Thursday , September 21 2017
Home / Tiho Brkan
Tiho Brkan

Tiho Brkan

I am male in my early 30s. I was originally born in Croatia, but am an Australian citizen, while currently living in Hong Kong. I hold a business degree with focus on accounting, finance and marketing.

Articles by Tiho Brkan

This Is What Wall Street Is Buying Right Now

1 day ago

Weekly Notes With Tiho — Issue 18Location: Skopje, MacedoniaWarren Buffett once said that “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”I promise that this won’t be another negative article putting Wall Street into the spotlight for all the wrong things they do (and get away with).This blog is about investing and making money.Buffett’s quote, therefore, is great wisdom for independent thinkers and contrarian investors amongst us.Following Wall Street — or market consensus — rarely, if ever pays handsome dividends.How To Outperform The MarketIt’s no secret that I have done well investing over the last two years. This year alone, some of my clients with higher risk tolerance have managed to increase their capital by

Read More »

3 European Countries You Didn’t Invest In — But Should Have

10 days ago

Weekly Notes With Tiho — Issue 17Location: Belgrade, SerbiaWhat do Poland, Turkey, and Austria have in common?Firstly, depending on your high school teacher, all three countries are part of the greater European continent.Furthermore, all three countries experienced turbulent financial and/or political conditions over the last few years.Finally, all three are the best performing stock market indices year to date.And chances are, you probably didn’t own them in 2017.Poland is up a staggering 51% year to date.Turkey and Austria are a close second with 2017 returns of 45% and 42%, respectively.Before we discuss Poland, Turkey, and Austria in further detail, let us observe the year to date performance of global indices in the table below.Year To Date ReturnsWhat a terrific year 2017 has

Read More »

Emerging Markets Lost Decade Is Over

16 days ago

Weekly Notes With Tiho — Issue 16Location: Sveti Stefan, MontenegroHello there friends.I’m sending you regards from the extremely beautiful 15th century fortified island called Saint Stephan.Back in those days, this was a pirate’s haven and a hiding place from the Ottoman Empire.Today, it is an extremely beautiful resort where tennis champions like Novak Djokovic have their lavish weddings.I’ve been very busy with extensive travel through this mountainous region. Away from financial markets, I am tracking the progress of various real estate projects around Kotor Bay that are currently in their building process.Two of major ones include Portonovi (Europe’s most expensive luxury resort) and Lustica Bay (stunning marina village and golf course development). Real estate investors and others

Read More »

Weak Seasonal Period Approaches

24 days ago

Weekly Notes With Tiho — Issue 15Location: Kotor Bay, MontenegroAutumn is here.Weekly notes will be a little lighter in the month of September, as I am slightly more preoccupied with a real estate side project and extensive travel.However, you should expect Weekly Notes write ups from time to time, especially if market volatility rises.Side Note: Those who are subscribed to me for personal one-on-one consultations and monthly commentary can continue to expect the same volume of information and details for executing investment themes. If you have interest in establishing a similar relationship, please do not hesitate to contact me.The Week That WasForeign stocks continue to lead the charge on the upside. Emerging markets — especially Chinese equities — were the best performing major asset

Read More »

The Stock Market’s Breadth Is Narrowing

August 20, 2017

Weekly Notes With Tiho — Issue 14Location: Perast, MontenegroYou’ll probably think that this week’s cover image is a National Geographic award-winning photograph from a remote, never before heard, ancient stone town.While I didn’t take this exact photo, there are plenty on my iPhone that look just as beautiful — if not better.So far through my European travels, I have been fortunate enough to visit many places.Recently, I found myself visiting a small southern Balkan country called Montenegro.Locals call it Crna Gora, which means black mountain.The country, which is a former Yugoslav state, uses the European Euro as the form of exchange and has a flat tax of 9% for its residents.It was extremely interesting to see real estate developments popping up left, right and center… and the cost per

Read More »

