, IMHO.
    Mar 22, 2015. 04:50 AM | 1 Like Like |Link to Comment
  • Why Goldman Sachs Is Wrong About Commodity Prices: Philip Richards  [View article]
    I think gold held up quite well comparing to other commodities and the very long term trend since 2002 is still up. I think this is due to the increasingly negative rates environment. No yield is better than negative yield.
    Mar 21, 2015. 05:02 PM | 1 Like Like |Link to Comment
  • Dollar Strength Is Coming To An End  [View article]
    everything has already been priced in, the dollar trade is one of the most crowded ever, a lot of euro slack has already been exported to US and very soon green shoots will start appearing there, while US is starting to disappoint. Nzd, aud, cad, gbp, are all turning.
    Mar 21, 2015. 12:57 PM | Likes Like |Link to Comment
  • Federal Reserve: No Patience Does Not Mean Impatient  [View article]
    Technology is the main force driving rates lower everywhere. It increases production while reducing the need for labour. The result is an ever increasing gap beetween supply and demand. Central banks can print as much money as they want, they will not be able to increase demand.
    Mar 18, 2015. 06:54 PM | 1 Like Like |Link to Comment
  • Sorry But This Is Not 1997 For The Market  [View article]
    the market will correct as always in first hike years and then keep rising during the tightening cycle until the yield curve eventually flattens and then inverts. The trouble is, it will not be a long or steep tightening cycle this time. My personal opinion is that the yield curve would invert with the the FED rate at 1-2% in 1 - 2 years time. That's when the bubble will burst, and at the next downcycle, FED rates will go negative.
    Mar 15, 2015. 07:00 AM | Likes Like |Link to Comment
  • Beware Chasing QE  [View article]
    I wonder if anyone has also tried the exercise of analysing where you got your best returns on the last year using eur as you base currency? Guess what, treasuries and spx returns were staggering for an unhedged european investor. The recent european qe rally is just catching up. My guess is whenever there is qe now in the world it will flow to the us. That's why the fed stopped theirs, from now on its "QE outsourcing" oopps just invented a new term!
    Mar 15, 2015. 04:32 AM | Likes Like |Link to Comment
  • Mr. Market Discounts Petrobras 60%, New Developments Signal Time To Buy  [View article]
    With the dollar bull just starting, I wouln't even consider investing in any oil stocks or EMs before 2020. Prepare for a long, long bear, market. Oil is on a structural decline anyway and is on the verge of being superseded by new technologies. Oil is already in the past.
    Mar 15, 2015. 03:56 AM | Likes Like |Link to Comment
  • Why The Euro Bear Market Is Only Half Over  [View article]
    A lot of it boils down to confidence and where the market thinks it can safely allocate capital now and in the future. Political , instutitional and geopolitical stability is a big factor when choosing your currency, and you even pay for it. What country is the safest right now? Europe is looking increasingly fragile from both and internal and external perspective. EMs are already facing unrest due to commodities collapse, but also populational and environmental challenges that are only going to get worse. In spite of everything else said, USA is a nation (unlike Europe), they have the most advanced mitary technology on earth, and they have the balls to act when you mess with them. Also, they respect private property more than any other country on earth. To me the dollar trade is as much about preparing for things turning ugly in other parts of the world as it is about making money in the short term
    Mar 14, 2015. 04:42 PM | Likes Like |Link to Comment
  • Why The Euro Bear Market Is Only Half Over  [View article]
    I think it also depends on which countries we are talking about to some extent, the swiss have been having both surpluses and capital inflows, EM on the other hand are having deficits and outflows.
    Mar 14, 2015. 04:25 PM | Likes Like |Link to Comment
  • Why The Euro Bear Market Is Only Half Over  [View article]
    Does any one remember the old Yen carry trade, lets say that the EZ is now the new Japan and shorting the Euro will be the new carry trade.
    Mar 12, 2015. 10:26 AM | Likes Like |Link to Comment