Can we predict everything? Can we have enough data?

Long-term Value Portfolio for week ended 11/2

I have not updated the the performance of the long-term value portfolio since October 19, as my ability to post before Halloween were impeded by my preparations for Hurricane Sandy. Since October 19, the Long-Term Value portfolio fell 1.8% versus a loss of 1.3% on the S&P 500. Since inception, the fund is up 2.5% since June 30, falling short of the S&P 500 by 130 basis points.



I would expect the performance versus the S&P 500 to close over time, due in part to how the portfolio is constructed, which I have detailed extensively in prior posts.

Trading portfolio update for week ended 11/2

It has been two weeks since I provided an update on the performance of the trading portfolios, as my preparations for Hurricane Sandy did not allow for much time for do any posts. Since 10/19, both the long and short trading portfolio investment have remained unchanged. As a reminder, the long and short public profiles can be found here and here, respectively. In addition, these portfolio represents recommendations that I have publicly stated. 

The long-trading portfolio finished the week at a value of $11.45 or gaining 0.8% since 10/19. This compares to a loss of 1.3% on the S&P 500 over the same time period. The blue line in the graph below represents the long trading portfolio while the green line is the S&P 500 and the brown line is the NASDAQ.



The portfolio is currently composed by long positions in coal stocks, the Proshares Short 20+ year Treasury Fund (ticker TBF), and the Advisor Shares Ranger Equity Bear ETF (ticker HDGE).

The short trading ended the week at $10.28, gaining 2.1% since 10/19 versus the 1.3% loss on the S&P 500 over the same time period. Portfolio positions include short positions in a number of mortgage REITS (in an attempt to simulate the Mortgage REIT ETF), Spider Gold ETF, the United States Oil Fund, the triple Q's, and the S&P Homebuilders ETF (Ticker XHB), the later of which I on may close with a small loss.





Similar to the above chart, both the green line and brown line represent the performance of the S&P 500 and NASDAQ, respectively, while the blue line is the short portfolio.

PIMCO is positioning itself for higher inflation

Via  Boomberg- http://mobile.bloomberg.com/news/2012-11-01/pimco-seeks-protection-from-fed-s-inflation-in-australia-u-s-.html

“Central banks have implemented increasingly far-reaching policy measures and they are more willing to take inflation risk as a trade-off for growth and employment,” Michael Althof, a senior portfolio manager in Munich, said in a phone interview. “Index-linked bonds are good assets to have, as longer-term we think the pressure for higher inflation is there.”

“We expect inflation expectations in the U.S. to increase over time because of the Fed’s policy,” said Althof. The near- term “part of the market tends to react more to oil, food prices and currency risks. Further out, they react more to expectation and the central bank’s policy stance. This is our favorite part.”

I am in the camp that inflation rates will rise. It will just take time and an otside catalyst that pushes short term rates higher.

Blame Christie and Cuomo for the gas shortages

As they limited the ability of service stations to raise prices in the wake of reduced supply. Simple economics, simple economics.

A picture is worth a thousand words- gas shortage edition

You have no doubt heard about the supposed gas "shortages" in New Jersey and New York in the wake of hurricane Sandy. What is not talked about is that the so-called shortage is primarily a result of human psychology run amok. How do I know this? Look at the wholesale price of gasoline.

Do you see the shortage? You will have to look very hard and turn your computer screen over to see it.

This is the greatest self-portrait in the universe

Davinci and Rockwell, eat your heart out. The below picture is as self-portrait of the Curiosity rover as it travels across Mars.