Volatility Rising As Dollar Tries To Bottom

August 15, 2017

Weekly Notes With Tiho — Issue 13Location: Belgrade, SerbiaMonday was an interesting day, especially following last weeks events.Most stock markets around the world are reversing their losses, while volatility is calming down.Firstly, let us look at the week that was.Gold was the best performing asset last week and an asset that I’ve been tracking closely over the last couple of weeks due to its technical coiling pattern.Treasuries also did well.The US Treasury 2 Year Total Return Index hit a new record high, while the 5 Year Total Return Index is less now than 150 basis points below its record from July 2016.The drawdown on the Long Bond is still meaningful, though the recovery has been decent over the last 6 months.Regular Twitter followers should remember that I was extremely bullish on

Read More »

Complacency Continues As Warnings Mount

August 8, 2017

Weekly Notes With Tiho — Issue 12Location: Belgrade, SerbiaIn the previous post, I discussed a few important topics.Firstly, US Dollar became very oversold — with sentiment overly bearish. Since the greenback has managed to jump on a solid jobs report.Let’s see if there will be a follow through this week.Secondly, Gold’s technical coiling pattern. For now, indecision continues.I am watching this one closely, as mentioned before. Strong Dollar is usually — but not always — negative for Gold.Having said that, at times they were best of friends and rallied together.And finally, stock markets complacency.On Thursday, Dow Jones Industrial hit its 33rd record for the year — same as 1929.On Friday, 34th record for the year — same as 2007.And yesterday, 35th record for the year — same as 1999.As I

Read More »

Dollar Pessimists, Gold’s Indecision & Market Complacency

August 2, 2017

Weekly Notes With Tiho — Issue 11Location: Dubrovnik & Hvar, CroatiaI’m currently in Dubrovnik, the pearl of the Adriatic Sea.For the fans of Game of Thrones, this is where King’s Landing is filmed.The ancient city has been protected by huge stone walls for at least 800 years. It’s a sight to behold.As I take in this wonderful view, I have sat down to write.This week’s financial market observations will be written within a global macro context — something I did consistently for several years with the old Short Side of Long blog.In Dubrovnik, the talk of the town is Game of Thrones season 7.Meanwhile, in financial markets, the talk of the town is falling US Dollar.Investors Become Pessimistic On The DollarLet us put things into context first. The global reserve currency has shot straight up

Read More »

From Asia to Europe, Economy Is Booming Again!

July 18, 2017

Weekly Notes With Tiho — Issue 10Bienvenue en Europe… Benvenuto in Europa.The sun is shining, the sea is crystal blue, temperatures are warm, food is delicious and well-dressed people are walking around me — speaking plethora of different languages.Yes.I’m back in Eurozone.That kind of explains the lack of updates in recent weeks, too.I am traveling with my beautiful parents and have gifted them all of my time.They gifted me life, so in the attempt to be a good son… it’s least what I could do.Having said that, constant travel also fatigues us. After all, it was only last month that I was doing a business trip to Singapore, Hong Kong, and Shanghai.One thing in common here is good whether accompanying me wherever I have gone. I feel very lucky.From Asia To EuropeShanghai forgot to be

Read More »

Performance Summary For The First Half Of Year

June 27, 2017

Weekly Notes With Tiho — Issue 09I know, I know.I can’t believe it either. The first half of the year is already finished.It seems to go faster every year, or do we just say that as we get older?Please don’t tell me its the latter of the two.I will take this chance to summarize the asset price performance. I must admit, it has been a steady and bullish first half.Not too much anyone could do wrong, and yet the performance of average funds is still lagging behind major indices.This seems to be an occurrence every year.Last week I posted a sneak peak year to date performance some of my clients achieved, especially those who happen to have a higher risk appetite. The link on Twitter can be found here.At the time of the Tweet, and at the time of writing this article, their portfolios are up

Read More »

Are You Denominated In The Right Currency?

