Dollar sentiment is hyper bearish everywhere I look. The usual anti-dollar talk is of gold, commodity prices and the trade deficit. But every currency I follow is drooping in the face of a gold bull market. The following two charts present some technical analysis for a contrarian view to the bears and aunt Nellie's dog.
As of the close today, April 27, 2006, we have a Bagpiper buy. For tally purposes I am using 1315 as the reversal price. So the last sell was a break even, but I had a ten handle loss on the first sell.
This brings the total to +109.50 since December 1 last year. However, since March 1st I have a 23 point cumulative loss. This is a reflection of choppiness which is not kind to daily price bar trading systems. The bagpiper is a trend following system, although it can change trend on a dime. Choppy periods are something one learns to live with in systems of this sort.
The bagpiper confirmed a sell today in ESM6 and SPM6. I will record the nearest round number to the CME pit settlement price of SPM6 as his sell price. This will be tallied as an add-on sell for record keeping purposes.
The stock markets remain fickle and enigmatic. Some broad stock indexes are making new all time highs at the same time that the Dow 30 and SPX are below their highs of 2000. NYSE breadth measured by advances and declines and the Mc Clelland Indexes remains weaker than the index price. John Hussman's value and breadth approach has his HSGFX totally hedged and his gains at under 2% year to date.
An oddity is the American Association of Independent Investors' sentiment index (AAII)having more bears than bulls, normally seen only at intermediate or long term lows. http://www.hal-pc.org/~wsrafuse/BULL-BEARS.gif Normally AAII is heavily bullish when indexes are making or nearly making new highs, so it would be a miracle (or an anomaly in AAII's data) for them to be right at this time. My own sentiment measures are fairly high in the bullish ranges they have established over the past year, but not higher than in January or March.
Several cycle index makers feel a market downturn is due, and my own cycle index suggests a down turn followed by a rise to new highs inoi next year. But such studies are more like a game or an amusement and one can't bank them.
Lagging economic indicators have turned modestly down again as they did in early 2005. Whe they turn down, lagging indicators are thought to be saying that "things are as good as they can be", but of course they can turn up again as they did last year.
The Bagpiper System is about to signal another sell unless the SP futures make new highs tomorrow. My portfolio remains pretty well hedged, but if we make new highs tomorrow I may remove some hedges and lighten up on golds which have had an enormous run.
Despite the above comments I am not bearish, and I think we have to be ready not to miss a big breakout and run up in various sectors which benefit from or adapt well to inflation. I take the inflation phase of Kondratieff very seriously, and the broad market should do well on a trend basis over time. By the way, I published the "Chart of the Year" on April 8, but then I got short term bullish based on the severe drop, and bought some long bonds the Thursday before Easter. They did well for a few days and then dropped back down near where I had bought them and I exited. Barring a recession in an inflationary phase, bonds are not place to be even for a "dead cat bounce".
The chart shows a plausible case for an upside breakout and larger run up in SP500. First note the Elliott Wave labelling from 2000 to the 2003 low. For a long while there after I wasn't sure whether or not there would be a "D" and then "E". I think it much less likely now for that to happen.
Most of us in the market have felt the lethargy and heaviness since early 2004, excepting hot Kondratieff sectors: metals, oil, and emerging markets primarily, and continuing moves in small and mid caps. As late as last October the SPX had done nothing since March 2004. That, my friends, was a correction. I am labelling it here as a "running triple three" a b c with c being above the March 2004, hence "running". This is a bullish formation going into a third wave.
Price has risen above several important lines: the shallow downtrend line from 2000 was pierced and retested in December. Likewise a line up along the highs from March 2004 to March 2005 has been bettered. The thicker cyan line is not a true trend line, but I think it's important. It is the continuation of a line up from the 1982 low, at the start of the great bull market, through the 1998 low, which was the largest correction in that bull market until 2001/2002. It is a "moving average" or average weekly move of the bull market. The market of course went far below it in 2002, but now it has come back and surpassed that line which is a sign of strength. If SP500 can stay above that line, it has a shot at new all time highs as many other indexes have already done
Several bloggers I respect have remarked upon Richard Florida's April 7th article for Financial Times: "Do not get impaled on the spikes of China's success". Florida is Hirst Professor of Public Policy at George Mason University (NCAA "Final Four" in basketball) in Fairfax Virginia.
