Marginally net long! That's how you beat the market

14 ביוני 2016

Stocks in global terms have fallen by 0.8% since we marked the markets for the first time this week. For the year-to-date, stocks in global terms are actually down 2.2% while stocks here in the US as represented by the S&P are up 1.7%. Further, the bear market that began in late May of last year when our International Index hit 11,185… its all-time high…is now all the more severe for stocks globally are down 17.2% and a decline by that sum is bearish in anyone’s estimation. More weakness is likely.

Note then the swift/sharp decline that has taken place in the CNN Fear & Greed Index. This index has fallen from 80… a historically high level that argued for weaker share prices… to 53 presently and it is heading toward “fear” levels with uncommon speed. It may take several weeks and a great deal of distance to the downside before “Fear” is the driving force in the markets and it shall then be right to be a buyer of equities once again.

As for our own positions in our retirement fund, for the year-to-date we are +3.3% and are thus beating the year-to- date returns of both our International Index and of the S&P. We are marginally net long as of last night’s close although we became marginally net less so early in the session as we added a bit to our short derivatives position. We are long of the same high-tech, “cloud” related equity that we have been long of for the past two weeks and we are long of metals, but rather than being long of aluminium we sold out of those shares and replaced them once again with the shares of the US largest steel manufacturers. We are long also, of course, of gold in EUR and Yen denominated terms.