June 11, 2017

Weekly Notes With Tiho — Issue 8I’ve been traveling a lot lately.Mainly around Asia, until next month when I leave for Europe.Ho Chi Minh City, Singapore, Kuala Lumper, Bangkok, Hong Kong and recently the metropolis center of Shanghai.Side note: The photo above was taken on my iPhone 7 last week.Each one of those cities has a different currency.This makes the world of foreign exchange fascinating, especially to travelers and cross-border investors.Being denominated in the right currency can dramatically boost returns and protect against the loss of purchasing power.A great example of this is Australian property market.Australian Property Hasn’t Actually Done That WellFellow countrymen of mine would usually say to me how great Australian property market has done over the last several

Read More »

How To Retire Using The Right Investment Portfolio

May 28, 2017

You worked hard your whole life and you’ve saved all those pennies for a rainy day.Your family and close friends are proud of you.Now it’s time to retire and enjoy the fruits of your labor.Retirement is meant to be a cheerful and satisfying milestone in your life and yet — for many — it is a frightening experience.Will you be able to maintain your current lifestyle as you retire?How much can you spend each year?What happens if you run out of money?These questions and many others usually arise as you might not have worked with the right financial advisor to devise a credible plan.With the financially sound plan, you have the ability to take control of the situation and effectively become your own boss.Let me show you how.Are You Ready For Retirement?Calculating and projecting your

Read More »

How Are Fund Managers Positioned In Global Markets?

May 20, 2017

Weekly Notes With Tiho — Issue 7Here I am.Leaving Thailand’s beautiful paradise of Phi Phi Islands.Clearly, I am in deep thought about the state of global economy, financial markets, and geopolitical affairs.Like all the other hedge fund managers, newsletter writers and macro thinkers of our time.Come on!I’m just joking with you.I’m actually enjoying the scenery and crystal clear waters. I just forgot my sunglasses.Having said that, later that night on the flight I was reading a favorite sentiment report of mine and I thought it would be appropriate to do a post on it.Investor sentiment can be a very useful measure.It helps you figure out what the consensus is thinking and how they are positioned.In the wise words Bridgewater hedge fund master:You have to be an independent thinker because

Read More »

What Could Investors Expect If Stocks Peaked Today?

May 13, 2017

Weekly Notes With Tiho — Issue 6No.I’m not calling the final top in this bull market.Even if does top here, there is no way anyone in our industry has the ability and the foresight to correctly and consistently predict calls like that.You could speculate on it, though.Put your money where your mouth is, as they say.I’ve done that plenty of times. I’ve had some wins and I’ve had some losses.And there is plenty of reasons a speculative bet like that just might turn out to be a winner.Just make sure your risk management is in order — but that’s a topic for another day.This week I am writing to you from the beautiful Thailand. I’m visiting islands of Phuket and Phi Phi, as I look for some real estate opportunities.Everything here is perfectly calm, similar to the lack of volatility in the

Read More »

When Does Good News Become Bad News?

May 2, 2017

Weekly Notes With Tiho — Issue 5The global stock market made a new record high last week.And it’s continuing to rally this week.That’s good news, right?Not necessarily.It is said that the stock market climbs a wall of worry. And it has been climbing this wall since the start of last year.In January 2016, panic selling gripped investors. This is precisely the condition that enables markets to bottom out.Amongst many concerns, investors were extremely fearful of the consequences Chinese stock market crash will have on the world’s second biggest economy.At the same time, global earnings growth was negative while industrial production and manufacturing were contracting.World trade was pale and lifeless, like a sick patient.Nevertheless, the stock market started to rally… building a wall of worry.By the middle of 2016, investors had to worry about new concerns.European banking sector was once again making front-page news. In particular, Deutsche Bank’s share price was sinking like a rock.Bearish investors were making comparisons to Lehman Brothers.Additionally, United Kingdom’s referendum vote on whether to remain or leave the Eurozone surprised all of the media and just about all of the investors, too.Several famous hedge fund managers waged large bets on a stock market crash (if UK ends up leaving the EU).Yet the market continued to rally.