Florida talks about the amazing uneveness of China's economic success. How localized it is to a few provinces, how shallow it is in terms of who participates, how thin their educated class really is, and how over-stretched it is in providing for its own citizens. The irony of this shallowness occurring in one of the few remaining communist countries needn't be overdone. Nor should the irony be missed that a lot of foreign capital has been thrown into the world's largest (potential) market willy nilly, as if capitalism and profit potential didn't matter.
It will be easy for me NOT to pontificate since I have never been to China, except for Hong Kong, and I am rather weak in Chinese history in recent times. But from a market and geo-political perspective, which I do know, it has seemed to me for a while that China is at greater risk for a major market/economic crash than any other active economy.
Except for the densely talented regions detailed by Florida, China is still run by the Communist Party and Red Army. This is where most of the bad debts are and the corrupt management. Granted that the modern boomer/booster economy will have much unexposed corruption, but the other part will have to be far, far worse. Imagine New York's Eliot Spitzer on the loose in China exposing the weakness, venality and corruption! Oh my!
The defining moment for China is the 2008 Olympics in Beijing. Property speculators and other boosters are, of course, counting on the Olympics to sell into, but for the Chinese government it is the keys to the kingdom. Everything is being propped up, deferred, suppressed, and polished up to make a statement: WE ARE THE WORLD. It's even more a turning point than the US presidential cycle. And it may turn out to be, as my European history university professor used to say about 1848 Europe: "it was the turning point of history upon which history failed to turn".
China's modern success really only began in the wake of the 1997 deflationary crash in Asia, and that crash set the tone for events leading to the bubble burst and decline to 2002-2003. If you've read my Kondratieff work you'll know that we are not going back into the Asian deflation and Western near deflation of the late 90's and early 2000's. But major crashes and economic pullbacks do indeed occur during inflations as they do during disinflations.
China is now overdone in many ways, and it is questionable whether they can navigate their way to the eternal Goldilocks economy with their untested greater leadership riding a tide not created by themselves. It used to be said that when the US caught cold, the world got pneumonia. Currently we might say, not entirely metaphorically, that if China gets a bad cold the world will get a bird flu pandemic.
I have no intent to make a prediction, but in my opinion the Achilles heel of the world economy right now is China. Some of the fault lines--banks, intellectual property piracy, contract disputes, material support of islamist (and other) bad boys, undermining of US energy sources--are well known, but many others are not. And therein lies the problem. In addition, those with real and valid axes to grind know about the Olympics.
Confirmed today on the 4:15 CME pit close: sell the long and reverse to short at 1305 SP/ES.
The long was bought one month ago at 1283 basis the March contract and rolled to the June contract (10 point difference), so the effective profit as of 04/10/2006 4:15 PM CME close is 1305-1293 or twelve points. Not a great trade, but still a profit. It's been a tough month for a daily bar trader which is why everyone is scalping these days. But I'm too lazy to scalp as a regular regimen.
Since 12/1/05 there is a cumulative profit of 119.5 SP points with 8 winners and 3 losers. That's about 40 points a month or nearly 11 points per trade.
I posted this chart last June, and it is playing out beautifully in the concept of Reverse Point Waves, as Welles Wider called them, and as other people call broadening tops, "spandos" (Don Wolanchuk) and "pointers" (Steve G).
I have studied and learned an awful lot from all of them about this important form of analysis, but particularly from Steve G who developed the concept into the core of a fantastic trading system in all time frames . Thanks guys!
In any event the chart had a 5 point reversal formation very long term into the high and then a 4 point continuation UNDER that high as an upward correction before falling again. There are other "pointers" visible on that chart, but the ones that are labeled are key.
I found this chart today. Once you know what to look for, you will see examples of the Kondratieff Wave in many price, growth, incomes, interest rates and other data series.
Some observers will object that it was all due to geo-politics. But note how the drilling rig count rose dramatically to meet demand and then fell off even more dramatically once demand was met by supply.
Then finally in 1999, when the rig count was at its lowest due to nearly two decades of downtrending prices and plentiful supply, a slight increase in demand in China and elsewhere exposed the parlous state of the whole oil supply infrastructure, and prices began to rise once more.
I needn't, but will, point out that all investors know that gold made its high also in late 1980 and its low in 1999 with a secondary or double bottom in 2001.
Long Wave websites and many books used to discuss the "why" of the Long Wave. The reasons advanced were many, including astrology and numerology, politics and sociology, but I think a simple argument for supply and demand can be made. When essential commodities are scarce, it takes a long while to get them geared up again.
