Nouriel Roubini made some comments about gold and raising cash the other day (here is a recap from Murray Coleman). In there Roubini talked about paranoia that leads people to load up on "canned food, guns, ammunition and gold bars" and then "buy log cabin in the mountains." On some level it is funny to this line of thinking from someone who is not American. This is not a xenophobic thing, it just seems like the only place where this idea gets talked about is in the US.
Also funny is that I live in a cabin in the mountains but we are not long cans of tuna.
Being a little more serious I have always been an advocate of having some portion of a diversified portfolio in holdings with some level of bomb shelter protection, things that have a reasonable chance of going up when markets come unglued due either to something external like a terrorist attack or something internal like what has gone on for the last couple of weeks.
For us that has meant gold and a defense contractor as being a specific counter strategy to a shock. An absolute return fund can also play a role here depending on the particulars of the shock. During the current shock, exposure to Switzerland, specifically the franc, would have also done the job. Unfortunately this is not so simple that the franc can and will always now offer shelter in a storm.
The SPDR S&P Telecom ETF (XTL) had an interesting day on Monday as Motorola Mobility (MMI), one of its largest holdings, went up 50% on news a of a takeover by Google while Interdigital (IDCC), which was the largest holding, went down 15% for apparently being left out of the consolidation in the space. The actual ETF is very thin so it is not clear that 1.8% lift for the fund that day accurately captured the day. But this is an example of a point I made before, most notably about the HealthShares when they existed, which is that with some ETFs one component wins at the expense of another component such that the fund doesn't move much. It may not have been a big deal on Monday but it is worth being aware of.
The other funny bit was this story about a hedge fund that scans tweets and invests (or speculates) based on observations gleaned from the tweets studied. The work here is obviously done by software or dare I say an algorithm and I'm sure the managers know what to do with the information but it is very funny. What's next, a hedge fund based on Facebook, foursquare and Yelp posts? A combo of all three?
Also funny is that I live in a cabin in the mountains but we are not long cans of tuna.
Being a little more serious I have always been an advocate of having some portion of a diversified portfolio in holdings with some level of bomb shelter protection, things that have a reasonable chance of going up when markets come unglued due either to something external like a terrorist attack or something internal like what has gone on for the last couple of weeks.
For us that has meant gold and a defense contractor as being a specific counter strategy to a shock. An absolute return fund can also play a role here depending on the particulars of the shock. During the current shock, exposure to Switzerland, specifically the franc, would have also done the job. Unfortunately this is not so simple that the franc can and will always now offer shelter in a storm.
The SPDR S&P Telecom ETF (XTL) had an interesting day on Monday as Motorola Mobility (MMI), one of its largest holdings, went up 50% on news a of a takeover by Google while Interdigital (IDCC), which was the largest holding, went down 15% for apparently being left out of the consolidation in the space. The actual ETF is very thin so it is not clear that 1.8% lift for the fund that day accurately captured the day. But this is an example of a point I made before, most notably about the HealthShares when they existed, which is that with some ETFs one component wins at the expense of another component such that the fund doesn't move much. It may not have been a big deal on Monday but it is worth being aware of.
The other funny bit was this story about a hedge fund that scans tweets and invests (or speculates) based on observations gleaned from the tweets studied. The work here is obviously done by software or dare I say an algorithm and I'm sure the managers know what to do with the information but it is very funny. What's next, a hedge fund based on Facebook, foursquare and Yelp posts? A combo of all three?
5 comments:
No need to be long cans of tuna if you are long bulk ammo! Again, only in America...
You should get into the positive portion 'til oct 7. From Oct 7 to oct 31 a new low.
Jeff from Milan, Italy
I never remember to write down your predictions and check them.
Jeff,
Just curious, what price level are you looking for in October as a potential bottom?
Mike C.,
I am vacationing with family in the Italian riviera and do not have the main computer to do the usual forcasting. Off the cuffs we should break the low from july of 2010 in late oct/2011. The downturn should take place from oct 7 foward. We should get a pop here to have some rally in an oversold situation.
SD,
I am a comp.sci like you have am doing some modeling to do the forcasting. It is not perfect but think to have some avantage. What gets me is the fact that one is tuned up with the crowed and that has been the hardest thing for me.
Perhaps it is the last thing to get rid of.
Some of my comments:
http://randomroger.blogspot.com/2011/06/end-of-world-as-not-foretold-by-wall.html
Calculated S&P 1008 for bottom - http://randomroger.blogspot.com/2010/05/big-picture-for-week-of-may-30-2010.html
SD - I have learned alot and still learning. Still refining my system.
These two stand out and even rememberin jan/2010 but do not have any reference.
Please do not take my forcast as 100% full proof. I am even my self sometimes skeptical.
Best,
Jeff from Milan, Italy
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