Read More »

Recent Visit To Singapore & Malaysia

April 19, 2017

Weekly Notes With Tiho — Issue 4Let’s start with a simple question…What do both of these economies have in common?Considering their geographical location, maybe the first thing that comes to mind is humidity.Being a fan of cooler weather, I can tell you that I definitely felt the equator.Or maybe you’re a bit of a foodie like me, so you would have answered with Curry Laska or Satay.I must admit, one cannot go wrong with either of those!Being a finance guy, my answer is (unfortunately) linked to economic data.Consumers & Businesses Are PessimisticBoth of these economies have been exhibiting negative trends.Multi-year lows in consumer confidence and slumping business sentiment are all linked to patchy and sluggish economic activity.Singapore’s consumers have been feeling most pessimistic since the Global Financial Crisis, while their next door neighbors in Malaysia are even more negative.Business sentiment isn’t anything to write home about, either.Malaysian business confidence is at similar levels last seen during Asian Financial Crisis of 1998.So why all the negativity?Asian Economies Impacted By Rising US DollarThe rise in the US Dollar since 2011 has pushed down commodity prices, while global trade has remained anemic.Furthermore, the juggernaut of the region — China — has been going through a multi-year slowdown and economic adjustment phase.

Read More »

Should You Buy Or Sell Bonds?

April 10, 2017

Weekly Notes With Tiho — Issue 3Trump’s election win wasn’t kind to the Treasury market.Initial clues of bond market weakness came in July of last year.Writing for the old blog (Short Side of Long), I alerted my readers that Treasuries, together with other defensive sectors, were putting in a medium-term top.Here is the extract from the post, which Market Watch picked up:A range of asset classes have become “overbought, over-extended and prone to a correction” in the short and medium term, the Short Side of Long’s Brkan says.He’s looking at you, long-duration Treasuries (EDV), TIPS (TIP), investment-grade bonds (LQD), gold (GLD) and U.S. REITs (VNQ).By his thinking, much of this crowd is likely to fall in the days or weeks ahead. That’s because they’ve been “gapping upwards and lately moving in vertical fashion,” as shown in his chart above.What’s more, their relative strength indexes have jumped above 70, and these plays are at least two standard deviations above their 50-day Bollinger Bands, Brkan says.“Despite the fact that my portfolio has benefited tremendously, I now hold an opinion that we are about to mean revert,” the financial blogger writes in his latest post.“I would advise my readers to be very cautious when it comes to adding new capital towards the overall bond market, real estate and precious metals sectors.The call proved timely and correct.

Read More »

Looking For Stock Market Opportunities Around The World

April 7, 2017

Weekly Notes With Tiho — Issue 2Happy anniversary.Last month the bull market turned eight.Thats older than someone’s child.Thats older than someones career on the desk of a Wall Street bank.That’s probably too long of a time to spend on the desk of a Wall Street bank, but I better leave that topic for another day.United States stocks have had a impressive run over the last eight years.During the depths of the panic, when that devilish bottom of 666 was printed in March 2009, I hardly doubt many of us — if any — foresaw US equities to be trading above 2,400 points some eight years later.And that doesn’t even include dividends.But this chart does.Have you had the nerves of steel to buy on 06th of March 2009, and more importantly, hold until today — you would be looking at a very handsome profit.US Stocks Are OverpricedThat being said, US has become overpriced.You probably disagree with me, because the media is hooraying every time a new record high is reached.Using any classic valuation method, US stocks are expensive. I’ve recently looked at:Thanks to for the links and wonderful charts. The guys also average several of these valuation measures into a composite and than look at the current reading relative to its historical mean.As us Aussies would say, US stocks are bloody expensive.The truth is, market was expensive in early parts of 2015 as well.