First there is a period of some years before the new rising prices are taken as other than a momentary aberration in a bear market. Price didn't go down in a linear manner for the prior 20-30 years, so maybe this is merely another rally which will fizzle and die like the others did.
Then after five or more years there is realization or recognition that something must be done about shortages: by governments, industries, banks, labor and most certainly by end users and consumers. The financing of massive new supply infractructures to relieve the shortages takes time, and the phases of it are many. There are always a few projects that are ready to go, but most are not. For many crude commodities there begins a new round of the acquisition of land for exploration, the exploration itself, the proving-up of the ore body or the gas or oil field, the financing of production and ports and pipelines and ships.
All this takes a decade or more in real market time. Engineers and laborers are in tight supply and must be trained, often housed, and paid. Government gets into the act by demanding higher payouts, taxes or outright expropriation, as we see. Environmentalists of the urban western type, as well as people living near these massive new projects, want their share an d/or try to slow the projects.
As economic growth increases, demand rises, adding to the price pressures. Tire prices for machinery and the machinery itself rise. Labor begins to flex its muscles to share in the largesse. After 15 years the new productive structure has still not caught up to demand. Consumers/voters are angry and legislatures punish producers for their profits. These events have little effect upon projects in the works or on the drawing boards, due to long lag times between deciding on a project and getting it into production. But gradually producers begin to pull in their horns a bit on new projects as many projects turn out not to have been as profitable as they looked, even at new higher prices.
This in turn puts more pressure on prices as investors become aware of producer reticence and shortages. Prices surge higher, and reticence is finally thrown to the winds as many new projects are undertaken at whatever the cost.
At last prices begin to show signs of stabilizing. Perhaps higher prices have finally inhibited demand, or supply has finally been able to satiate demand. Cost overruns on late projects are legion. Profits are dropping a bit.
The long down cycle is beginning with prices at historic highs, unemployment very low, wages high, GDP high and tax receipts even higher. It will take a long time for late projects to be completed, and when they do they will be selling into a saturated market at lower prices. Some will think this initial decline is just a minor correction in an even longer bull market, and this idea will persist for several years. Many people won't remember or even be aware of the last down wave. It will take a while to close down unneeded projects and get rid of them, or go through bankruptcy.
Well you get the picture. This is what happens in most crude goods categories: commodities that are necessary for new infrastucture and production, transportaion, utilities, homes, industrial buildings. And all of these have to be financed. So interest rates go up in the growth half of the cycle and go down in the slower growth phase when projects dry up. And so it goes.
So we know the commodity cycle and the bond cycle. But what about stock equities? That's what most poeople invest in.
I'll leave that mostly for another time, but here is a brief preview. In the growth phase of Kondratieff, stocks of productive companies, and services for them, do well as well as do commodity stocks. In addition many companies, whose market domination permits it, are able to raise prices a bit faster than their expenses rise. They do well too. These companies may not all be domiciled in your home market.
The best of the growth bull market is the first half: ten to fifteen years. After that interest rates and prices of supplies and labor begin to cut into profitability, and the stock market has a harder time. Toward the end there is almost always a rather severe bear market or two.
Notice that this runs counter to the everyday wisdom that rising interest rates are bad for stocks. Eventually that is true, but "eventually often takes quite a long time", depending upon the company and the industry and nation.
Also counter to conventional wisdom, many of the best bull markets in stocks occur during the slowdown of growth phase of 20-30 years when comomodity prices and interest rates are declining due to reduced demand and more than adequate supply: 1932-1946 and 1982-2000 are great examples. More on all this another time.
But do not be foooled into thinking that rising rates and prices always mandate a serious bear market in the near future. Reflation and inflation are good for stocks for a long time until inflation gets "too hot". Although we can have bear markets and mini-crashes before inflation gets "too hot", the end of the current secular bull market has much longer to run than just 2002/3-2006.
As long as I am on the subject, I'll present these schematic diagrams of the Kondratieff wave form. The larger diagram is of unknown origin. I found it at a website without attribution and have edited it for my purposes. Whoever did the original thought that stock markets followed the Kondratieff wave, a common misconception. One version of this chart appeared in early versions of Frost and Prechter's book, and an even earlier one I have in an old Julian Snyder newsletter. It's such a simple schematic diagram that it has to be as old as the concept of the Kondratieff Wave itself.
Although the schematics imply that the tops and bottoms are V-shaped, both tops and bottoms actually take about five to ten years to complete. It makes more sense to talk of momentum tops and final tops and bottoms. But there's no need to get into that just now.
