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FOR NEWCOMERS ONLY ! + ANYONE WHO IS LOOKING FOR A BETTER WAY


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Hi Guys !

 I have created this page for new comers and anyone interested in my strategy of trading/investing.

My Background

      My name is Courage I am a pharmacist and I have been investing for a few years. Tried the trading approach and it resulted in a 30% drawdown over the last three months! (I know!). The most embarrassing fact about my losses are that I lost money in a bull market! Having swallowed these losses  I learnt a very important lesson over the last three months and that lesson is ; any strategy that doesn't have an input for or doesn't take volatility into account is garbage. I have been researching on a better way and I am fairly confident that I am on the path to finding it.

My strategy

        I employ a macroeconomic as well as a fundamental approach with quantitative means to make investing decisions. What does that mean? It means I make my decisions systematically; step by step. Investing decisions are only made if certain economic and market conditions are met. 

I look at economic data points and using publicly available data, I narrow down where I would prefer to allocate capital. Then using my limited knowledge of volatility, I invest when the volatility of the asset I like is being compressed or bearish on a trending basis ( 1-6months ). Combining this with a calculated rescaled range for prices, I risk manage my investments ( At the top of the range I sell if trading, and at the bottom of the range I buy or accumulate shares) .  I have used other methods whilst investing that involve analysing price and chart patterns. The problem with these are chart patterns are subjective, they depend on your own bias and can be interpreted in different ways and as for price, what is classified as cheap vs expensive ? One man's cheap is another man's expensive so again that doesn't work and if a stock is cheap, it is cheap for a reason likewise if its expensive.

 I simply run a customised volatility calculation and the numbers along with my calculated risk range tell me when to make purchases or sales. It's all math, no emotions, no feelings. Over the next few days I will be updating this thread with educational and principles and tools to help newcomers so that they don't make the same expensive mistakes I did.

Looking forward to interacting with you all. God Bless.

CA

 

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14 minutes ago, Ikechukwu said:

Are you making money and if so what are your returns using your approach?

I am making money now with a lot less stress. I was taking too many big bets not managing my account well       ( emotionally incapable) and being reactive rather than proactive. Currently, my returns are measured in basis points ( 1 basis point is = 0.01%) I allocate capital to shares ( zero leverage) 25 basis points at a time ( 0.25%) of my total capital standing today at 116 basis points at the end of march vs  the FTSE which was up 195 basis points in that time. So I am slowly making the money back. The main thing I want to cement is massive returns are great but I am on a path to slowly preserve and compound my capital over time. This money belongs to my family and I cannot afford any more expensive lessons. 

  • Like 2
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26 minutes ago, Ikechukwu said:

Thanks. What's your focus: day trading, swing trading or investment?

Day trading during periods when my volatility calculation  tells me to do so; (When vol spikes or looks like it is going to be episodic ) , and investing/managing a long term portfolio when volatility is low. 

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Are You A Market Tourist ?

  Before the lock-down I went to the Maldives with the woman who would turn out to be the mother of my first child. God bless her. She is the most patient/no nonsense woman I have ever known.She actually dragged me there knowing how much I hate traveling. Well not travelling per say more like packing . Whilst I was there on the secluded island I noticed that there were no "tourists" around. The beaches were empty except for a handful of people. It was pure bliss. It was the first time I ever saw a ''proper beach'' and by beach I mean the sea, sand and very little human presence.

    Contrast that to  Paris or London or New York in the summer. The latter environments are  noisy, brownian and full of flash. They even have what Anton Kreil calls the "rat-tube" which is the mechanism that transports people from work to home and back through the dark underground in absolute darkness in a city that spends more than half of the year in the dark (London). 

  The point of my anecdote is that if you want to be successful at this you have to focus on data points that actually matter. Jumping from headline to headline like a  tourist jumping from high street to high street / attraction to attraction is a; unproductive and b; unprofitable.  No disrespect to IG  they have to make money but turn off their news feed its all a distraction. The platform should only be used for EXECUTION purposes.

