4 August 2017: 2020

There are some hints that Mark Zuckerberg, the founder and CEO of Facebook, is considering running for US President. He hired former Clinton pollster Joel Benenson and has also expressed the intention to visit all US states this year. In the past years, Zuck has left his geekdom behind and has shown interest in many subjects outside of computers and social networks.
Barack Obama and his team were the first to make use of the possibilities that Facebook offers in terms of micro-targeting. (Supporters of) Donald Trump used Facebook to influence voters by means of politically biased, fake news stories that slandered Hillary Clinton. It would be campaigning at a completely different level, however, when the boss of the world’s most prominent social network were to join the race to the White House. If George Orwell would still have been alive in 2002, he could have easily come up with a story like this in the 2.0-version of his most famous book under the moniker of 2020.

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The Dow reached a seventh consecutive all-time high yesterday, but the other major indices were struggling. The Dow gained 0.04%, whereas the S&P 500 lost 0.22%. The NASDAQ also closed in the red: -0.35%. Volatility yoyoed: the VIX went as low as 9.90 points during yesterday’s trading session, but also reached 10.60 points. It closed at 10.44 points (+1.56%). UVXY ETFs recorded a gain: +2.53%. XIV ETNs took a step back: -1.34%.
Danny Daredevil was a winner for the day: his RSS rose to 197%. Adventurous Anny was still holding cash yesterday. Her RSS remained at 33%. Solid Suzy and Lazy Larry recorded a small loss and their RSS dropped to just above 40%.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil XIV 1 January 2016

196.64%

-26.41%

-31.85%

98%

Adventurous Anny XIV 6 March 2017

32.57%

32.57%

-4.39%

98%

Solid Suzy XIV 6 March 2017

40.70%

40.70%

12.41%

128%

Lazy Larry
XIV 6 March 2017

40.70%

40.70%

12.41%

128%

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

 

Two of our models gave a trading signal at the end of yesterday’s session: Danny Daredevil and Adventurous Anny. Danny switched from UVXY ETFs to XIV ETNs and Anny traded her cash for XIV ETNs at the opening of today’s session.

 

 

RS_v05-smallRené’s Reflections @ Friday: Battling groupthink

Contrarian Investing is an investment strategy that is characterized by purchasing and selling in contrast to the prevailing sentiment of the time. A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. – Wikipedia

The contrarian approach to investing is potentially one of the most rewarding strategies around. But at the same time, it is probably one of the most difficult strategies to follow. The hard part of it, is that it demands you to act ‘in contrast to the prevailing sentiment of the time’. Since you – whether you like it or not – are part of this sentiment yourself, it means that you will have to be able to act in contrast to your own (gut) feeling. This requires a certain mindset that is directly opposed to that of most other people. Going straight against popular and public opinion is not for the faint-hearted, as the power of groupthink is immense and cannot be underestimated. To go against the grain, and thereby stepping out of your beloved comfort zone, may pull you into awkwardness, doubt or even anxiety. It means a radical departure from the crowd, away from the prying eyes of those who wonder what exactly you are up to. Keeping on track, while ignoring all distorting human emotions, really is a daunting task. In bad times you will wonder why you are doing this. In good times there is always the looming risk of overconfidence. In both cases, you will be tempted to do things you wouldn’t do otherwise. By giving in, you will stop being a contrarian, and be thrown back at the mercy of your own gut feeling. Once safely back into your beloved comfort zone, eventually the inevitable day may come that the market will turn against you. Awkwardness, doubt or even anxiety will turn their ugly heads again. And like so many others, you will find yourself chasing rainbows.
Letting your emotions take control of the situation is, of course, not the recommended scenario. Except in case your gut feeling is better than anyone else’s. In all other cases: by all means, forget about your gut feeling, stick to your plan and stay calm, cool and collected!