The smaller schematics show how the wave form varies a bit under different longer term political/economic regimes. The periodicity of about 53-54 years has held steady since the 18th century, although my own studies and those of others have found a range of 48-72 years back to the European middle ages. The average, however was, 53.6 years.
I've read many of your articles in the past. Don't you think that real estate needs a substantial correction before rising again, especially given the gains made over the last few years? I live in Sydney (Australia) and our boom ended in 2003. Having said that, the correction so far has only been mild (about 15%). It is hardly the 1989-1991 scenario again of a sharp 25-30% drop. We're in a commodities boom and Australia is a major beneficiary, as reflected in the performance of our stock market.
However, I've always believed that excesses need to be purged before a new bull market can begin. In the case of RE, we've only had a small correction, which leads me to believe that the RE boom may not be over and that perhaps commodities will keep the economy buoyant. Without the stock market tumbling, I cannot see a crash on RE.
What worries me however the level of debt. Australia is worse that the US in the level of debt per capita. Our 10 year bond yields seem to follow the corresponding US 10 year bond yields (at least for the last 16 years) and I've noticed that the US yields have risen substantially recently. I'd tend to think that it would not take much of a rise in interest rates to really hurt home owners. Such action could well then lead to a recession.
In short, regarding your comment of 'Real estate and gold and most commodities will trend up but with negative interludes', I'm wondering whether a 'negative interlude' may arrive sooner rather than later - including the USA.
Both Australia and the UK have had residential real estate corrections, as you know, and we may have one starting in parts of the US. Residential real estate depends mostly upon very local factors. Our great home price increase in the past few years was a complex social event occasioned partly by "cocooning" after 9/11/2001 and the associated rapid drop in borrowing rates. However, it also occurred nearly at the exact bottom of the Kondratieff Wave itself.
With regard to Long Wave real estate investing, I really meant to refer more to commercial real estate, which also has local determinants, but where the economic situation is the primary factor for increases and decreases in values. Residential real estate can turn out to be a good investment, but in general it's best to think of it as "just home" for family and self. A person with a modest paid-for home, but who invests for the long term in stocks or other assets, will generally come out far ahead of some someone who leverages up a residence beyond his means as an "investment". Obviously some folks will at some times get lucky doing the latter, but luck isn't as controllable as other investments can be.
The concept of a "wipeout", or major debt and real estate disaster at the end of a Kondratieff down cycle, is NOT an integral part of Kondratieff's view nor my own. Such events "may occur" but are not necessary. All that is necessary is a 20-30 year decline in interest rates and prices followed by convincing rises in many price and growth data series.
That Long Wave "wipeout" concept in Kondratieff studies came from the so-called "liquidationists" in this country in the early 1930's. Andrew Mellon, who was President Hoover's Secretary of Treasury, was a vocal liquidationist. The idea arose that all "bad" investment had to be liquidated or destroyed so that "good" or intelligent investment could begin: this was often referred to as "creative destruction". The former Austrian imperial treasurer, Joseph Schumpeter, who became professor of economics at Harvard University after World War I, was a convincing champion of "liquidationism".
In my view "liquidationism" is a simplistic political slogan. Some particularly severe down cycles, like the one ending in ~1844, and in some parts of the 1929-1949 down cycle, are indeed severe liquidations. The recent one from the mid 1970's peak to 2002-2003 was not.
The Long Wave is an economic observation, not a political or philosophical system. Many would-be Long Wave analysts missed the whole down cycle of interest rates (and slowing growth), going from nearly 20% in 1980 to nearly 1% several years ago, because they needed to see "blood in the strees" and a major credit cataclysm. Many are still waiting for this "Second Coming", as did the early Christians, long after it's finished.
The hallmarks of the down cycle are decreasing crude (commodity) and finished goods prices, falling interest rates, and decreasing rates of growth and all such things which depend upon growth such as incomes. That is truly the "bottom line" of Kondratieff.
By the way, I have been enjoying the fruits of the Kondratieff rise by investing in BHP and in Rio Tinto for the past four years, both directly and through funds which own them. I suspect, barring some mistake or odd happenstance, that they and many other Australian investments will be good holdings for at least another 15 years.
From 1996 to 2003 I wrote so much about the Long Wave of Kondratieff in newsletters and internet websites, that I am rather burned out on it. Most people never got it then or will ever do so. There is no point in presenting the history or the cycle. Commonly, people only care about next week at best and have a gloomy opinion of the future in general. "Eat, drink, and be wary."