     To have a better investing/trading experience turn off the noise and follow the economic data yourself. Following economic data points that lead the the economy enables you to see market moves months/weeks before it happnes. Economic data points and market prices lead the narrative. Simply put the numbers lead the narrative. Thefore follow the numbers don't trade based on headlines. 

Only Follow Trusted Data Sources

     I love hive mind communities these are where people pool together with the objective of solving common problems. I sincerely hope the IG community reaches this level one day. The power of the internet is that you can form collaborative unions with people and put heads/ideas together to solve common problems. Someone has created this spreadsheet and kindly put it out for free. Within it you will find a list of links that will direct you to data points that are relevant your investing and TIME SERIES THAT ACTUALLY MOVE THE MARKET. 

    When going through the sheet focus on the Leading drivers/ Leading Indicators  these drivers are what the market focuses on, changes in the ebb and flow of the time series ( the rate at which the data changes ) is what moves the markets. Where you can get the raw data yourself, download them bend them play with them and see what insights you can derive for yourself.  There should be no whining no complaining and no laziness, we can do this if we put our minds to it. https://docs.google.com/spreadsheets/d/1jm739fcSZdPqks28oqA5eHAvSFZLMiXV/edit#gid=1736687311

Follow the link to the spreadsheet, cut out the noise and leave the tourists in the city.

Good Luck. Trading ranges will be released shortly.

CA

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1 hour ago, Courage said:

Are You A Market Tourist ?

  Before the lock-down I went to the Maldives with the woman who would turn out to be the mother of my first child. God bless her. She is the most patient/no nonsense woman I have ever known.She actually dragged me there knowing how much I hate traveling. Well not travelling per say more like packing . Whilst I was there on the secluded island I noticed that there were no "tourists" around. The beaches were empty except for a handful of people. It was pure bliss. It was the first time I ever saw a ''proper beach'' and by beach I mean the sea, sand and very little human presence.

    Contrast that to  Paris or London or New York in the summer. The latter environments are  noisy, brownian and full of flash. They even have what Anton Kreil calls the "rat-tube" which is the mechanism that transports people from work to home and back through the dark underground in absolute darkness in a city that spends more than half of the year in the dark (London). 

  The point of my anecdote is that if you want to be successful at this you have to focus on data points that actually matter. Jumping from headline to headline like a  tourist jumping from high street to high street / attraction to attraction is a; unproductive and b; unprofitable.  No disrespect to IG  they have to make money but turn off their news feed its all a distraction. The platform should only be used for EXECUTION purposes.

     To have a better investing/trading experience turn off the noise and follow the economic data yourself. Following economic data points that lead the the economy enables you to see market moves months/weeks before it happnes. Economic data points and market prices lead the narrative. Simply put the numbers lead the narrative. Thefore follow the numbers don't trade based on headlines. 

Only Follow Trusted Data Sources

     I love hive mind communities these are where people pool together with the objective of solving common problems. I sincerely hope the IG community reaches this level one day. The power of the internet is that you can form collaborative unions with people and put heads/ideas together to solve common problems. Someone has created this spreadsheet and kindly put it out for free. Within it you will find a list of links that will direct you to data points that are relevant your investing and TIME SERIES THAT ACTUALLY MOVE THE MARKET. 

    When going through the sheet focus on the Leading drivers/ Leading Indicators  these drivers are what the market focuses on, changes in the ebb and flow of the time series ( the rate at which the data changes ) is what moves the markets. Where you can get the raw data yourself, download them bend them play with them and see what insights you can derive for yourself.  There should be no whining no complaining and no laziness, we can do this if we put our minds to it. https://docs.google.com/spreadsheets/d/1jm739fcSZdPqks28oqA5eHAvSFZLMiXV/edit#gid=1736687311

Follow the link to the spreadsheet, cut out the noise and leave the tourists in the city.

