Financial Letter - October 7th, 2018
192nd Issue (since 01/24/2015)
Market Risk (Systematic Risk)
The SPY sailed the forty-first week of 2018 with sustained headwinds that made the SPY decline enough to make the EMA of the VIX and the VVIX (see charts 3 and 4) cross upwards: a discouraging signal for the short term.
But the long-term chart is showing a comfortable bullishness (see chart 2 - SPY - weekly).
In the last two weeks, a private indicator (CKL21) gave cautious signals for the short term and this week the bullishness of the market is more eroded.
The conclusion for this past week: technically speaking, the market is still in a somewhat negative bias without much optimism.
The Langford Management
Presently our investments are in ETFs and ETN offering a high return, with a dividend yield between 5 to 10 % per year, at pro rata temporis, monthly. The market has still a strong positive bias. We don’t think for the moment to change the allocation because also the products with higher returns are also bullish.
In the USD accounts, still we have cash, in the form of FLOT, MINT, NEAR. In the CAD accounts, it is PSA or the equivalents. In the average, our portfolios are invested 60% in revenue and 40% in directivity.
In some, more aggressive accounts we have increased the capital synthetically with option strategies to profit of the actual upward strong momentum. In accounts that allow futures markets, we have futures contracts in long position on stock indexes.
Our portfolio management is always ad hoc, for each client. But also, we offer now five standardized mini-portfolios for clients interested:
- Bullish aggressive
- A contrarian as a hedge or profit
- Bullish and dividend oriented
- Against inflation
- Bullish, aggressive on non-traditional assets.
(The portfolio management fees of Charles K. Langford Inc. is 0.9% of assets, per year (equivalent to $900 per $100,000). The capital under management is invested exclusively in ETF, ETN and options)
Among a group of selected stocks and ETFs, the week just ended has given middle- and long-term buy signals for the following stocks and ETFs.
TREND FOLLOWING
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Middle-term bullish |
Long-term bullish |
|
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Canadian Market |
GRAT.V |
EHT.V |
About Options
Investors that believe the current Canadian market offers interesting bullish opportunities, they can buy a call on MEG (it closed at $10.98 on Friday) January 18/9.00 @ $2.26 whose delta is 0.86 and gamma 0.10 (accelerator of delta). This call will offer a profit of 86% of the stock increase at a cost that is about 5 times lower than the present price. If the stock goes down, the maximum loss is the premium.
SPY - Daily - 2018/10/05
SPY - Weekly - 2018/10/05
VIX - Daily - 2018/10/05
VVIX - Daily - 2018/10/05
