31 October 2016: Banks and trust

trustIn this weekend’s Het Financieele Dagblad, the Dutch equivalent of The Financial Times, there was an article on the banking sector and trust. Eight years after the financial crisis of 2008, in which the Dutch government had to nationalize the majority of major Dutch banks, there are bankers in the Netherlands who think the time has come for politicians to loosen their grip on the banking sector. Many politicians and citizens are far from ready for such a step: trust toward bankers remains very low among these groups. And as long as systemic banks are still too big to fail, it is the question whether it is a good idea at all to give these banks more freedom. Companies that act in a sector that in the end will not and cannot go bankrupt are not truly exposed to market forces. It is a case of bad governance if a government would pretend that these companies are. More freedom can only be rewarded to banks after a fundamental restructuring of the sector has been carried out.

white-chapel-logo-smallNot only the Fed has the ability to move stock markets, also the FBI is capable of this. The announcement that the Federal Bureau of Investigation will start a new investigation into Hillary Clinton’s e-mails sent a shiver trough the markets last Friday. Volatility rose steeply: the VIX rose more than 2.5 points (which was a rise of more than 15% at that moment) in a matter of minutes during Friday’s session and the volatility index ended up more than 5% in comparison to the close on Thursday. Our UVXY ETFs added more than 8%. Return for the year now stands at 262%. Return for the quarter, which is almost a month old, is approaching 20%.
White Chapel is still happy with our UVXY ETFs, for the moment. But our model is aware that a change of momentum might only be a few days away.

Accumulated capital at close of previous trading day

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Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 384%.

ta_v05-small-invDuring a walk through the woods, Tim saw car tracks which were covered with leaves. The composition reminded him of a work by the famous Dutch graphic artist M.C. Escher. Tim was convinced that there was a piece of art made by Escher that looked very much the same. But a quick look at the master’s repertoire of mathematically inspired artworks taught Tim that he had mixed up (or rather: remixed) two of Escher’s pieces of art in his head. Funny how the mind works…