Good Luck. Trading ranges will be released shortly.

CA

This is a really great resource. Brilliant work, and I appreciate you sharing it.

:D

 

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  A Better Way To Go About Technical Analysis

  I have never been a chartist. I knew nothing about moving average crossovers, chart patterns, candlesticks and oscillators. Matter of fact in all honesty I still don't. One of my role models is Anton Kriel; the man manages almost 100 million in assets, runs an online academy, manages 1000 traders and is active on tweeter he is simply a beast!  In his educational talks to students, technical analysis is the last 10 percent of his investing process and he only knows basic patterns ! I did that at first ( support and resistance patterns)  and I was relatively successful before using other  indicators and TA , didn't do too bad but returns were not out of this world either. I did however I noticed that recently, my losses began to accelerate whilst using them. Not that there is anything wrong with indicators per say, its just that there is no standardised indicator that can capture the behaviour of price at granular/deep level ( for me at least) .  

  I have always been obsessed with tinkering with things and exploring ideas about their inner workings. Problem with doing this with a live account is education in the form of losses can be psychologically draining, Taking losses with large positions whilst experimenting, comes with sleepless nights and short tempered flareups with family members.  This is why I thought there has to be a better way to do this. A way that bears the least emotional and personal toll. So after 1/3rd of my account got wipped-out I turned to math. More on this later. 

    In 1854 there was an outbreak of cholera in London. Nasty disease . It was thought to have been spread through "miasma" ; which is some sort of vapour or smell like entity or something. But a man called Jon Snow was skeptical. His skeptisism was so pronounced that he measured and mapped out all sightings / points where the disease was reported and came the realisation that the water supply  in soho was the source of infection. The story goes that he marched into soho and broke the handle of the pump that supplied water to the area. Soon after the pump was destroyed the infection stopped . Upon investigation, it was realised that the water supply was within close proximity to a cesspit hence the source of the cholera outbreak.

Jon was able to come to that conclusion by deliberately measuring , mapping and taking copious notes on the cases of cholera the he came upon. This is part of my process. I measure and map EVERYTHING that is relevant to my portfolio/ positions /ideas views outlook forecast etc. WRITE S&^$ DOWN . If it has a number, write it down somewhere. A note book is preferable but write it somewhere on something. Get into the habit.

After writing things down calculate the % change on a historical basis. i.e. how has this number changed vs where it has been in the past ? it doesn't have to be organised at first, that will come later but get into the habbit. Be cognisant of the numbers and how the numbers change. It could be price, economic data points name it . Just write it somewhere you will be surprised the insights you come up with yourself before they become the narrative. 

Top things I like to have in my note book ( I have at least 30-40)  is the prices or change in prices  of common macro drivers:

1) The Dollar

2) The Move Index ( bond volatility)

3) The Vix ( spy vol)

4) Commodities / Oil

5)  VXN ( nasdaq vol)

6)  OVX ( oil vol)

7)  Major market Indexes.

         These are the things that you should at least be watching. If you notice there are a few volatility drivers up there. That is deliberate. Before  I explain why let me dive into a personal anecdote from my time as a child. I skipped school a lot as a teenager and as a result my grades deteriorated , as function of that my annual school report was abysmal as a function of that my mother seeking answers came to the school and found out that I was skipping classes which ended in her beating the dogS%$% out of me in from of my teachers and friends. That embarrassment I felt was the 6th derivative of a bad decision I made 6 months prior. 1st derivative was me skipping classes 2nd was deteriorating grades 3rd was my mum getting pissed off because private school is expensive 4th was her coming down to school 5th was the beating and 6th was the embarrassment .

