Global Macro Trading Journal
- Thread starter Daal
- Start date
The idea is that the back end (10 and 30y) will rally if the Fed keeps on being hawkish as the markets will start to price in its all a policy mistake/probable recession. The nice thing about bonds is that you get paid to hedge. When you say 'hedge if it incorrect' im not sure if you mean put options, stops or shorts. I try to do all of them as my asset allocation method tries to incorporate many different ideas and systems.
Right now I'm low on shorts and I wouldn't be a buyer of puts (given the recent panic, it doesnt seem to be a good idea to be a net buyer), I'm also a big believer of my positions so its hard for me to use stops on them (except if I'm quickly bouncing SPY). I'm sticking to bonds and gold as a result
I found some mistakes in my accounting (I have several different brokerages and two accounts at IB, plus I separate trading from investing so it can get quite messy) and actually found that my investing/macro return was -0.75% last year. The notable positions were
Overall it doesnt seem that bad of a year with the exception of the crypto plays. I was able to make some money by trading around BRKB and holding core plays like EWZ but lost it all on crypto. I'm positive in this crypto space for 2019, historically it has paid (exponentially) to buy panic and sell euphoria. 2019 is off to a good start as Novogratz added to his Galaxy digital stake and the stock soared by 40%. If he makes one or two good investments there (in the private offerings he is able to participate but the public can't) that can easily justify the entire value of the company. If he hits a couple more then the stock might be worth a lot more
Overall it doesnt seem that bad of a year with the exception of the crypto plays. I was able to make some money by trading around BRKB and holding core plays like EWZ but lost it all on crypto. I'm positive in this crypto space for 2019, historically it has paid (exponentially) to buy panic and sell euphoria. 2019 is off to a good start as Novogratz added to his Galaxy digital stake and the stock soared by 40%. If he makes one or two good investments there (in the private offerings he is able to participate but the public can't) that can easily justify the entire value of the company. If he hits a couple more then the stock might be worth a lot more
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Lets not forget that ETH was a 3500 bagger from ICO to peak price, convexity is the name of the game in this space. To me, its crazy NOT to have a piece of the action. Galaxy is like a little fund trying to exploit that, I'm doing that myself too but they have access that I dont. I gave up on the ICO space when I realized that the amount of adverse selection retail suffers from there is huge. Most of the good deals get snapped before they ever have a chance of making to the public market. As a result only the garbage is left. Hopefuly Novogratz with his special access hits a 100x along the way!
Loeb got defensive ahead of the SPX drop, which was pretty good timing, but somehow still lost 11%
https://www.wsj.com/articles/dan-loebs-third-point-lost-11-in-2018-11546541430
go figure
https://www.wsj.com/articles/dan-loebs-third-point-lost-11-in-2018-11546541430
go figure
I started to derisk my exposures, taking advantage of the strength in US equities. I sold my stakes in AMZN and MKTX for small profits and sold a little of BRKB. I plan to continue to size down BRK (my biggest US equity position) as this rally continues. My goal is to derisk my portfolio just in case the next 24 months prove to be very rocky. My Fannie investments (FNMFN, the preffered and as well as the indirect exposure through Pershing Square Holdings) have finally start to go somewhere.
It remains to be seen if the government plan will involve private capital (in which case I expect par or close to it in my preferreds as no extra dollar of private capital will flow into these entities if the previous investors were screwed out of their money, which they were) or if they will just zombify them by letting them build capital but not draw more cash from private hands. The latter would leave them very undercapitalized but it could offer the image that they didnt help out hedge funds make money, which Trump might prefer. I dont know, we will find out
It remains to be seen if the government plan will involve private capital (in which case I expect par or close to it in my preferreds as no extra dollar of private capital will flow into these entities if the previous investors were screwed out of their money, which they were) or if they will just zombify them by letting them build capital but not draw more cash from private hands. The latter would leave them very undercapitalized but it could offer the image that they didnt help out hedge funds make money, which Trump might prefer. I dont know, we will find out
The tough thing about US equity risk is that we are late in the short and long-term debt cycles, furthermore prices are bellow the 200MA. Selling part of my risk exposures into strength and building a cash cushion seems to be a prudent move. I'm still keeping a decent exposure, especially because a lot of my stock plays are micro not macro (With Fannie being a big example of that)
I think you are making a sub optimal decision derisking and here's why: You are selling into a rally from lows when you could have sold highs earlier by a few months.
What if the recent rally didn't happen? That would be weakness in the market and you could be making a smart decision by derisking. But since the market rallied strongly, it's an indication of strength.
It's not a rational decision if you are seeing strength and still derisking. If you truly believe in your positions, you should be adding to them.
Not a criticism, just an observation.
What if the recent rally didn't happen? That would be weakness in the market and you could be making a smart decision by derisking. But since the market rallied strongly, it's an indication of strength.
It's not a rational decision if you are seeing strength and still derisking. If you truly believe in your positions, you should be adding to them.
Not a criticism, just an observation.
There is still weakness in the market in the sense that prices are bellow the 200MA. To me, this is a more established indicator than short-term price action. A few weeks back markets were too oversold to sell, but now if anything they are a bit overbought AND bellow the 200MA AND late in the short and long-term debt cycles. The tape does feel like its going higher but this is more of a strategic move. The tape can change in an instant. Furthermore I will still own plenty of long equity, just not as aggresivelly as before