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The Capital Appreciation Program: Spreads ‐ A Unique Approach to the Energy Sector
Corporate Summary Tyche Capital Advisors, LLC is a New York based registered commodity trading advisor currently offering trading programs to qualified investors. Through its trading programs, TCA will engage in speculative trading of futures and options contracts offered on the United States commodity exchanges and overseas futures exchanges. Tariq Zahir and Steve Marino are the […]
The October Repricing Causes Low Signal to Noise, Limited Trends
When markets reprice risk, it is not fun being a trend-follower. Long equity indices were a crowded trade and few made money when the early October reversal hit the markets. Fast traders were able to exploit the move, but a bounce off the lows hurt intermediate traders. Bonds were hit with the cross-currents of flight to safety against the continued threat of growth and Fed action. Currencies were hit with this repricing and not a place of profit able trends.
Managed Futures – No Crisis Alpha in the Short-Run
Market performance for October was sobering. Investors were complacent to volatility and the fact that markets correct. The speed of adjustment hurt the average managed futures manager who was not able to get out of markets, which repriced at the beginning of the month. Although the month ended with some improvement from return lows, there is little to celebrate.
The Price of the Fed Not Providing New Liquidity – Larger Drawdowns
Our graph looks at the drawdowns for the equity benchmark SPY over the last ten years. While the current drawdown has come fast, there are have been a number of drawdowns that have been far worse albeit none that have reached the magic 20 percent market correction level. There is reason to be concerned, but investors need to have perspective.
Looking For Risk In All The Wrong Places….
…was lookin’ for risk in all the wrong places, Lookin’ for risk in too many faces, searchin’ their eyes and lookin’ for traces of what I’m dreamin’ of. -Lookin’ for Love, Johnny Lee Risk will surprise you. It is supposed to do this. While we always think of volatility as risk, the real measure of risk […]
Met Few Good Traders Who Thought Their Correct Decisions Were About Luck
Skill is what you have when things go right.
Luck is what you don’t have when things go wrong.
Probability does not have a personality.
Rising Interest Rates on Loans Current Numbers Don’t Show a Change in Standards
The channels of monetary policy are more important for any investigation of the macro economy. This is one of the key lessons from the Financial Crisis. Now that short-term rates are finally moving higher, the behavior of banks with respect to their lending activities becomes more critical. It is expected that as rates move higher, the demand for loans will be lower. Additionally, there may be a tightening of lending when rates move higher.
Emerging Markets Is A Place to Be In The Long Run
Emerging markets were talked about in many 2018 forecasts as the place to increase allocations both for bonds and stocks, yet that recommendation has been a performance disaster for many investors. For both the last year and for longer investment periods, EM has not matched the performance of DM equities or bonds. The current causes are many: trade wars scares, low commodity prices, a strong dollar and currency crises, over leverage, slower recent growth, and some strong geopolitical blow-ups. There are strong risks present, yet the arc of economic progress and convergence is still in place for those who think in the long run.
Hedge Funds – Mistakes, Pain, Competition, and Perhaps Not Enough Risk-Taking
“My mom always told me it’s okay to make mistakes, but she never worked at a hedge fund.”
― Turney Duff, The Buy Side: A Wall Street Trader’s Tale of Spectacular Excess
Decision-making will be filled with mistakes and failure. It is part of the process when making bets in an uncertain environment. No one is 100% certain and at your best, your track record will match your estimates for success. The objective of good investment decision-making is to get the process right, so failure or lack of success is not from lack of skill or outright ignorance. Nevertheless, even if the odds are in your favor, you will not get every decision right.
Geopolitical Risk Is Not the Driver of Any Market Decline
The BlackRock Global Risk Indicator is an interesting measure of uncertainty through looking at key work searches across a broad number of market news sources. I cannot say that this is a risk measure. Rather, the indicator is a measure of geopolitical negative news focus. It is a sentiment indicator that may lead to risk, as measured by negative market performance.
The Big Waves for Stocks, Bonds and Commodities – You Have to Exploit These Trends
Simple visuals can be very powerful at telling an effective investment story. I have compared equities, bonds, and commodity relative returns for the last twenty years to see the big wave cycles that investors needed to participate in to have a successful portfolio. The trends from these asset class cycles are long. An investor does not have to get in on the turning points, but they do need to hold the trends as long as possible. The secret to relative asset class success is commitment.
Mixed Signal from a Fed Official – A Modernized Taylor Rule Says Stop
Simple assumptions to some classic monetary models will produce very different policy views for the direction of Fed action. These significant policy divergences are the reason for the recent pick-up in bond trading. A dispersion of opinions on Fed action will lead to more volatility, trading, and potential rewards in these markets.
The Empirical Process Needs Narrative – Filling In the Space Between Data
The concept of investment narratives has been given a bad reputation especially by quants, yet these stories are often the glue that holds together data. Quants say, “Only look at the data”, yet the data may only be useful through words that extend meaning to the data.