As an investor you have to start thinking in derivatives ie what will be the knock on effect if x happens ? I always did this when I thought about running my business but I never thought to do this when looking at prices. Which brings me to volatility . VOLATILITY IS THE FIRST DERIVATIVE OF PRICE. This is why it is very important to keep it on your dash board. The standard deviation of volatility or the VOL of VOL is the 3rd derivative of price. Understanding how that derivative behaves has gotten me out of a lot of trouble and put me on the path to slowly making my money back. Did you know that since 1999 the S&P500 price moves have a 96% correlation with the calculation of volatility for the Implied volatility of options that are at or near the money in the option market? Well I didn't know this either ..... MATH! . Understanding volatility is crucial as a risk management tool.

It is the keys to the city. 

I have attached a paper below that you can all read to get more understanding so that you can build you own models. My model is built around the principles in this paper.

 https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-analysis/article/unknown-unknowns-uncertainty-about-risk-and-stock-returns/6E0E98349D20C1DCF67F3A0452361B80

Good Luck CA

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23 hours ago, Courage said:

  A Better Way To Go About Technical Analysis

  I have never been a chartist. I knew nothing about moving average crossovers, chart patterns, candlesticks and oscillators. Matter of fact in all honesty I still don't. One of my role models is Anton Kriel; the man manages almost 100 million in assets, runs an online academy, manages 1000 traders and is active on tweeter he is simply a beast!  In his educational talks to students, technical analysis is the last 10 percent of his investing process and he only knows basic patterns ! I did that at first ( support and resistance patterns)  and I was relatively successful before using other  indicators and TA , didn't do too bad but returns were not out of this world either. I did however I noticed that recently, my losses began to accelerate whilst using them. Not that there is anything wrong with indicators per say, its just that there is no standardised indicator that can capture the behaviour of price at granular/deep level ( for me at least) .  

  I have always been obsessed with tinkering with things and exploring ideas about their inner workings. Problem with doing this with a live account is education in the form of losses can be psychologically draining, Taking losses with large positions whilst experimenting, comes with sleepless nights and short tempered flareups with family members.  This is why I thought there has to be a better way to do this. A way that bears the least emotional and personal toll. So after 1/3rd of my account got wipped-out I turned to math. More on this later. 

    In 1854 there was an outbreak of cholera in London. Nasty disease . It was thought to have been spread through "miasma" ; which is some sort of vapour or smell like entity or something. But a man called Jon Snow was skeptical. His skeptisism was so pronounced that he measured and mapped out all sightings / points where the disease was reported and came the realisation that the water supply  in soho was the source of infection. The story goes that he marched into soho and broke the handle of the pump that supplied water to the area. Soon after the pump was destroyed the infection stopped . Upon investigation, it was realised that the water supply was within close proximity to a cesspit hence the source of the cholera outbreak.

Jon was able to come to that conclusion by deliberately measuring , mapping and taking copious notes on the cases of cholera the he came upon. This is part of my process. I measure and map EVERYTHING that is relevant to my portfolio/ positions /ideas views outlook forecast etc. WRITE S&^$ DOWN . If it has a number, write it down somewhere. A note book is preferable but write it somewhere on something. Get into the habit.

After writing things down calculate the % change on a historical basis. i.e. how has this number changed vs where it has been in the past ? it doesn't have to be organised at first, that will come later but get into the habbit. Be cognisant of the numbers and how the numbers change. It could be price, economic data points name it . Just write it somewhere you will be surprised the insights you come up with yourself before they become the narrative. 

Top things I like to have in my note book ( I have at least 30-40)  is the prices or change in prices  of common macro drivers:

1) The Dollar

2) The Move Index ( bond volatility)

3) The Vix ( spy vol)

4) Commodities / Oil

5)  VXN ( nasdaq vol)

6)  OVX ( oil vol)

7)  Major market Indexes.

