Global Macro Trading Journal

As far as the election goes, its hard to see a socialist winning with the unemployment rate at 3-4%. The billionaire managers are talking about a 'revolution' because of income disparities, wealth gaps, and etc. But I dont think this will play during good times, it will play out when there is a recession. That's when people will get pissed and might vote for a socialist. With 3-4% unemployment, wages growing, stocks doing well I'd give Trump a 70-80% chance, a 20-15% for a 'traditional' democrat like Biden or Bloomberg and 5-10% for a socialist
 
The most likely scenario seems a Trump reelection and a recession some time after it. It would be a bad one as the US budget deficit will be huge, entitlements will start to weight in the budget, people will be more indebted than ever. This will clear the way for a democract to be elected next, probably a populist/socialist. Then the 'revolution' can start. At that point, you dont want to be owning US stocks. The fiscal situation itself can create a UK style crisis (where stocks got absolutely lambasted over there), that combined with the 'revolution' (and all the taxes and regulations that will come with it) makes it an absolute no brainer to cash out of the markets.

But timing is everything, markets could still climb 20-40% before that happens
 
Daal said:
The most likely scenario seems a Trump reelection and a recession some time after it. It would be a bad one as the US budget deficit will be huge, entitlements will start to weight in the budget, people will be more indebted than ever. This will clear the way for a democract to be elected next, probably a populist/socialist. Then the 'revolution' can start. At that point, you dont want to be owning US stocks. The fiscal situation itself can create a UK style crisis (where stocks got absolutely lambasted over there), that combined with the 'revolution' (and all the taxes and regulations that will come with it) makes it an absolute no brainer to cash out of the markets.

But timing is everything, markets could still climb 20-40% before that happens
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Could you please elaborate on what you mean by
"a UK style crisis (where stocks got absolutely lambasted over there), "

What period of time were you referring to?
 
m22au said:
Could you please elaborate on what you mean by
"a UK style crisis (where stocks got absolutely lambasted over there), "

What period of time were you referring to?
More...
In the 70's. I posted charts and data in this journal about that before. they had a fiscal crisis and had to be bailed out by the IMF
 
A portfolio update

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My portfolio stress test is now projecting a -14% return, this is down from a -24% from year end 2018. I have cut risk by quite a bit but I'm still long a bunch of stuff, I'm thinking of adding more Brazilian stocks
 
I'm also thinking of liquidating all my IEF, 10Y bonds and strips and using only short-term UST bonds. The risk in the next recession is that bonds wont provide a hedge IF the recession triggers a bond crisis (like the UK in the 70's)
 
Would be nice to see a rolling sharpe on here; and maybe a conservative fwd estimate? Unless you've got a really large amount of capital and/or take income from the portfolio, I'm surprised you're not running more risk. Stressing for 4 sigma+ and only ending up with 14% DD seems like leaving a lot on the table. Your pft vol is well into the single digits then?

Seems like the betas you're exposed to should be able to support more than that without getting crazy. Not to mention you can reduce exposure to rising vols and perhaps shift allocation during a regime change; -50% on equities is very unlikely to happen overnight.

I could maybe see having stats like these on if I was eminently bearish, but the timing on those plays is just hard to get down. I ended up giving away more in potential gains than I benefited in risk reduction when I positioned as macro conservative early in the decade. Now I rely on more short-term measurements and will start to control risk after I start to see it materialize. But obviously this opens me up more to acute shocks.

Above all appreciate your transparency, it's enjoyable to follow along with your investing.
 
Magic said:
Would be nice to see a rolling sharpe on here; and maybe a conservative fwd estimate? Unless you've got a really large amount of capital and/or take income from the portfolio, I'm surprised you're not running more risk. Stressing for 4 sigma+ and only ending up with 14% DD seems like leaving a lot on the table. Your pft vol is well into the single digits then?

Seems like the betas you're exposed to should be able to support more than that without getting crazy. Not to mention you can reduce exposure to rising vols and perhaps shift allocation during a regime change; -50% on equities is very unlikely to happen overnight.

I could maybe see having stats like these on if I was eminently bearish, but the timing on those plays is just hard to get down. I ended up giving away more in potential gains than I benefited in risk reduction when I positioned as macro conservative early in the decade. Now I rely on more short-term measurements and will start to control risk after I start to see it materialize. But obviously this opens me up more to acute shocks.

Above all appreciate your transparency, it's enjoyable to follow along with your investing.
More...
Hi tks.
I was running my risk assets at 60-80% for a number of years but I just feel that strategically it makes sense to bring it down especially because I'm not a primarely macro trader/investor but rather a day/swing trader. If I was doing macro/investing full time, then I could do it like you, monitor things in real time, have stops, react to things, etc. And cut risk at the right time. But I'm busy with my other trading and non-work stuff so I dont trust that I will be in sync with the markets to that extent.
Furthermore, one of my strategies is to decrease stock exposure but increase the risk in the equities inside that stock bucket. What is more risky, 30% SPY or 15% tech startups? The % might not give a full risk picture. I'm even buying an Argentina stock now, thats quite risky vs say BRKB
regards
 
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