Global Macro Trading Journal

Daal said:
I was thinking about something the other day. Dalio recommends people to invest 30% in stocks with 55% in bonds and 15% commodities. But that stock/bond portion, isn't that pretty much equivalent as being in IG bonds? stocks and gov bonds blended together (high and no risk) are a low risk combination, that's pretty much what high quality bonds are
http://awealthofcommonsense.com/2016/02/the-greatest-bull-market-of-all-time/

The main benefits of going in IG bonds is that it might offer tax advantage (specially for non-US investors who buy the bonds outright instead of using an ETF) and its less distracting (since you won't see the stock portion fall)
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I would think if one is thinking of flight to quality longer term, Bonds not the way to go at all cause at some point when interest rates going higher, value of the bonds goes down f you need to get out. Since so many of the Commodities are so low, I think this percentage be warranted to like 35% and go to much shorter duration financials.

Am waiting for the day when I put money in standard bank account and they say more I put in, more I owe for renting their bank for my funds, one day it will come.
 
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Handle123 said:
I would think if one is thinking of flight to quality longer term, Bonds not the way to go at all cause at some point when interest rates going higher, value of the bonds goes down f you need to get out. Since so many of the Commodities are so low, I think this percentage be warranted to like 35% and go to much shorter duration financials.

Am waiting for the day when I put money in standard bank account and they say more I put in, more I owe for renting their bank for my funds, one day it will come.
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The do go down when rates rise but if you keep durations low (say 5 years) its every hard to lose money because for any given year that you lose money, the next year, the implied reates will be higher and hence the chance of a losing year declines. If you lose 2 years in a row, the chance of losing more drops even further.

Usually buying something like the Barclays AGG or being in investment grade bonds will return a lot more than parking cash in bank CDs. Investors get rewarded for taking credit risk AND duration risk (term premia). At least thats true most of the time
 
I think so far this year I'm down about 1-2% on my macro/investing. Mainly due the mistakes I outlined before. Not having enough duration in my bond hedge in the new year ramp (and failing to sell SPY calls during the same period) and then not buying puts last week when markets gave a clue of further weakness by failing to rise after supportive central bank statements (at least I covered some BRKB puts and sold my longs).
But I'm still a good position to take advantage of this sell off by putting cash to work in positions I like, while selling calls against SPY (into big ramps).
I don't see any other way to play these markets. Getting into bonds now seems crazy, shorting ES is just asking to get squeezed (unless its a daytrade), shorting the dollar index, well thats an interesting idea and could work out but isn't that like longing bonds? if rate expectations rise, the dollar could catch a bid. If anything there could be a trade in terms of shorting bonds, I'm playing that a little bit by shorting the Jan 2017 fed futures contract

As far as gold goes, its probably going to correct short-term but I'm still keeping 6-7% of my assets there as a hedge. Its providing some downside protection against my long in stocks. If anything, I'm looking for a big pull to buy more
 
The gold thesis is the increased skepticism against central banks, the war on cash and negative bond rates turning gold into an asset that pays 'interest' in the form of lack of subtraction. I'm not going to lie, I didn't get in because of those reasons, I mainly wanted to diversify away from the USD in a world where everybody was bullish on it. Not it turns out that there are a lot of other reasons to be long of it. That's why I want to add into a big pull
 
All the Grains are very low, coffee, not to say can't go lower, but in areas I am buying and hedged, but my long term commitments are numerous tries of finding possible bottom which is harder than finding tops actually. Bottoms, if they go sideways can be very long of doing nothing, only monies are doing Put credit spreads. I keep selling Gold and hedged each time thank goodness, although takes quite of bit of funds to do so, but simple couldn't sleep at night if I didn't.

About the only time I have even bought a Bank CD has been to get mortgage for real estate, but somewhat collateral getting better rate, I have on occasions bought fire gutted properties to fix up and rent, but banks don't like handing out loans when little value is present. Really comes down to how solvent bank.

Am short Dollar Index, so my opinion is in line with signal which is unusual, LOL. I just don't do well at Macro, maybe too much to think about, too many comparisons. And quite possible I am feeling my age, climbing stairs never use to be tougher as they are now. I often think stocks relating to Baby Boomers "Assisted Living" might see some good profits and anything Health Care. What do you think?
 
Handle123 said:
I often think stocks relating to Baby Boomers "Assisted Living" might see some good profits and anything Health Care. What do you think?
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I don't know much about these stocks. I think David Ronsenberg was talking about something like that years ago
 
Definitely a tougher mkt for those who were conditioned to the V dips we've had since 2012. Think if you believe in the longer term bull run, scaling into long equities here will likely payoff. Other asset classes, not so easy. Maybe long oil 2 years out if you believe in a rally.
 
This is why a lot of criticism of easy central bank policies is misguided

"
Central Banker: But what if I'm too courageous and then I overshoot my inflation target?

A. Both lab experimentation and macroeconomic history shows that price-setters are much more reluctant to lower prices than raise prices. Employers and employees are much more reluctant to lower wages than to raise wages. Most employers would rather fire one person than try to negotiate 5% salary cuts with 20 people who would all be demoralized. On the other hand, if there's enough nominal money coming in and the wage market is heating up, they're often okay with giving everyone 5% raises. This means that making your money policy slightly too tight does much more damage than making it slightly too loose, because it's a well-tested empirical fact that the people inside the economy have a much easier time adjusting to slightly higher money flow than slightly lower money flow. Big deflation and big inflation both do enormous amounts of damage, and hyperinflation is worse because it goes further and faster. But money that's a little too tight does much more damage than money that's a little too loose! So it's really important that you create more money right now, and don't worry so much about the possibility of overshooting your inflation target a little, especially when you've undershot your target a lot up until now."

In a utopian society where people are rational then Murry Rothbard desire to have everything cost a nickel would be great, in the real world where people are flawed and have irrational biases. It doesn't work
 
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