         These are the things that you should at least be watching. If you notice there are a few volatility drivers up there. That is deliberate. Before  I explain why let me dive into a personal anecdote from my time as a child. I skipped school a lot as a teenager and as a result my grades deteriorated , as function of that my annual school report was abysmal as a function of that my mother seeking answers came to the school and found out that I was skipping classes which ended in her beating the dogS%$% out of me in from of my teachers and friends. That embarrassment I felt was the 6th derivative of a bad decision I made 6 months prior. 1st derivative was me skipping classes 2nd was deteriorating grades 3rd was my mum getting pissed off because private school is expensive 4th was her coming down to school 5th was the beating and 6th was the embarrassment .

As an investor you have to start thinking in derivatives ie what will be the knock on effect if x happens ? I always did this when I thought about running my business but I never thought to do this when looking at prices. Which brings me to volatility . VOLATILITY IS THE FIRST DERIVATIVE OF PRICE. This is why it is very important to keep it on your dash board. The standard deviation of volatility or the VOL of VOL is the 3rd derivative of price. Understanding how that derivative behaves has gotten me out of a lot of trouble and put me on the path to slowly making my money back. Did you know that since 1999 the S&P500 price moves have a 96% correlation with the calculation of volatility for the Implied volatility of options that are at or near the money in the option market? Well I didn't know this either ..... MATH! . Understanding volatility is crucial as a risk management tool.

It is the keys to the city. 

I have attached a paper below that you can all read to get more understanding so that you can build you own models. My model is built around the principles in this paper.

 https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-analysis/article/unknown-unknowns-uncertainty-about-risk-and-stock-returns/6E0E98349D20C1DCF67F3A0452361B80

Good Luck CA

WD Gann said in 1909 that all the markets are all Mathematical points of force

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On 09/04/2021 at 14:30, wealthelf said:

Courage, sounds like you are a Hedgeye guy?

I was , but I find the CEO a bit abrasive a bit insulting and not to my taste  . So I made my own model and do all the work myself. 

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On 09/04/2021 at 14:36, wealthelf said:

This is a really great resource. Brilliant work, and I appreciate you sharing it.

:D

 

Here to help. Share with anyone who wants to improve their game.

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Doing The Least Amount Of Work For The Biggest Possible Return ; There Are No Original Ideas. History Always Repeats Itself.

   Part of the investing, is the grindy process of trying to generate new ideas. A lot of people think Hedgefund managers and money managers are more intelligent than the average person. I don't think so. Otherwise they would have figured out that  rising rates as the economy opens back up is BULLISH for the economy. Rates rise as the economy improves so do commodities and corporate profits. Yes there is a point at which rates become too high and at which rising rates hinder economic growth due to increased interest payments on private and public sector debt. But the recent rise in the US10yr was absolutely bullish for the economy.  

It took me three years to complete a two year A-level so I am not the sharpest guy in the room most times, however,  I have noticed since I started doing this that the same stories repeat themselves over and over again. One week it's the Dollar collapse, another week it's the inflation story. There is always one headline or another. Amidst all this it is very easy to get side tracked whilst generating ideas. 

  I think best ways to generate ideas is to look look at the economic cycle. What part of the cycle are we in ? Are we early ? middle ? or late ?. ( I think we are near the peak give or take a few months. Don't hold me to it I could be spectacular wrong) . Once you make that assessment, you now need to find companies that do well given that part of the economic cycle. Then do your fundamental analysis of balance sheets etc. And then look for a good entry price. Rinse and repeat . Do this and you will notice the same things happen over and over again. This is my second business cycle ( first was 2015-2020) and now, I notice the same things happening again. So yeah these so called " professionals" are not that smart. I would wager they are of average intelligence like the rest of us. Only difference is they just have more money.

   Below is a template of investing ideas. I borrowed it from a  friend who was kind enough to let me have his ideas spreadsheet. It contains simple ideas that can result in a lot of profits if you get your timing right. Have a read and find ways to implement these strategies at the right time. You do not need to work too hard. 

Until next time God Bless.

