March 3, 2022
We are all traders of Volatility
The primary source of performance for capital managers is (1) asset selection and (2) short volatility or short correlation exposure. When the asset groups’ diversification converges on one (1) all that remains is being “short volatility” for the majority. Selection does not matter. In other words, capital managers are long everything! Hence it is not a shock that the majority underperform during a crisis.
The emergence of the components for variance swaps to hedge is just one example of a bull market in fear since 2008-2009 but also it requires the use of “market timing” to be effective.
Without getting into the methods of “short variance swaps” the bottom line is “Regardless of the asset class, the true source of alpha seems to be moving between short and long volatility exposure—the volatility risk process and not the underlying asset.” Artemis Capital Management
In other words, the method that can achieve Alpha the industry commercializes as unfeasible is market timing! If you buy into that propaganda by the industry, you are reading the wrong newsletter.
The first chart featured today reveals a number of important factors. With that in mind, here is some background backing up a number of Contrary Thinker’s assertions.
February 24, 2022
The study of history plays an important role in all aspects of life including investing and trading.
Contrary Thinker’s publications are not about cheap talk. Our publications are about providing a research product from hours of work to your benefit, for a fee, full stop. No one wants to benefit from outside world events as negative as the pandemic was or Putin’s invasion of Ukraine. However, I do not believe in coincidences and have witnessed over my career the market (form) preceding outside world events (content), to be meaningful.
Clients following MarketMap™-2020 Issue#1, received an “off risk” advisory to raise cash and engage hedge systems.
Two years later, in all of the issues of MarketMap™ -2022, Contrary Thinker has made clear the risk of a major bear – when price and time analysis gave a clear “risk-off” signal mid-May 2022. Our advisory pointed out it was the train not seen that will kill you, and over the long term, the risk remains little noticed or thought of and it is a political one here in the USA. The events offshore are only a catalyst.
MarketMap™ -2022 Issue#2 is important to you, your investments, and your client’s investment. That publication pointed out a series of historical parallels
February 23, 2022
June 1, 2021
Walking away from a winning streak is rough.
One good thing for every Contrary Thinker is that I am read and respond to comments and feedback from my traders and team.
October 22, 2020
9/14/20 “the intermediate-Term outlook remained bearish on the oil.
Today ditto. The wedge pattern shown on the 90-minute bar implies a thrust coming out of that formation, very typical. After a number of false starts we witnessed, this decline has the structure of an impulse wave, which suggests it is in the direction of the larger trend. I will leave trade plans to the trader, we have an Algo to use. however, it should be clear that a minor move above 40.34 would run a few stops. If that failed to pick up a long following jumping on the failure with short sales make sense. More below…