First to get the trades out of the way selling 100 SPY at the open to lighten up my broad market exposure. I still hate this market and think it is expensive.
The bulk of my time and energy is now focused on the launch of psyquation.com on the 20th May. I will write more when my schedule allows it.
Herewith Sefirot Freestyle Fund performance to date, in terms of the stated goal we are winning with a Sharpe Ratio of 0.42 vs 0.11:
I am feeling terrible that I am not posting on this site, like I would like. I am however tweeting a lot these days and can be followed on @mickson
As we have just finished Feb I wanted to post our returns. On the positive side of things the fund is profitable; however the strength of this bounce/new high coming has surprised me. I continue to opt for a very most index exposure. I have been toying with buying some non-correlated instruments of an exotic nature, but I have decided to stay away from it and stick to my main objective of beating the S&P500 on a risk adjusted basis.
Lastly, I am currently reading Market Mind Games by Denise Shull who I had the pleasure of meeting in New York in December. I will reserve comments until I have completed the book, but I will say I am impressed with her mindfulness approach. I am just wondering if I can accept her overriding philosophy within a Jungian context. Until later…..
Psyquation.com launch scheduled for May and occupying almost all my attention.
It has been some time since we have done anything to the portfolio. We will buy 75 SPY @ the market open on 21 Jan.
The portfolio is doing really well having side-stepped the latest bout of volatility. We have no plan on getting too constructive on the portfolio. However, given the recent selloff there is some scope for a bounce of some nature to develop.
Reminder: the funds goal is to outperform the S&P500 on a risk adjusted basis.
This table has all you need to know to have a handle on what happened last year.
For me today is the last day of the year as I write this note at my hotel in Los Angeles before boarding a flight tonight that will cross the dateline and see me miss New Years Eve, i.e. we leave on the 30th and arrive in Sydney on the 1st.
Here is a summary of the Sefirot Freestyle Funds performance since inception on 23 December 2014. The fund has essentially side stepped the volatility of the broader S&P500 and more or less delivered the same nominal performance. For me 2015 was frustrating but I still maintain we are due further dislocations in the market and I intend to be on the sidelines during this time.
I am going to put forward a controversial theory that came to mind.
Working within a neuroscience framework we know that people release hormones like cortisol (related to stress) and serotonin (related to happiness) within a normally distributed range. Then we have some people, call them outliers who either produce too much or too little of these hormones. Think here of your ADHD or extremely nervous trader.
I recall more than a decade ago reading Nobel Laurette Prof Robert Shiller’s book “Irrational Exuberance” where he questions the volatility in the stock market prices, when the dividends driving valuations move much less than the price. His thesis is that there must be more to valuation than simply discounting future dividends. The volatility ingredient in the mix is the emotional context of the trader/investor.
I would like to suggest that perhaps the volatility in the markets is simply an expression of the hormonal chemical reaction in the trading population. Here is a 5yr chart of the VIX (volatility index).
As someone striving for intellectual honesty I am amazed at how we confront moments of truth when we least expect it.
In roughly 2 weeks time we will be lifting the lid of our new startup and start talking openly what we do and why we think we are bringing a fresh approach to an old problem.
The story behind the subject starts yesterday with me spending most of the day with a friend and advisor who occupies a unique position in the market we are looking to compete in. Because of my friends industry knowledge I was more inclined to consider what he had to say.
Vladimir and I have spent many hours discussing our business model and a few weeks ago we finally locked down our way forward, or so we thought. Enter friend X and his idea of a 180 degree switch to our business model with the prospects of making more profits in a shorter time frame and the result is one helluva confused set of co-founders.
So Vlad and I started talking but our heads were spinning we just couldn’t get a grip; we launch in 2 weeks and here is a proposal that will completely change the message and approach we plan to launch with. This is when intellectual honesty and the genuine pursuit of it comes into question. Vlad and I really gave this new approach very serious consideration.
We have finally decided to stick with our intended value proposition which might not be as profitable in the short term, but it represents our value system and the idea of disrupting the market with genuine innovation and giving as many people as possible the benefit of this innovation and giving us much lower exposure to conflicts of interest.
This leaves us as both richer and poorer, which aligns nicely with my Kabbalistic and Jungian principles of uniting opposites.