This chart from Michael Kahn over at Barron's puts the dollar rally in some perspective, eh?People are saying the dollar bear market is over but as rallies this decade go it doesn't look that big.
It could extend and turn into something big of course but we have seen this movie before WRT to snap back rallies during this decade.
This applies to charts of other things having violent moves in the other direction from what we have become accustomed.
To me this is a good reminder that these moves, counter trend or the real deal, happen often, do not require a panicked response and make a good argument for moderate exposure.
I was never in the gold $2000 camp, and thought oil could come back down to $120 but as fast as the moves have been I think the best thing would be for the velocity to slow down, let these things (currencies, commodities and anything else on your mind in this context) calm down and find their footing. Very fast moves, IMO, belie a very nervous market--more nervous than usual.
I found this guest article about the iPath Global Carbon ETN (GRN) on IndexUniverse.
The author contended that GRN has had a low correlation to the Oil ETF (USO) noting that from July 31 forward GRN was up 10% and USO was down 10%.I have written about this fund a couple of times expressing my interest in seeing how this works out and what effect it might deliver to a portfolio as the world trades more carbon credits.
My hope is that things related to carbon trade in their own world, essentially correlating with nothing. A few days ago I expressed some surprise at how much GRN had dropped to which a reader very rightly pointed out that it had dropped with the price of oil.
I think the article missed on the correlation issue. It seems clear to me that so far, the two have been correlated but in reality I think it is too soon to feel very confident either way.
A quick Buy Write ETF (PBP) update; it launched right after the S&P 500 started rolling over into a bear market and I gotta say it seems like it is doing what PowerShares and the CBOE said it would do, at least in a down market.BigCharts has data for the underlying BXM index going back to early 2002. From that point forward BXM is up what looks like 40% versus about 15% for SPX.
In 2003, the one year this decade that the US market was up a lot, BXM was up about 18% versus 26% for the S&P 500. The next time the market is up a lot BXM and by extension PBP would probably lag then as well but the long term result is compelling. I own PBP personally and in a few client accounts.
The volume thus far in PBP has not been so hot but maybe that will change.
I'm still writing for greenfaucet. The content is different than what I post here, I hope you'll check it out.
Team handball update; Iceland is 2-0 in pool play. Last night on the Red Sox game, announcers Jerry Remy and Don Orsillo were talking about team handball. Apparently some of the players were watching in the clubhouse and it is very popular with the players which I find amusing. It really is a hoot.
11 comments:
Roger,
For a covered call strategy, the Gateway fund is a great play. It has outperformed PBP.
I own a buy-write closed end fund ETW which is down about -10% ytd and at a -12.9% discount to NAV and pays a 12.23 distribution. I don't know how to compare to PBP.
I mentioend the gateway fund in a recent TSCM article--good track record.
as for the CEF you mention, not sure what you mean by not sure how to compare. it is an activly managed product in a different wrapper, the BXM would be a good benchmark for both. PBP is the index tracker and the CEF probably attempts some sort of result tied to the index.
over the full cycle you can decide whether it does or does not do what you think it should.
Team Handball is a sport that was created for all the little wimps who had their milk money stolen as children. Not sure what the attraction is for people. Every four years I try to get on the bandwagon and every four years I find myself asking why I wasted a part of my life watching it.
And while I am ranting about that how about equestrian events? Dressage? Come on. Why is that in the Olympics? If you're gonna have sports where the "people" (these are not athletes under any definition I can imagine) getting medals are simply animal handlers/trainers then why not have jack russells running around doing dog agility and what not? It baffles me what some people consider sport.
I meant compare ETW to PBP. If I take the NAV of ETW -Eaton Vance Tax-Managed Global Buy-Write Opportunities, which is paying out 12.23% distribution, can it be compared? Does the market price of PBP have a distribution?
etfconnect has the div info for pbp. that site also has good total return info for the various funds too.
yahoo finance will let you chart the nav of a CEF. for ETW you would use XETWX and chart it like anything else.
before shorting the dollar, you may want to see John Authers discussion of the important breach of the 1000dma Pound/$ line...
http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html
We can also lose any sport that starts with the word "syncronized". Apparently someone saw an old Doublemint commercial and thought it would be a great idea for an Olympic sport.
Roger,
nice chart on the dollar, but the dollar is clearly above its 200 dma which I would have thought would make you positive on the dollar.
I see both sides of this debate and I personally come down on the side of the dollar bulls. It is not that I see everything rosie going forward in the US (quite the contrary)
I do see the rest of the world going into recession with us though and I think the decoupling BS did not count on this being a global economy event.
All that said why are you not a dollar bull now that the dollar is above its 200 dma
i've never talked about the 200 dma in any other context other than demand for equities on a broad basis.
dollar has bottomed has become very popular all of a sudden. The other currencies have weakened due to cyclical issues, i perceive that the US problems are bigger than cyclical, more secular or systemic (not systemic failure).
I may be wrong but I have not bet the farm by any means.
I've been kicking around an idea for a asset class mean reversion system based on 2-3 year performance. Mebane Faber discusses the general concept here:
http://www.247wallst.com/2007/01/mean_reversion.html
What if we ranked a set of asset classes for their performance over the past 24, 30, 36, and 48 months, and choose the worst performers as investment candidates. Secondary, we use a moving average (e.g. 75 day moving average)as a filter, buying and holding candidates who are above that moving average.
If I ever get the time I would sure like to test it out.
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