I’m in the process of creating a formal “business plan” for one of my trading strategies.
In 2002, I went through an arduous experience of creating an operating agreement, disclosure documents, and strategy explainers to attract investors as I built a small commodities hedge fund from scratch. Ignorance was bliss.
It was a chore, but a worthwhile investment in my time and energy because I ultimately won the business and started the fund. Success!
Now I’m entertaining the idea of managing OPM (other people’s money) again, and I’m reminded of the rewards of this process.
What caught my attention following the SVB collapse wasn’t the headlines so much as how the markets handled the news and the stress that followed.
It’s difficult to find the silver lining of one of the largest bank failures since the financial crisis. But I’m more of a glass-half-full kind of guy.
Despite the relentless barrage of negative headlines, it’s undeniable that risks have been contained, and the markets have weathered the storm – at least for now.
Investors ditched equities and ran to the safety of US Treasury bonds as the saga unfolded. It was like the good old days when stocks were risk assets, and bonds acted like – well, bonds!
Now that the dust has settled, I believe the renewed classic intermarket relationship between stocks and bonds and the familiar patterns of risk-on/risk-off behavior bodes well for the overall market.
Especially when you consider easing volatility…
Here’s an overlay chart of the Bond Volatility Index $MOVE and the S&P 500 Volatility Index $VIX:
If you would have told me in September that the Dollar would fall apart over the next 2 quarters, I would have told you that precious metals are likely doing well in that environment. I would have also said that Silver would outperform Gold during that period.
In this case I would have been absolutely right.
Great.
But what I would have also been confident about is foreign equities doing well in that weaker Dollar environment.
And while I would have also been correct in that guess, I would have definitely told you that it would be Emerging Markets outperforming, not Developed Markets.
And that would have been very wrong.
It's been the Developed Markets outside the U.S. that have been dominating the equities markets over the past couple of quarters. Look at the performance of these assets since the Dollar peaked:
Monday night we held our March Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each
