It is so common in life that dealing with the truth is far harder than just pretending it does not exist. Politically, so many people wonder why people cannot except the truth of climate change, or Brexit or Trump. It is far easier, to accept alternative answers that don’t require you to do anything. Climate change is a hoax, Brexit and Trump lied and are not deserving on their democratic mandates are examples of such thinking.
For me, I have been struggling with the market action in Chinese bond markets. In a pro-labour world, I would expect bond yields to rise everywhere. In China they recently touched new all time lows.
The convenient truth for me is that falling bond yields in China has had no negative effect on my core trade of GLD/TLT, which has recently surged to new all time highs.
So what gives? How can we try and “handle this truth”? If I was a newsletter writer, I could just ignore it, but as I am thinking of launching a fund, the above question is exactly what a high level allocator would ask, and not having a good answer would (should?!?) condemn your pitch the dustbin.
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