CA 

 

834174_Screenshot2021-04-12at22_00_06.thumb.png.d8e90e6f35829f5e23a7d39f1627baea.png

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Current Economic Leading Indicator Outlook: Always Look At The Big Picture

   The last 9 months have been nothing but epic in terms of the performance of risk asset if you have made some money great! If you have lost some, don't worry there is always a bull market somewhere. 

  Given the current confidence and state of affairs, I think it's time we begin to begin to reassess our current economic situation. Bonds have been getting destroyed since the relation story started to take a hold late last year, commodities have been spectacular as inflation has risen due to base effects. The YoY growth in rates ? PHOAR! talk about a rally eh?  Now, however, we are reaching important levels (IMHO). When I look at the economic fallout post covid, there is still a lot of scaring left over as a result of the lockdowns. Many people are unemployed and under employed and a lot of support is still needed. Yes,  prices are rising and businesses are opening up again but there is still ALOT of work to be done. Inequality still needs to be addressed, countries are still battling the pandemic and the stop start nature of re-openings and closures, all pose a significant hurdle to growth.

    Also, before the lockdown, there were a lot of structural issues in the economy that needed to be addressed. These issues ( demographics, high government debt to GDP encouraged by record low interest rates) are still with US and over the coming months, my guess is that once the inflationary impulse is done with, we will see these issues come back to surface as they have not yet been dealt with. 

  I use the ism as a cyclical indicator. It is a survey I use as  a means to gauge the speed of the economy , the current reading for the US sits at > 64. Highest level since 1988. Normally around these levels , the ism tends to  begin to decelerate. See below. ( source trading economics)

324133331_Screenshot2021-04-15at15_03_02.png.9e9608bd307faf0c367f25bda01026ec.png

Also, the employment situation needs to be addressed , > 13 million people require support from the US government. (Source macrotechnicals). 

837708192_Screenshot2021-04-15at15_17_57.png.49c3538a35f7c6e37b5ed1e0edd106a1.png

     Inflation is here yes, however, we should now start thinking about the consequences of higher prices; If companies have higher input prices, there is a ceiling to how much of those prices can be passed on to consumers. If the consumers are unemployed ,  there is potentially a demand issue which will result in  companies having no choice but to take those prices down this has a knock on effect on the supply chain resulting in lower input prices. Currently, the euro area is in the midst of a 5 year high in prices. 

33303822_Screenshot2021-04-15at15_47_30.thumb.png.3e7df9c5aeb7f42db89a74790388ffd6.png

 

At some point, this will start to matter.

Lastly and most importantly, the rise in interest rates on a year over year basis is reaching a point where historically, there has always been a slow down in the rise of rates. Cyclical pattern has been in place since 1994. This was a tool I used to prepare for the reflation theme we experienced over the last 9 months.

1034001742_Screenshot2021-04-15at14_53_13.thumb.png.b1affdd39d5384d98d1eb64600d5dc5f.png

 

 I am not calling for imminent deflationary collapse. I am simply saying statistically, we could be heading for bumpy roads as global governments attempt to heal the scaring caused by the mandated lockdowns. 

So What Is The Play?

The play is simple; Should lower inflation becomes a reality I would want to own  Bonds, the Dollar, Gold, Gold miners Tech, High quality and low beta stocks. Not right here right now of course as I still think there is a little more room left in the tank for inflation. But I would start adding these securities to a watchlist for observational purposes . Watch their performance on a regular basis to see for periods when the market potentially starts to sniff these economic conditions out.

 

Risks To MY View ?

If we get an infrastructure bill for the US then inflation is going a lot higher and bonds will continue to languish . And it will mean my view is wrong. At that point I will stay with the reflation and growth story buying more commodities, value and growth companies until the cows some home.

Good luck out there.

CA 

Lastly, its been a little slow with ranges this week. Mad week at the offie. Will hopefully be able to get back on top of things next week. I wrote this in one take. You will probably find gramatical errors. Try to ignore them and focus on the key ideas. ☺️

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18 hours ago, Courage said:

Current Economic Leading Indicator Outlook: Always Look At The Big Picture

   The last 9 months have been nothing but epic in terms of the performance of risk asset if you have made some money great! If you have lost some, don't worry there is always a bull market somewhere. 

