18 November 2016: Boom and bust cycle

boombustVarious analysts, such as chief economist Joachim Fels of Pimco and senior fellow Olivier Blanchard of the Peterson Institute, predict the return of a classical boom and bust cycle under a Trump presidency. His policy measures, ranging from an increase of government spending to a lowering of taxes, will, in the first place, mean a strong stimulus for the US economy. But as a reaction, that phase of increased economic expansion will almost certainly end in tears by 2019 or 2020.
These Dutch Guys share this analysis. The Obama administration and the Fed have been treading very carefully the past few years. This behaviour alone will trigger stronger measures by the Trump administration and will lead to amplified fluctuations in the US (and world) economy. Our model White Chapel does not favor one president or presidential candidate over the other. But history has shown that fluctuations like these will boost White Chapel‘s returns substantially. Will the years of quadruple digits returns like 1999 return?

white-chapel-logo-smallU.S. stocks extended their post-election rally on Thursday, picking up where they remained on Tuesday. The S&P 500 added 0.5%, the Dow climbed 0.2%, and the NASDAQ rose 0.7%. Volatility eased substantially: as a result our XIV ETNs gained more than 3%. Return for the year stands now above 300% and return for the quarter above 30%.
White Chapel did not give a trading signal at the end of Thursday’s session. Our model advises us to stick with our XIV ETNs; a switch is not nearby.

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$40,148

+301.48%

+301.48%

+31.1%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 393%.

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René’s Reflections @ Friday: Journeys and Destinations

Investing is, in a way, the opposite of traveling. Now, that sounds a bit odd, doesn’t it? Let me elaborate on that.
A good friend of mine is a traveler. By ‘traveler’, I don’t mean the occasional traveler, whose travels are limited to the obligatory two-week holiday. For whom any destination will do, as long as the temperatures are high and the sun is always shining. The occasional traveler loves to meet up with last year’s holiday friends (who most likely are fellow countrymen). He is not so sure if he can accept the strange tastes of the local cuisine, so he’s more than happy to see familiar foods from back home being served in his holiday resort. And the further away the destination, the better it is – his holiday pictures will look so much better!
So, I don’t mean that type of traveler. Neither do I mean the professional traveler, who travels all over the world to show us exotic places – places we probably never get to see. And who even gets paid for that. Lucky him/her.
My friend is a traveler of the third kind: the traveler by lifestyle. Last year, she and her partner traveled for 304 consecutive days with their Hymer camper, covering 8,330 kms (approx. 5,200 miles). The journey went through the Netherlands, Belgium, France, Spain, Portugal and Germany. In Germany, they bought a giant army green Mercedes truck from the 1980’s, which was previously owned by Germany’s Bundesgrenzschutz (Federal Border Guard). After the approval of the RDW (the Dutch vehicle approval and information authority), they manually converted it into a camper. My friend then passed her Heavy Goods Vehicle test (her partner already has his HGV License). The conversion to camper is almost done by now. Soon, they will be traveling again, to far away, unknown destinations, off the beaten path.
Where they will go? They don’t know. They find true fulfillment in the journey itself. In the unexpected. And in the surprises that could lie ahead behind every corner of the road. And even the things that go wrong, often reveal themselves to be blessings in disguise when you least expect it. They live the moment, and they do so with intensity. Their camper is their house, their vessel, and the road connects today’s life-enriching experience to that of tomorrow. As any ‘traveler by lifestyle’ will be happy to tell you, it’s not about the destination at all. “The true traveler never arrives” – (Edgar Degas).
If investing were like traveling, we would be focused on the “ups and downs” of the day, more than on what lies in store at the end of the road. So much so, it would probably drive us insane. It’s a good idea to keep in mind that, in fact, investing is the opposite of traveling. In the sense that for investing, it is not the journey itself that matters, but only the destination. And in investing, the destination stands for the value of your portfolio at the end of your investment horizon.

traveling

Photo by SayCheeeeeese, under the Public Domain license