Read More »

What You Can Expect From The Atlas Investor Website

April 5, 2017

Weekly Notes With Tiho — Issue 1Its good to be back and writing again.My last publication was in September 2016 on the old website called the Short Side of Long.That was a free blog I ran for years, building a meaningful following and meeting plenty of friends along the way.Over the last few months, I have worked hard with a designer and web developer to rebrand my financial publications.The result is a new website and a company called The Atlas Investor.Teaming up with a handful of experts and specialists in various fields, my aim is to deliver highest quality advice and service to readers like you.Long Term Investing Is Still The Primary FocusFirstly, let me say that I will still be running a free weekly publication. This is something that was very much enjoyed during my time with Short Side of Long.Once a week I will be writing with a global macro style and focusing on asset classes from stocks to bonds, and from currencies to commodities.We will also cover economic conditions, credit conditions, leading indicators, sentiment, hedge fund positioning, market breadth, statistics, valuations, monetary policy and various events as they occur from month to month.Plenty of charts, like the one above, will appear in the future Weekly Note posts. Here, we are looking at South Korea since its an export powerhouse. Over the last three months, exports are up by 11.4% on average.

Read More »

How To Protect Your Wealth With A Globally Diversified Portfolio

March 28, 2017

Let’s face it.Investing is a very hard gig.The world economy has gone through dramatic shocks over the last two decades.Based on misguided policies by a majority of the world’s central banks, asset prices have been and continue to be in a continuous cycle of short-lived booms, followed by ruinous busts.Has your retirement fund performed poorly over the last decade?There is no stability as you watch your net worth oscillate from year to year, and it seems like every several years, there is a major catastrophe affecting the financial markets.The Asian Financial Crisis.September 11 and the Technology Bust.The Subprime Crisis followed by the Global Financial Crisis.The Eurozone Debt Crisis.Fears of a Chinese Slowdown and the Commodity Bust.Investment bankers, market strategists and other so-called “experts” are failing to live up to their reputation, disappointing clients like you.

Read More »

We Are Moving

November 29, 2016

Many have emailed regarding the blog inactivity and lack of financial market commentary by Tiho. We will be re-directing the traffic from this website towards a new one, as our business is expending and notify our regular readers and newsletter subscribers from this blog as soon as it is ready. In the meantime, we apologise for any inconvenience.

Read More »

Precious Metals Update

October 19, 2016

Our previous advice
Regular readers of the blog should remember that back in early July we warned that the probability of safe have assets correcting was very high. This included various bonds (especially long duration), commercial real estate, minimum volatility / high dividend paying stocks and of course the precious metals sector.

There has been some serious selling in the Precious Metals market throughout the month of October, with Gold falling 4.5% so far. More speculative assets within the sector such as Platinum, Silver and Gold Mining equities have declined even more. Chart above presents the Gold Mining index together with its 200 day moving average mean (a standard industry measure of trend). The red indicator in our chart indicated that the index of precious metals companies traded as much as 60% above the mean, an extremely overbought condition. Consequently, the miners have now experienced almost a 30% drop over the last two months alone.

It is always wise to dig through the Commitment of Traders report, just to understand how other market participants such as hedge funds are positioning themselves. By observing the second chart, we can clearly see that hedge funds and other speculators held record net long positions just as the price of Gold was testing a very important downtrend line (and the mining companies were overstretched on the upside).

Read More »

Where In The World Is Tiho Today?

October 12, 2016

After spending several weeks holidaying with friends throughout the beautiful Adriatic Coastline, which included traveling all the way from Pula to Dubrovnik and islands of Hvar and Brac, we found ourselves searching for some Eastern European culture in a place not regularly visited by normal tourists. It wasn’t difficult to enter the rhythm and start enjoying the old capital city of former Yugoslavia called Belgrade, so we decided to spend over 6 weeks in this multicultural centre of the Balkans.
While there, it was natural for us to also search for business and investment opportunities. If you would like to know what we found, including the neighbouring Former Yugoslav state of Montenegro (which has the lowest corporate tax in Europe), please contact Tiho for a personal discussion. So… where in the world is Tiho today?

