15 September 2016: To ask the question is to answer it

A question like “It is time to get out of the stock market?” has only one answer for fearful investors.

questionIn the Netherlands, we have a proverb that goes like this: “De vraag stellen is hem beantwoorden” (“To ask the question is to answer it”). Investors’ sentiments act in the same way. If there is some doubt somewhere in the back of investors’ minds, they can be sure that some day (soon) this doubt will materialize.
Yesterday at prime time, this item took prominence at finance.yahoo.com:
time
It links to an article at Kiplinger that is really pretty balanced. But with conversion rates as low as 0.2% these days, we can be sure that only a small group of readers has taken note of the nuances as expressed by Robert N. Auclair at Kiplinger. To the other 99.8% of the people who were exposed to this question, it will become much more than just a question that can be answered in many ways. An unpleasant feeling caused by the unrest in the markets of late has settled in the minds of investors. The answer ‘Yes’ to the question is under such circumstances not far away. De vraag stellen is hem beantwoorden.

white-chapel-logo-smallAt the beginning of yesterday’s trading session, some bargain hunters and trading algos tried to profit from Tuesday’s weaknesses in the market. But the rise of indices was only short-lived. The S&P 500 and the Dow closed with minor losses. The NASDAQ Composite was able to avoid the same fate and closed with a small gain. Volatility had a… hmmm… volatile day itself. Our UVXY ETFs stood -10% some moment during the session, but ended with a loss of only 0.5%. So, not many changes to our profits: return for the year is now just above 350%, return for this quarter is at 33% and our average Annual Return is still at a healthy 771%. No signal from White Chapel at the end of yesterday’s session. With the smell of fear in the air, that sounds like music to our ears.

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$45,095

+350.95%

+350.95%

+32.8%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 771%.

TA_v05-smallTim went to a Back To Campus meeting at his alma mater yesterday evening. Apart from being a nice occasion to talk to old classmates, the gathering had a substantive program on wicked problems. The main part of the program was dedicated to the legal implications of Volkswagen’s emissions scandal. To paraphrase Oliver Hardy: “Well, that’s another fine mess Volkswagen has gotten itself into…”
Professor Deborah Hensler of Stanford University held an extensive exposé on the numerous class-action suits that have been filed against Volkswagen in the US.
By means of a video connection, Axel Halfmeier, professor of law (to be precise: Professor Für Bürgerliches Recht, Rechtsvergleichung Sowie Internationales Privat- Und Verfahrensrecht) at the University of Lüneburg, added the German perspective. Volkswagen is a German company after all. Shareholders are knocking at the doors of Volkswagen’s headquarters in Wolfsburg and judges at the small court in nearby Braunschweig are asked to rule on the compensation these shareholders should get.
Ianika Tzankova, professor of Mass Claim Dispute Resolution at Tilburg University, concluded the session with something that sounded like a big surprise to most attendees: Volkswagen might have a relatively easy way out of the mess. Not in financial terms, but to avoid years and years of lawsuits. The Amsterdam court of appeal has the power to declare settlements between Volkswagen and plaintiffs globally binding. As a side effect, a ruling like this will emphasize the position of the Netherlands as a center of international law.

axel

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