21 December 2016: Unleash the bear

sad-bearVolatility is at low levels these days. That is not surprising given the rise of indices over the last few weeks. However, volatility instruments are also a good way to hedge against a downside in the market. From that perspective, it is remarkable that only a few people are betting on a change of momentum in the markets. As Randy Frederick, managing director of Trading & Derivatives at Schwab Center for Financial Research puts it nicely: “It is worrying that nobody is worried right now.” That is yet another sign, that investors are truly bullish. It is time for investors to unleash the bear in themselves.

white-chapel-logo-smallYesterday, there was nothing new under the sun: major US indices made a moderate gain and volatility eased. The VIX was more than 2% lower and our UVXY ETFs lost almost 4%. Return for the year for our model dropped to 264%.
White Chapel did not give a signal at the end of yesterday’s trading session, as it thinks that it is about time that there is a change of momentum. We stick with our UVXY ETFs.

Accumulated capital at close of previous trading day

Return since start

Return this year

Return this quarter

$36,441

+264.41%

+264.41%

+19.0%

Our initial capital was $10,000 at 1 January 2016. Our average Annual Return is 284%.

ta_v05-small-invOne of Tim’s favorite artists is American video artist Bill Viola. In a local museum for contemporary art, De Pont, there is a piece of art by Viola which is called The Greeting. The work is inspired by the painting Visitation, painted in 1528-29 by Italian Mannerist Jacopo Pontormo. It features three women who meet each other in front of an architectural setting which resembles Pontormo’s painting. The meeting of these women is filmed in extreme slow motion. Naturally, this piece of art is about what happens in the foreground. Since Tim saw the video installation for the first time, almost twenty years ago, he has been fascinated by what happens in the background, however. In this YouTube clip, part of the video that is used in the installation can be seen. In the first seconds of this clip, a glimpse can be caught of what is going on in the background.
During a walk in a forest, which had a fairytale-like feel to it because of the diffuse lighting, Tim imagined himself in Viola’s video installation. In the distance, there was somebody moving. Was it a man walking his dog? Or was it a preview of what it will be like at the end of life, when somebody is waiting at the end of an illuminated tunnel? Well, judge for yourself. Tim tried to capture the moment in the picture below.

greeting-woods