“I see no reason why I should be consciously wrong today because I was unconsciously wrong yesterday.”
-Supreme Court Justice Robert H. Jackson
Supreme Court Justice Jackson said that in 1948. You can say that to yourself today, tomorrow, or for the rest of your life. But, when it comes to preserving, protecting, and compounding YOUR hard-earned capital, that’s not going to help you win.
Winning or losing money isn’t an opinion. It’s in your accounts. Did you buy the damn dips in Asset Allocations that we’re already long this week? Why wouldn’t you? We wouldn’t be long 37 ETF Asset Allocations if they weren’t signaling that you should do so.
The aforementioned quote came from a book a very experienced Institutional Investor (and client) sent me. It’s a good #behavioral book titled Mistakes Were Made (but not by me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts, by Carol Travis.
Back to the Global Macro Grind…
It’s an amateur and/or “foolish belief” that one can’t be bearish on certain economic factors and bullish on their invested positions.
In the words of a certain someone who I don’t believe, “believe me”, I get it… I get the Institutional dogma on Old Wall Street that pigeonholes people like me into being “bullish” or “bearish.” It’s a short-cut and lazy conclusion for people who don’t do the real work.
That said, you aren’t them. You’re much better at this. So, would you call me a Bull or Bear on the following Asset Allocations?
A) India
B) Uranium
C) Russell 2000
If I’m long it in my accounts, I’m bullish. If I’m short it, I’m bearish. That’s it.
A) Bullish on India? Yep, we’re Long both mainline India via INDA and India’s Small Caps via SMIN
B) Bullish on Uranium? Yep, I’m so bloody bullish I’m Long it FOUR ways (URA, URNM, NLR, URNJ)
C) Bearish on the Russell? Yep, but I don’t short and hold the thing – I risk manage it within my Risk Range!
It’s taken me almost a quarter century to learn how to play The Game at this level. And I still have a LOT to learn. But one thing I’m not going to let either my competition or my haters do is label me as who they want and/or need me to be.
As I explained in yesterday’s Early Look, the best way to do that is to show YOU every move I make, every day.
Here’s the note from our new Portfolio Solutions product from yesterday: “In the PA today, bought 100bps of TFLO and SHY. Bought 50bps of GLD, SPLV, STXT, URNJ. Sold 50bps FXB, GXG, ITB, PJP, BDRY. Added AMLP at my min.”
What does “at my min” mean?
A) I already have a predetermined MIN (minimum) SIZE for every type of Asset Allocation
B) I also have a MAX SIZE … and I have rules on MIN/MAX incremental additions to each position
C) Depending on the Portfolio my MIN for a LONG EQUITY position = 1.5-2%
In my account: after having sold my Asset Allocation to High & Safe Yielding MLP’s when I went bearish on Commodities, as an Asset Class, AMLP has earned the respect of both my TREND and Risk Range™ Signals, so I bought a 2% position in that on sale yesterday.
Why do uniquely American FOMO types like to buy everything else in their life on sale but stocks?
A: I know why, but I don’t care to interrupt them. All YOU and I should care about is doing what we do. We buy things on sale. We sell-SOME or all of those things based on our rules-based risk management #process.
Why did I wait to gross some of my Fixed Income positions (and Gold) until the last 2 days?
A) The only permanent Asset Allocation in my portfolio is #patience
B) The time to Buy Bonds (and Gold) is WHEN Bond Yields are heading towards the TOP-end of my Risk Range™ Signals
C) They did that yesterday, then backed off
Why did I buy-MORE SPLV (SPX Low Volatility) yesterday?
A) I was already Long the Asset Allocation
B) It was near the LOW-end of my Risk Range™ Signal… and
C) My TREND Signal on front-month US Equity Vol (VIX) broke 13.41 support
You see how easy simplifying the complex can be by just showing you WHAT I’m buying and selling and WHEN?
It doesn’t mean I’m always “right” and/or going to “beat” their 1-dimensional SPY Monkey. It means that you can trust that there’s an experienced, transparent, and accountable human being who is standing on the frontlines with YOU alongside YOUR hard-earned capital.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 3.88-4.18% (bearish)
UST 2yr Yield 4.19-4.46% (bearish)
High Yield (HYG) 76.64-77.71 (bullish)
SPX 4 (bullish)
NASDAQ 15,200-15,806 (bullish)
RUT 1911-2004 (bearish)
Tech (XLK) 197-206 (bullish)
Insurance (IAK) 104.98-108.01 (bullish)
S&P Momentum (SPMO) 69.47-73.73 (bullish)
Healthcare (PINK) 28.16-29.90 (bullish)
BSE Sensex (India) 70,608-72,706 (bullish)
VIX 12.57-14.54 (bullish)
USD 103.07-104.55 (bullish)
Oil (WTI) 71.05-75.96 (bearish)
Nat Gas 1.94-2.25 (bearish)
Gold 2011-2083 (bullish)
Copper 3.71-3.91 (bearish)
Uranium (URA) 29.56-32.42 (bullish)
TSLA 175-196 (bearish)
NVDA 639-703 (bullish)
Bitcoin 42,004-43,668 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
