Despite the widespread concern that the U.S. stock markets are overvalued, my ETF momentum strategy which is currently heavily invested in U.S. equities posted yet another positive performance in April with a 1.16% gain. Even though I am using leverage, volatility remains very comfortably below 10%. The strong first four months of 2017 for my strategy has pushed the CAGR up to 8.9%. With a system that requires only about two hours of my time per month, I will gladly take that return in a world of low rates.
I am about to start an email list for this site and am working on an eBook. The eBook is for those of you who want to construct your own ETF momentum trading system. I will outline the steps you need to take to develop and then execute your very own, personalized system. Stay tuned!
I listen to a lot of investing podcasts and thought I would share some insights from recent episodes.
In Planet Money’s latest podcast it was noted, rather casually I might add, that stock pickers were being replaced at major firms by computers. An informative article from Fortune provides some of the details on lay offs at BlackRock, Paul Tudor Jones’ firm, Stephen Cohen’s family office and Ray Dalio’s Bridgewater. If a stock picker is using a rules-based strategy to select stocks, do you think it should come as a surprise that software is taking over that person’s job? I don’t. As a matter of fact, I expect to see a continuation of this especially of financial firms reducing their head count. AI is progressing very rapidly and if your job involves sitting at a desk and performing repetitive tasks, you should ask yourself if you can be replaced by software and what you are doing to prepare for the eventuality.
Former global macro fund manager Raoul Pal (@Raoul GMI) has been in a number of podcasts that I listen to lately. Raoul is one of the founders of Real Vision TV which I haven’t subscribed to yet but am about to start a trial subscription. If you haven’t heard of Real Vision TV before, it appears to be well worth your effort to visit their site. On The Meb Faber Show, Raoul discussed his belief that there is a high probability of a recession in the US very soon based on his research of recessions in the past 100 years. From Yahoo Finance:
He recently spent time looking at US recessions in general. What he found was that every single one in the last one-hundred years occurred during or right after an election. Specifically, when there’s a two-term incumbent change.
“I recently noted that since 1910, the US economy is either in recession or enters a recession within twelve months in every single instance at the end of a two-term presidency… effecting a 100% chance of recession for the new President,”…
For more on Raoul’s view regarding the possibility of a near-term recession, you should listen to the podcast with Meb Faber. I think you will be fascinated with this particular podcast.
If you enjoy podcasts as much as I do and you have a strong interest in finance and investing, I think you will be fascinated with a new podcast that started in January. Adventures in Finance is hosted by Grant Williams (@ttmygh) and Aaron Chan (@macrodidact). The guests on the podcast are the absolute best and the production is high end. An interesting feature on the podcast is a discussion with fund managers, professors, highly successful investors, etc. titled “What I Got Wrong” in which the guest discusses a mistake they made in the past which is usually a bad investment. It is a reminder that even the very best in the world of finance and investing are wrong on a regular basis.
My ETF momentum strategy gained 1.90% in March giving it a 4.16% return year-to-date and 4.38% 12-month return. Volatility has ticked up a little since the end of February but is still in my comfort zone.
For the first time, I am holding a water ETF namely CGW (Guggenheim S&P Global Water).
Daily portfolio values are provided by Collective2.
Early this year, I was asked to join a new band as the acoustic guitarist. Over the past six months we have recorded an album with fourteen original songs. We aren’t full-time musicians so the recording was done as all five members could find time. The album, Sweet Little Thing by Somebody Famous, has just been made available on Spotify and our first gig is at The Gathering in Burlington next month.
I’d love to hear your feedback on the album. If you don’t have a Spotify account you can sign up for a free one.