  Given the current confidence and state of affairs, I think it's time we begin to begin to reassess our current economic situation. Bonds have been getting destroyed since the relation story started to take a hold late last year, commodities have been spectacular as inflation has risen due to base effects. The YoY growth in rates ? PHOAR! talk about a rally eh?  Now, however, we are reaching important levels (IMHO). When I look at the economic fallout post covid, there is still a lot of scaring left over as a result of the lockdowns. Many people are unemployed and under employed and a lot of support is still needed. Yes,  prices are rising and businesses are opening up again but there is still ALOT of work to be done. Inequality still needs to be addressed, countries are still battling the pandemic and the stop start nature of re-openings and closures, all pose a significant hurdle to growth.

    Also, before the lockdown, there were a lot of structural issues in the economy that needed to be addressed. These issues ( demographics, high government debt to GDP encouraged by record low interest rates) are still with US and over the coming months, my guess is that once the inflationary impulse is done with, we will see these issues come back to surface as they have not yet been dealt with. 

  I use the ism as a cyclical indicator. It is a survey I use as  a means to gauge the speed of the economy , the current reading for the US sits at > 64. Highest level since 1988. Normally around these levels , the ism tends to  begin to decelerate. See below. ( source trading economics)

324133331_Screenshot2021-04-15at15_03_02.png.9e9608bd307faf0c367f25bda01026ec.png

Also, the employment situation needs to be addressed , > 13 million people require support from the US government. (Source macrotechnicals). 

837708192_Screenshot2021-04-15at15_17_57.png.49c3538a35f7c6e37b5ed1e0edd106a1.png

     Inflation is here yes, however, we should now start thinking about the consequences of higher prices; If companies have higher input prices, there is a ceiling to how much of those prices can be passed on to consumers. If the consumers are unemployed ,  there is potentially a demand issue which will result in  companies having no choice but to take those prices down this has a knock on effect on the supply chain resulting in lower input prices. Currently, the euro area is in the midst of a 5 year high in prices. 

33303822_Screenshot2021-04-15at15_47_30.thumb.png.3e7df9c5aeb7f42db89a74790388ffd6.png

 

At some point, this will start to matter.

Lastly and most importantly, the rise in interest rates on a year over year basis is reaching a point where historically, there has always been a slow down in the rise of rates. Cyclical pattern has been in place since 1994. This was a tool I used to prepare for the reflation theme we experienced over the last 9 months.

1034001742_Screenshot2021-04-15at14_53_13.thumb.png.b1affdd39d5384d98d1eb64600d5dc5f.png

 

 I am not calling for imminent deflationary collapse. I am simply saying statistically, we could be heading for bumpy roads as global governments attempt to heal the scaring caused by the mandated lockdowns. 

So What Is The Play?

The play is simple; Should lower inflation becomes a reality I would want to own  Bonds, the Dollar, Gold, Gold miners Tech, High quality and low beta stocks. Not right here right now of course as I still think there is a little more room left in the tank for inflation. But I would start adding these securities to a watchlist for observational purposes . Watch their performance on a regular basis to see for periods when the market potentially starts to sniff these economic conditions out.

 

Risks To MY View ?

If we get an infrastructure bill for the US then inflation is going a lot higher and bonds will continue to languish . And it will mean my view is wrong. At that point I will stay with the reflation and growth story buying more commodities, value and growth companies until the cows some home.

Good luck out there.

CA 

Lastly, its been a little slow with ranges this week. Mad week at the offie. Will hopefully be able to get back on top of things next week. I wrote this in one take. You will probably find gramatical errors. Try to ignore them and focus on the key ideas. ☺️

charts are  all courtesy of macro-technicals.

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