Since 1999-2003, depending on the asset item, the price patterns since the 1970's through 1990's totally reversed.
Interest in stocks is always most common: they go up most of the time except when deflation is around and when hyperinflation is around. They will go up for the next 10-15 years until inflation gets "too hot". Not in a straight line of course, but trending upwards.
Bonds will trend down over the same period, and the US dollar as well. Euros and Yen and the rest of the paper chits will also trend down with variable rates to each other.
Real estate and gold and most commodities will trend up but with negative interludes.
The cyclical tops in most stuff (physical and paper assets) and the lows in bonds will not occur until 2020-2028, depending on which type of final high we have. We will have two or three major crashes in "emerging country" stuff, and at least one in US and european stuff.
Some stuff you won't want ever to sell in these two decades. Others you can trade if you're bored or need the money.
Bank it. It's as easy as buying bonds in 1981-82 and as profitable, even though the decay of all currencies makes it harder in this phase.
This is not a prediction of the future. It is a description of the controlling cycle of economics throughout history and how investment assets react to that cycle.
Keep your eye on the ball and invest accordingly. Enjoy life and accept the fact that things change.
Some traditional and proprietary sentiment measures are near buying lows and others are near selling highs. The intelligent amateur internet trading sites seem polarized more than normal between the crash-of-the-month crowd and the to-the-moon crowd.
If I had to choose sides I'd go with with the latter group because the news has been depressing my entire life as it is now, and I see some smart people buying.
As described in the article below, one doesn't have to choose sides if one learns how to manage a portfolio. But there are also some intermediate term data which support the bullish case. The official and legal US commercial hedgers of stock portfolios are covering their natural and habitual shorts. These folks are insurance companies, bank trust departments, mutual funds, pension funds and all those like them who manage or self-invest in stocks for a profit or underwrite them. There are only about 200 of these "big boys" around the world recognized by the CFTC as true commercial or trade hedgers in US stock index futures. As such they qualify for very low margin deposit rates for hedging short or long, and they are required to identify exactly what they are hedging in order to qualify.
On January 31 they were net short an amount of stock index futures equivalent to 102,000 SP futures contracts. In dollars that is 102,000 times $250 times 1300 they were short against their long positions. That's a good bit of bearishness. As of this past week they have reduced those shorts in a big way to -58,000 SP futures equivalents (combining all contracts as George Slezak does).
The Dow 30 was higher this past week on Tuesday (reporting day) than it was on January 31, and these folks normally short more at higher prices, not cover shorts. So something is making them more comfortable being long their stocks. I don't know what this factor is that is making them cover almost half their short hedges--they always have some-- but I believe they are smarter, or at least better informed, than I am. They have to be, given who they are and where they are. And they are usually right, even if not immediately.
This could be called "The Endless Winter" of investment returns. It's like a travel adventure film going from one fantastic ski area to another, but there is either no snow to be found or just bunny slopes for beginners. Where is the high deep powder?
It's embarassing and frustrating to report that my liquid asset accounts, including all cash deposits, are up only 2.8% for the first quarter. Cash itself is paying at a 4.6% per annum rate at Vanguard's Prime Money Market, so it was doing over 1% on the quarter.
Gross's report is long and repetitive, but it's a very important discussion of what's going on, and why substandard returns often lead to even worse risk-adjusted returns. If you want to read even more about this depressing subject, go over and read John Hussman's excellent but boring weekly essays on the same subject: http://www.hussman.net/index.html
On the other hand, gold funds (I own some) and small caps here and everywhere did superbly again as they have for six or seven years. It's a matter of the historic risk you are willing to take to get outsized rewards. If you are 25 years old, "no problem." You should be taking some risks and going for the "gold". But small caps will not outperform forever.
I am still long as I have been since early 2003, but I have been in variable hedging mode since the last quarter of 2005. Plungers with $5000 accounts are entitled to laugh. Over the past year I have gradually moved to funds with good records in both bear and bull phases and especially funds whose active management includes a policy and practice of accumulating cash when times are likely to be tough, not holding 100% long always through booms and especially through busts. If you look at funds via MSN Money or FastTrack (mentioned in the portfolio archives) you can learn who they are. I want to add that I am up 13.2% year over year.
