8 November 2016: Predicting particular events

glazen-bolWhite Chapel is good at predicting the momentum of stock markets in the long run. (The return for the year in the table below is proof of that.) The model has its limitations, however. It is not very good at predicting the outcome of particular events. White Chapel cannot predict the outcome of the US Presidential elections. Our model had trouble predicting the outcome of the Brexit referendum and it took a loss of around 25% at the day after the referendum. However, White Chapel proved to be very good at predicting the swings of momentum during the run-up and the show-down of the Brexit referendum. Effectively, our model made a profit of around 50% as a result of the rise and easing of volatility surrounding the referendum.
There is a chance of 50% that White Chapel is in line with the outcome of the US Presidential elections. There is a much bigger chance that White Chapel will profit from the volatility surrounding the elections in the long run.

white-chapel-logo-smallStocks rallied yesterday, after the FBI said it would not press criminal charges against Hillary Clinton over the use of a private email server. Major US indices gained 2.2% on average. As a result, volatility eased. The VIX lost almost 17%. Our XIV ETNs added almost 13%. Return for the year stands at 321%, return for the quarter is approaching 40%.

Trading signal: as a result of a change of momentum, White Chapel gave a trading signal at the end of Monday’s session: a “V” (volatile) signal. As a result of that, we sold our inverse positions (XIV ETNs @36.80 ) this morning and bought volatile ETFs (UVXY ETFs @15.32).

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$42,098

+320.98%

+320.98%

+37.4%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 449%.

RS_v05-smallWhile driving on the highway, René’s attention was attracted by two things simultaneously: a beautiful rainbow, and a black car with the text “Jezus zoekt jou!” (Jesus is looking for you!) written in big letters on its rear window. Moments later, the black car took the exit, followed by another car, a white minivan. The front-seat passenger of the minivan pointed his finger at the rainbow, then to the black car in front of them. Both cars left the highway, in the direction of the rainbow.
According to an Irish legend, there is a leprechaun at the end of the rainbow, waiting to give a pot of gold to the first person who finds him. Maybe the legend is right, except for the leprechaun (and/or the pot of gold). Who knows? Every now and then, someone finds out that chasing rainbows is a fruitless pursuit. René was happy to be back home in time.
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