12 January 2018: Bonds

For a few days, it looked like US bonds were about to enter a bear market. The yields on US government debt had been falling for more than thirty years and at the beginning of this week it seemed like we had reached the end of that period. News from Asia set things in motion and when ‘bond king’ Bill Gross started talking about a bear market, to a number of investors this became the new reality. But after some skirmishes during the days that followed, everything returned to normal.
But this nervousness is sending a clear signal. Small changes (true or alleged) can have a great impact on the markets because of the anxiousness among investors. Expect stocks markets to move more violently in the upcoming months as a result of that.

white-chapel-logo-smallThe major US indices closed at records on Thursday, driven by a rally in energy and materials sectors. The S&P 500 gained 0.70% and both the NASDAQ and the Dow added 0.81%. Volatility remained at low levels. The VIX closed slightly higher (+0.6%), but remained below 10 points. UVXY ETFs recorded a small loss of 1.2%. XIV ETNs closed 0.6% higher.
Danny Daredevil saw his RSS drop to -13%. Adventurous Anny is still holding a cash position. Her RSS remained unchanged at 23%. Solid Suzy´s and Lazy Larry´s RSS rose to well above 117%.
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

-13.40%

-15.08%

-15.08%

-7%

Adventurous Anny Cash 6 March 2017

22.91%

0.00%

0.00%

27%

Solid Suzy XIV 6 March 2017

117.46%

7.85%

7.85%

148%

Lazy Larry
XIV 6 March 2017

117.46%

7.85%

7.85%

148%

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

 

RS_v05-smallRené’s Reflections @ Friday: Lessons from the cutting room

I have a passionate interest in cinema. I don’t know exactly where that comes from — that alone could be the subject of a future post. One of the cinematic fields that are of my particular interest, is that of film editing. This is an art form in itself, which has everything to do with rhythm, timing, building up momentum, managing the viewer’s emotions. A good film editor knows exactly how to make selections. He (or she) has a good sense for (literally) cutting the crap, for stripping things down to the essence. But most of all, for making the right combinations of sound and visuals, so that the whole turns out to be greater than the sum of its parts. It sounds odd but it’s true: one frame more or less can make or break a scene. A film editor can make or break a whole film.
One of the best film editors of all times is three-time Academy Award winner Walter Murch. He worked on films like Apocalypse Now, The English Patient, The Godfather I, II, and III, The Talented Mr. Ripley, Cold Mountain, and Tomorrowland. The list is much longer — check it on imdb.
On 13 September 2015, Walter Murch was the special guest at the eighth Annual Amsterdam SuperMeet (a community of collaborative visual storytellers) at the NH Grande Hotel Krasnapolsky in Amsterdam. His engaging talk on Moviola Metaphysics: Why we do what we do, why it’s important, and how we can do it better is to be found on YouTube. It is definitely worth eighty minutes of your time, even if you’re not particularly interested in film editing. This man has a story to tell, a story which amply transcends the world of cinema. 68 minutes into his lecture (click here to start watching at that point), he explains the so called parade effect. What that is, and why that matters to us investors as well (especially in the current bull market we find ourselves in) will undoubtedly sink in after you’ve seen it.

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