My core positions are 42% of all liquid assets as of yesterday: HSGFX, DODBX, SGENX/FESGX/VHGEX and FAIRX. Let me mention SGENX first. It is the old SoGen Global Fund run by Frenchmen out of New York. Jean-Marie Eveillard ran it for decades and now Charles de Vaulx. It is the perfect balanced global fund that has everything including physical gold (a minor holding). The only problem is that it is a load fund, and it is closed to new investors. FESGX is the D class no-load version which I own, also closed to new investors. Check out their total return chart at FastTrack compared to almost anything over the past 20 years.
Vanguard's VHGEX is almost as good as SGENX. The only real problem with Vanguard's Global Fund is that like most Vanguard Funds they do not believe in timing, and so they never run their cash reserves above 1-3%. So they lag in bear markets. So if you buy VHGEX, as I am doing for add-ons, only buy 75% of what you would buy of SGENX/FESGX. You must carry some cash **for** them. If you grasp this simple concept, you are already on the road toward building your own hedge fund using mutual funds! Building cash and spending it are key elements in long term returns. Find people who know that and do it.
HSGFX from John Hussman takes a different tack. Again look at its total return chart at FastTrack or MSN Money. (Download and install the MSN Money advanced chart software---it's free and non-invasive.) Hussman buys stocks he thinks are undervalued and buys short index options or futures against them. The concept is to buy what's good and sell the average. It is not a bear fund, and Hussman can be fully exposed long when value conditions warrant. He varies his hedge according to values (P/E's etc.), but also according to market breadth. If the market is showing strength despite being over-valued Hussman is going to be exposed to the long side, but only if the strength is shown on declines. He uses all the classic techniques from securities analysis to technical market analysis, and "Buy low and sell high". And he's still only in his early 40's, so he'll be around. It took me several years to warm up to his approach, but look at what he did from 2000-2003. Obviously hedging pays off best in bear markets and detracts somewhat from bull moves in overvalued times.
Except for the fact that he has no foreign stocks, I would say Hussman's could be the only fund you would ever need plus a money market and/or an intermediate term bond fund. But I think SGENX and VHGEX add another dimension that we need. And my favorites below.
Then there is dear old DODBX which I have owned a long time. They are a stock and bond fund, but an extremely intelligently done one. They are heavily in cash now, perhaps 25%, and some very short term bonds with the rest in stocks. Dodge & Cox have been legendary stock pickers since 1931. Typically they are 60% stocks and 40% bonds of variable duration. And they are between 10% and 15% in foreign stocks. Again, as with Hussman and the Frenchmen in New York, and Vanguard, it is the management you are paying for. Mind you, the management costs on all these funds are relatively low. You really need to see long term total return charts with dividends reinvested, like the ones I have mentiond, to convince youself what these three funds do.
The fourth fund is Fairholme FAIRX. It is the youngest of the four (1999) and developed out of a group who invested for themselves and private clients. Like the others they believe in cash to prevent losses, and they believe in value. Right now nearly 20% of their holdings are in Berkshire Hathaway (Warren Buffet) and the second largest holding is Leucadia, another holding company. White Mountain is in there too. Fairholme are deep value and "coming attractions" people, but they know when to lay low. Look them up and study the charts compared to index and popular dopey funds over the period from 2000 to now. This quartet are 42% of assets, and Hussman is the largest piece.
Another 21% is in sector hedges: gold, REITs, energy, health/biotech, and microcaps, all of which I'll talk about another time. This latter group also includes a small 3% position in a RYDEX fund which is equivalent to a net 6% short position in the S&P500 for my own hedge. This last can be and is varied in size according to my technical and timing studies. It has ranged from a -20% to zero short. This is NOT essential to this kind of portfolio. These funds in the sector hedge are all a combination of demographic and inflationary hedges in addition the US and foreign stock funds in the core. Then 37% of assets are in cash money market funds at Vanguard.
These are four cheap core assets to own and very well and actively managed "hedge funds" in their own right. Look at the charts from 2000 to 2003 and since, not just who is hot this month.
This table is presented for those who use the Bagpiper system as a part of their survey of current directional biases of various stock index trading systems which are discussed at market trading sites. No recommendations are intended by me in publishing its signals.
The Bagpiper typically holds a long or short position for several weeks, and he is always in the market. Click on the image here for a larger pop up version showing all trades since December 1 of last year. It is not an optimized or backfitted system. It is the same today as it was twenty five years ago.
The system is undisclosed. I will make an effort to post new signals as they occur, normally around the open or close of the front month of the CME pit S & P 500 futures contract daily session.
Posts and signals will be archived in the left column of this page.