15 November 2016: Make volatility great again

volatility-greatWhat is going on after the election of Donald Trump? The dollar is up, bonds are selling off, bond yields are shooting up, most stocks are on the rise, but technology, telecom and utilities stocks are down, economic growth and inflation are expected to go up the next couple of years and it has become very likely that the Fed will raise interest rates. Some analysts say that stocks cannot continue to go up in the long run, because they have been up for the wrong reasons (monetary policies!). But other analysts think that they will remain high and will even climb higher, because of the prospect of economic growth. Some investors outside of the US are positive and think the US economy will drag the rest of the world and others think that Trump’s policies (protectionism!) will hurt other economies and thus the world economy. It has to be seen whether or not Donald Trump is able to “make America great again”, but he already has proven that he is very capable of “making volatility great again,” as hedge-fund investor Doug Kass of Seabreeze Partners Management put it.

white-chapel-logo-smallA familiar pattern could be observed in the markets yesterday: the S&P 500 and Dow were not really going somewhere and the NASDAQ was somewhat down, but the VIX was relatively much up. We should not be surprised when this pattern keeps showing up regularly the upcoming period. Our newly acquired XIV ETNs profited from the rise in volatility and went up 0.6%. Return for the year now stands at 276%. Return for the quarter is stuck between 20% and 25% and is currently at 23%.
White Chapel is far from a new trading signal in terms of momentum and advises us to stick with our XIV ETNs.

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$37,636

+276.36%

+276.36%

+22.9%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 364%.

ta_v05-small-invA few years ago, the Netherlands was gripped by a large food scandal. News broke that a large food processing company in the south of the Netherlands had been using horses instead of cows as the main ingredient for many products. Almost any supermarket or chain of butcher shops in the Netherlands (and a substantial number of shops outside of the Netherlands) fell victim to the scandal. Horse meat is cheap, because there is a surplus of horses in Europe: horses are not consumed in such high quantities. It is not that eating horses is unhealthy, but many people just don’t like to eat these majestic animals. They don’t have a problem with eating cows, pigs, chicken, geese, ostriches, pheasants, frogs, fish, crustaceans, mollusks, etc., etc., but horses are a bridge too far. (Although, strangely enough, there is one type of preparation of horse meat that can be found in almost any butchery or supermarket in the Netherlands: slices of smoked horse meat.)
During one of his walks, Tim came across the trailer shown in the picture below. The text reads: “Raw materials for mushroom cultivation”. It looks like they have found new ways of getting rid of the horse surplus and they are not very secretive about it…

 

horses-mushrooms