24 March 2017: Trump card

President Donald Trump is already playing his trump card: he threatened that if his party colleagues in the House of Representatives vote against his proposal to reform healthcare, they will be stuck with Obamacare for many more years. Ironically, Obama was basically a lame duck, because of the opposition of Republican majorities in Congress. Stock markets were not bothered by that fact at all. Will Donald Trump face the same fate as Obama, but will it have a devastating effect on stock markets this time, given the high expectations that have built up in the previous months?

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As predicted, markets got a little nervous yesterday, when the vote on Trumpcare was delayed in the House of Representatives. The VIX shot up and ended above 13 points. UVXY ETFs added 7% as a result. XIV ETNs lost more than 3.5%.
Danny Daredevil profited from the rise of UVXY ETFs. Danny’s AAR is back at 200%. Adventurous Anny is holding cash, so her RSS remained at 8%. Solid Suzy and Lazy Larry are almost back where they started. Their RSS dropped to 1.62%.
No trading signal was given by any of our models. A signal for Danny and Anny might be just around the corner.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

285.36%

-4.40%

-4.40%

200%

Adventurous Anny Cash 6 March 2017

8.17%

8.17%

8.17%

Later

Solid Suzy XIV 6 March 2017

1.62%

1.62%

1.62%

Later

Lazy Larry
XIV 6 March 2017

1.62%

1.62%

1.62%

Later

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

RS_v05-smallRené’s Reflections @ Friday: The Power of Ideas & Beautiful Lies

Ideas can take on a life of their own. They can go spiraling off, getting out of control of whoever originated the idea in the first place. Especially if they seem “too good to be true” but are presented in such a convincing, compelling manner, that many people would rather simply believe them, than to form their own critical opinion based upon known facts. A well-constructed lie is much more powerful than the naked truth behind it (if any). Such powerful ideas tend to keep themselves alive, long after they appear to have a loose relationship with the truth.
Take for example the “monster of Loch Ness”. As long as there is no irrefutable proof of its existence, this is not a monster at all, but just an idea. A very powerful one nonetheless, but still an idea. Even after the famous “Surgeon’s Photo” (as well as many other, lesser-known, photos of Nessie) was revealed as fake, somehow people prefer to keep believing a beautiful lie rather than to accept the dull, ordinary, unimaginative truth. Needless to say, the Loch Ness tourist industry is booming like never before.
Another example can be found in Dan Brown’s “The Da Vinci Code”. One of the plot devices in this book is a six-pointed star, worn into the floor of Rosslyn Chapel, which is said to mark a secret vault. In reality, this star doesn’t exist. It is an invention of the writer. According to one of the tour guides of the chapel, visitors don’t believe her when she tells them there is no six-pointed star in the stone floor, and that it exists only in the book (and movie, for that matter). A typical reaction is like: “Ah, I see. Though it exists, you’re not supposed to tell us.”
And then there are the ideas of Donald Trump, that not only helped him into the presidential seat, but also propelled major stock indexes to all-time highs, after he was elected. Whether or not these are to be categorized as the ones mentioned above, remains to be seen. But as Loch Ness and Dan Brown have shown us, it is not about the truth. It is about what you can make people believe. So, I wouldn’t be surprised to see this so-called Trump rally last longer than any stock market rally we’ve seen before.