18 April 2017: Repetitive patterns

On Monday after closing hours, streaming video giant Netflix reported first quarter results that were mixed. Earnings were better than expected, but subscriber growth lagged. More than ‘normal’ television companies, Netflix has insight into the behavior of their viewers. It turns out that they watch those movies and series that they already know or that are popular in general. The popularity of Adam Sandler’s latest movie is the living proof of this. According to hit author Derek Thompson, writer of Hit Makers, the tastes of consumers are “more basic & repetitive than we thought”. This predictability is something These Dutch Guys can identify with to a high degree. It is these very elementary and repetitive patterns we observe in stock market trading. The Trump era is no exception to this rule. First, there was the collective fear about his election during the campaign. Then came the mass euphoria after his election. And we can be sure that we will see dumping of stocks at a large scale once investors start realising that Donald Trump is not able to turn everything into gold. Our models are very good at predicting those waves of fear and euphoria. We are amazing at that, our ability to do so is huge.

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US markets bounced back during Monday’s trading session, after last week’s losses. Especially the banking sector fueled the good mood among investors. All major US indices added 0.9%. Volatility eased substantially: the VIX closed more than 8% lower. UVXY ETFs had to settle for less: they lost more than 10%. XIV ETNs had a good day and added almost 5%.
Danny Daredevil had to take a large step back as a result of this. His RSS is at a very healthy 458%, however. Adventurous Anny is still holding cash and her RSS remains at 22%. Solid Suzy and Lazy Larry are a step closer to positive territory. Their RSS stands at -1%.
None of our models gave a trading signal at the end of yesterday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

458.36%

38.51%

19.11%

277%

Adventurous Anny Cash 6 March 2017

21.78%

21.78%

0.00%

433%

Solid Suzy XIV 6 March 2017

-1.26%

-1.26%

-9.85%

-10%

Lazy Larry
XIV 6 March 2017

-1.26%

-1.26%

-9.85%

-10%

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

 

The Chapel Family – Episode 3

Danny, Anny, Suzy and Larry are blowing off steam at the go-kart racing track. As Anny pushes her go-kart to the max, she looks around and notices there is no sign of any of her three opponents. This is going pretty well, she thinks. Pretty, pretty well. She passes the pits, and sees Suzy and Larry waiting for their tires to be replaced. But when she turns her head, she sees Danny, appearing out of the blue. She increases her speed as much as she can, but no matter how hard she tries, Danny is steadily gaining ground on her.
“What the heck!” she shouts, when he gets so close behind her that she can hear him chuckle. “But I’m still ahead of you!!” she continues.
“No you’re not,” Danny shouts back, “I’m a lap ahead of you!”