12 June 2017: This time, it’s different

Bill Gross, portfolio manager of the Janus Global Unconstrained Bond Fund, last week warned that the financial markets are at their most vulnerable since the 2008 financial crisis. Marc Faber, a famous investor, proclaimed that stock markets are caught in the midst of a gigantic bubble. Last Friday, tech stocks experienced intraday one of the biggest falls of the last years. A pattern like that could well signal the start of a change in sentiment among investors. But there is one thing that should really scare the sh*t out of anyone who is in the possession of stocks right now. Sue Chang, a markets reporter for MarketWatch, uses those magic words in an article that have brought down many a bull market: “This time, it’s different”. Investors, beware, the spell has been cast!

US indices closed mixed last Friday, with pressure on technology stocks. The NASDAQ lost heavily: -1.80%. The S&P 500 recorded a small loss (-0.08%) and the Dow was able to make a substantial gain: +0.42%. Volatility had a wild ride: first, the VIX drifted below 9.50 points, a level we have not seen since 1993. But during the second half of the day, the VIX rose to more than 12 points. The volatility index closed somewhere between the highs and the lows of the day at 10.70. UVXY ETFs recorded a gain: +2.71%. XIV ETNs had to take a step back, but were still able to close above 80 points (-1.42%).
Danny Daredevil‘s RSS rose to 381%. His AAR is just below 200%. Adventurous Anny is holding cash. Her RSS remained at 39%. Solid Suzy and Lazy Larry had to take a small step back, but their RSS remained above 20%.
None of our models gave a trading signal at the end of Friday’s session.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

381.06%

19.34%

2.62%

197%

Adventurous Anny Cash 6 March 2017

39.23%

39.23%

14.33%

252%

Solid Suzy XIV 6 March 2017

20.52%

20.52%

10.04%

103%

Lazy Larry
XIV 6 March 2017

20.52%

20.52%

10.04%

103%

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

 

One of the nice things about the month of June in the Netherlands is the length of its days. Yesterday, sunrise was at 5:20 AM and sunset at 9:59 PM (CEST). At summer solstice, during the longest day of the year on 21 June, the sun is up from 5:20 until 10:04 PM (CEST). At clear days, it is possible to read a book outdoors up to half an hour after sunset. Seventeen hours of daylight is a real treat to those who like outdoor activities (like These Dutch Guys). It stands in great contrast to those cold and short days in mid-winter, with as little as eight hours of daylight (or even less, on cloudy days). Check here (pdf) for the table of sunset and sunrise times for the Netherlands in 2017.
The picture below was taken shortly before 9 PM last night. Jacob van Ruisdael would probably have loved it.