I agree with your sentiment that politics trumps economics - if so, since most of the US population heading into retirement has exposure large cap US companies and the only palatable political agenda is for the US govt to support equity pricing - why not go long US equities?
This makes me think for the next 15 years:
- Levered Long sp500 (US govt political support, equity prices cannot stay down)
- Short Oil (its in no developed governments interest)
- Short Crypto (no political support, undermines stability of government currency)
- Short China/EU equities in the short/medium term (no government support/political support YET)
- Short commodities in the long run (no politcal/govt support from developed nations for ever increasing prices)
Based on this view of the world relating to US equities a crash like 2000 and 2009 is possible due to any number of issues -i.e 2020
However it can be expected that the response from the government will be to prop prices up similar to 2020 nearly immediately with hard handed policy, a sustained bear market with a long time to recovery such as 2000 or 2009 is impossible because it is politically unpalatable.
Eventually its conceivable that Chinese equities will be supported by the Chinese government (when a larger percentage of the Chinese population are invested and affected by pricing of their indices?) at that point Chinese equities will be a long as well.
Do you still see opportunities in big China tech for shorts - focus being Alibaba and Tencent? With the BABA ADR now being 80% off highs , I’m wondering what we can expect next
Intriguing, but you cannot predict political decisions ahead of the decision news.
The rates direction and the easy money "printing" or tightening are a better underlying forces.
You cannot follow the narrative, because insiders pretty much know in advance and the markets move before. Just look at Bonds they started to fall way before the rate increase started.
China is way oversold and due for a rebound. As USD falls back, Chinese stocks will pop up like they did last week.
Is the right way to think about your framework now (a) you use NIIP to identify where there could be a macro issue (b) you use political analysis of capital vs labor to determine the political response to the problem and potential winners and losers (c) you do your micro analysis to quantify how this plays out (d) you do your market technical analysis to time and size your position? Put another way, are you just adding a new step into your process or are you completely changing it?
I think politics dominates everything - and the way the world worked before was because there was a strong political mandate for that model - a political mandate for governments to let markets do what they needed to do. Now there is a mandate for government to act to ameliorate the negative aspects of market behaviour. So you need to think about what is politically acceptable and unacceptable when investing - or short selling...
Usually doing similar trades more driven via fundamentals and more painful ways, intriguing to learn how you caught them in such a different way.. I should have called you :) especially that the China tech sell off.
What would be your thought on an IndexFund like fund of short positions on a broad range of companies and/or other assets.
Perhaps Equal Weighting could be used rather than Market Weighting.
I agree with your sentiment that politics trumps economics - if so, since most of the US population heading into retirement has exposure large cap US companies and the only palatable political agenda is for the US govt to support equity pricing - why not go long US equities?
This makes me think for the next 15 years:
- Levered Long sp500 (US govt political support, equity prices cannot stay down)
- Short Oil (its in no developed governments interest)
- Short Crypto (no political support, undermines stability of government currency)
- Short China/EU equities in the short/medium term (no government support/political support YET)
- Short commodities in the long run (no politcal/govt support from developed nations for ever increasing prices)
Based on this view of the world relating to US equities a crash like 2000 and 2009 is possible due to any number of issues -i.e 2020
However it can be expected that the response from the government will be to prop prices up similar to 2020 nearly immediately with hard handed policy, a sustained bear market with a long time to recovery such as 2000 or 2009 is impossible because it is politically unpalatable.
Eventually its conceivable that Chinese equities will be supported by the Chinese government (when a larger percentage of the Chinese population are invested and affected by pricing of their indices?) at that point Chinese equities will be a long as well.
Do you still see opportunities in big China tech for shorts - focus being Alibaba and Tencent? With the BABA ADR now being 80% off highs , I’m wondering what we can expect next
Definitely interesting Russell. I look forward to the next post.
Intriguing, but you cannot predict political decisions ahead of the decision news.
The rates direction and the easy money "printing" or tightening are a better underlying forces.
You cannot follow the narrative, because insiders pretty much know in advance and the markets move before. Just look at Bonds they started to fall way before the rate increase started.
China is way oversold and due for a rebound. As USD falls back, Chinese stocks will pop up like they did last week.
Is the right way to think about your framework now (a) you use NIIP to identify where there could be a macro issue (b) you use political analysis of capital vs labor to determine the political response to the problem and potential winners and losers (c) you do your micro analysis to quantify how this plays out (d) you do your market technical analysis to time and size your position? Put another way, are you just adding a new step into your process or are you completely changing it?
I think politics dominates everything - and the way the world worked before was because there was a strong political mandate for that model - a political mandate for governments to let markets do what they needed to do. Now there is a mandate for government to act to ameliorate the negative aspects of market behaviour. So you need to think about what is politically acceptable and unacceptable when investing - or short selling...
Usually doing similar trades more driven via fundamentals and more painful ways, intriguing to learn how you caught them in such a different way.. I should have called you :) especially that the China tech sell off.
That was the problem... finding good shorts but then pairing them with bad macrotrades....