The H.E.A.T. Formula
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Our Next Webinar:
Topic: How to Determine the Best Potential Investment Themes.
When: Oct 24,2024 11:00 AM Pacific Time
Register in advance for this webinar:
https://zoom.us/webinar/register/WN_nicbiSSlTwqTDXqOmfd1cA
Why Things Like Factors, Asset Classes, Styles, and Market Cap Diversification are Stupid.
Why most thematic ETFs suck.
How to use first-order, second-order, and third-order thinking to pick stocks and ETFs with the best potential upside.
One below-the-radar theme that could end up being extremely relevant regardless of who wins the election.
There will be a recording sent out to those who register
For Investment Pros Only
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These start trading today. I think they could be extremely interesting and I am going to look for opportunities to try to trade them....
Options on Cboe Volatility Index® Futures
If this is true then weird stuff around the election is the only thing that can stop the market moving higher into year end.
Soft Landing or Hard? Bank Results Show Path to No Landing-WSJ
“So overall, we see the spending patterns as being sort of solid and consistent with the narrative that the consumer is on solid footing, and consistent with the strong labor market and the current central case of a kind of no-landing scenario economically,” Barnum said.
JPMorgan Calls It: The U.S. Economy Has Made a Soft Landing-WSJ
“These results are consistent with a soft landing,” Chief Financial Officer Jeremy Barnum said on a conference call. “That’s pretty consistent with this kind of Goldilocks economic situation.”
Themes
AI Power Generation
Lab data confirm potential of geothermal’s holy grail: superdeep, superhot rock as important renewable energy source-Quaise
New laboratory data confirm the potential for geothermal’s holy grail: tapping into the superhot, superdeep rock miles below our feet, which could create a clean, renewable energy source capable of replacing a significant amount of the fossil fuels associated with global warming.
China
Watching this closely, did buy into BABA and BIDU last week..
China’s finance minister says there is room for more economic stimulus but offers few details-MarketWatch
From Jefferies.....
Investors are focused on potential stimulus measures from China. The MoF briefing over the weekend was broadly in line with expectations and keeps for the door open for further stimulus measures. The press briefing confirmed that the central government has large room to leverage up and is to conduct the largest scale of debt swap in recent years. We remain in the camp that more fiscal support is on its way and are looking for an incremental fiscal support to RMB1-2tn in 2024, and RMB2-3tn per year in the next three years.
China stimulus measures should be supportive for China and Asian equities over the next 3-6 month horizon. We would be allocating risk to China in the near term, and it supports our existing bullish view on Asia and commodities. However, the stimulus measures announced so far have not changed our medium term structural view on China.
Hedges
Why raising more cash is a smart portfolio move — even with stocks at record highs-MarketWatch
Instead, the reason to cut portfolio risk is that higher-risk stock strategies offer no long-term advantage. Outsized risk-taking means that not only are you losing sleep for nothing, there’s a greater chance you will throw in the towel on your strategies at the worst possible time.
Cash is a crappy hedge, so are bonds. A real hedge goes up when market go down. Here's a better way to do this:
- My portfolio is about 85% Tbills, not as a hedge, but as a way to design the entire portfolio for asymmetric risk
- My equity exposure is almost entirely in options. That way I have fixed risk on all of my positions, I can only lose as much as the option premium.
- I have constant short exposure to a fundamentally broken ETF that tends to do poorly in up markets, and tends to do really poorly in down markets.
- I run 3 short term shorting models that buy puts in overbought ETFs and stocks
- I run a 0 DTE SPY Put strategy that often has me in puts overnight.
Speaking of hedges.....
Retail Traders Embrace Market Turbulence With Bets on Volatility-Bloomberg
I am currently long VIX calls. I try to stay away from calls on the ETPs unless I am constructing a spread trade and they match up better. VIX futures are currently in backwardation, which historically has provided an edge to go long.
Edges
Stuff like this is stupid and provides no edge. Presidents can impact certain sectors though. If Trump wins or it looks like he is going to win then I probably buy GEO again.
Here’s how stocks have performed under Biden and Harris vs. under Trump-MarketWatch