Read More »

Stock Market Clam & Complacency

October 12, 2016

Let us check out US stock market breadth today. Before we start, I would like to state that the charts above are as of last Friday’s close. As always lets work with three different tools and indicators: a) Advance Decline data; b) Percentage Above Moving Averages data; and c) 52 Week New Highs & Lows data.

NY Stock Exchange 10 days Advance Decline line has not been even slightly oversold since February of 2016, when the market experienced a sharp sell off due to Chinese economy worries (seems like a distant memory these days). However, our investment discipline has us adding at least some equity positions into our Hong Kong fund whenever breadth becomes “extremely oversold”. Regular readers of this site should remember that buying and selling pressure tends to ebb and flow… so do not fall into a trap thinking the market will never be oversold again. We are not chasing prices right now, that is for sure!

Standard & Poor’s 500 is probably the most widely followed benchmark in the world and the most renowned and distinguished asset class in the world. Therefore, it makes a lot of sense following the companies within this index. There are currently 48% of S&P components trading above their respective 50 day moving average. We are neither overbought nor oversold over the short term perspective, so there is no real edge.

Read More »

Finally, A Comprehensive Market Update!

September 2, 2016

Dear readers,
I admit, I’ve been missing in action. I took a prolonged summer break and have been traveling Europe for months now. As a matter of fact, I’ve been traveling the world for 11 months now and have not yet returned back to Australia. Last newsletter, which initially did not work properly due to technical issues (but works now), showed a few places I recently visited including the beautiful Adriatic coastline. Since I haven’t properly commented on asset class performance in awhile, today’s post will be more in-depth than usual. Furthermore, in coming posts I will also be diving into some commentary that covers various portfolio returns, and not just classic tactical opinions. There are many ways to do this, but I shall try to track the “imitational lookalike” performance of several famous asset allocators and comparing them against the way I invest my own capital. But for now, let us cover recent market conditions.
2016 has been a great year for asset classes, in particular the bond market. Federal Reserve raised rates at precisely the wrong time at the end of 2015, just as the global economy continued to slow. What followed was a nasty equity market correction in January and February, which pushed the Fed back into the dovish corner. Bond market started a powerful rally, sensing that the US central bank was in a “one-and-done” case scenario.

Read More »

Rates Rising, US Stocks Leading, August Holidays

August 16, 2016

Dear readers,
I hope this post finds all of you well. In the first week of July I commented on financial market overextension, in particular for asset classes that were and still are deemed “safe” by various market participants. These included nominal Treasuries, inflation linked bonds, corporate bonds, emerging market bonds, US commercial real estate, utilities sector and Gold. So far so good, and it seems that majority of these asset classes continue to correct even as I write this post (I do admit EM debt did not correct and is still holding up at short term elevated levels).

Focusing on the stock market, it is not a secret that US equities continue to outperform, leading on the upside. S&P 500 remains the only major index at a new record high (priced in USD). On the other hand, MSCI All Country World Index is still below May 2015 highs.  In my opinion, an important test for the US stock market is now approaching. We could potentially re-test the previous resistance around 2,100. If bulls successfully hold this level, further gains might be in the cards. However, if this area fails to hold, we will be facing a so called technical pattern usually known as a “bull trap” for this overly aged bull market with high valuations.
I am wishing everyone a wonderful holidays in August. I hope you are spending the time with family and friends.

Read More »

Asset Prices Are About To Correct

July 6, 2016

Dear readers,
Just a quick technical update. It has come to my attention that variety of global macro asset classes have become overbought, over-extended and prone to a correction from both short term and medium term perspective. Market participants now believe that the Federal Reserve has all but given up on its rate hike intentions. Expectations from the bond pits show that FOMC will stay on hold until 2018. With that context unfolding over the last few weeks, and Brexit adding fuel to the fire, various bonds together with other interest rate sensitive assets have benefited. From a contrary point of view, despite the fact that my portfolio has benefited tremendously, I now hold an opinion that we are about to mean revert.

I’m going to keep the grid above, thanks to website, in the same arrangement for both charts. Assets I am tracking here are Long Duration Treasuries ETF (NYSE: EDV), Treasuries Inflation Bonds ETF (NYSE: TIP), Investment Grade Bonds ETF (NYSE: LQD), Emerging Market Bonds (NYSE: EMB), US Commercial Real Estate (NYSE: VNQ) and Gold (NYSE: GLD). To be quite honest, I could have added a few more asset class subsections such as S&P Dividend Aristocrat Index, S&P Utilities Index and so forth. The first chart above is daily price (short term time frame).

Read More »

Brexit, Europe’s Bear Market, Interest Rates & Gold

June 27, 2016

Dear readers,
I hope this post finds all of you well. Since the last letter mainly focused on the global economic trends, which continue to show signs of slowing, it is interesting to note that Short Side of Long has not made commentary on financial markets in about two months now. In my defence, I have been busy traveling from Cambodia to Hong Kong, and from Papua New Guinea to The Phillipines. Returning back from my travels, I find the timing of this letter just about perfect so let us get straight into it. Recapping the post written in early May, I wrote that:
“The most disappointing period of stock market performance is May to October, while outperformance occurs from November to April. I’m sure we have all heard the famous “Sell In May & Go Away” quote. …the oversold conditions and extremely pessimistic sentiment in February led to a sharp [stock market] rally over the last 10 weeks. With seasonality now turning negative, I would advise my readers to exercise caution. Vertical rallies, such as the one we recently witnessed in the S&P 500, are not sustainable on annualised basis. Certain market pundits have advised buying the recent dip, but we would argue… that the market isn’t oversold just yet.

Read More »

Assets Returns & The Global Economy

June 2, 2016

Dear readers,
We are almost half way through 2016 and I have to say it has been an interesting year so far. I’m sure you would agree. In my humble opinion, major theme isn’t the Chinese economic slowdown and potential for more RMB devaluation, even though a lot of folks would argue for it. I also believe it isn’t Federal Reserve’s next interest rate hike, which just about everyone is obsessed with (especially the financial media). Nor is it the US election and the potential setup of Trump vs Clinton. European readers would advocate for “Brexit”. Personally, I would have to say it’s something that the financial media hasn’t yet started to focus on. The US stock market, which has dramatically outperformed other assets over the last few years, is not “the only game in town” anymore. Global macro investors (like me), are finally starting to gain in performance by holding assets other than the S&P 500 and it’s about time. Let us discuss further.

There are now variety of assets outperforming the S&P 500 over the last 12 month timeframe (this is even more true on a 6 month rolling basis). These include nominal Treasury Bonds, Treasury Inflation Protected Securities (TIPS), Emerging Market Bonds (USD denominated), investment grade Corporate Bonds, listed US Commercial Real Estate (REITs) and the Grains Index (Soybeans, Corn & Wheat futures).

Read More »

S&P’s Seasonal Change, Value in China & Vietnam

May 5, 2016

Dear readers,
I hope this newsletters finds you well.

I am currently writing from a very warm and extremely humid Saigon (or Ho Chi Minh City), where change is coming – the rainy season is about to start. The interesting fact about this change in weather phenomena is its close similarity and correlation to the stock market seasonality. Saigon’s rainfall increases dramatically from May to October, while the dry season occurs from November to April. Likewise, the most disappointing period of stock market performance is May to October, while outperformance occurs from November to April. I’m sure we have all heard the famous “Sell In May & Go Away” quote. This year, we enter May with the following year to date performance for major asset classes:

What stands out to me is the underperformance of global equities against all other asset classes. It is worth mentioning that the oversold conditions and extremely pessimistic sentiment in February led to a sharp rally over the last 10 weeks (we discussed these points in our mid Feb post). With seasonality now turning negative, I would advise my readers to exercise caution. Vertical rallies, such as the one we recently witnessed in the S&P 500, are not sustainable on annualised basis.

Read More »