Flash Crash could happen again. Click on
What the above house is doing to minimize the affect of Climate Change and what you can do.
- Plant a tree on the west side of the house in front of windows. Make sure that the tree is not bigger than the house and loses its leaves in the winter.
- Install awnings over windows that block sun in the summer and allow sun in during the winter.
- Install weatherstripping around doors and windows to stop leaks of weather into the house during summer and winter.
For notification of future posts, click Follow below. You will not be spam’d.
No, not prayer. Basically, ALL schools need the Ten Commandments minus the God stuff. We are so hung up with the God stuff, that we ignore the Ten Commandments. We lose out by separating church aka religion and state aka government.
If we take out the God stuff, the Ten Commandments cover most of what the major 7 or 8 religions in the world teach plus or minus “an eye for an eye” clause. In other words, the remaining 7 Commandments need to be taught in every school. Let’s review them.
Remember the Sabbath day. So taking Saturday or Sunday to reflect is a great idea. We all need to recharge our “batteries”. Take the time to rest, regroup, meditate. And if it includes practicing your favorite religion on Saturday or Sunday, then go for it.
Honor thy Father or Mother. This can be generalized to say honor or respect your elders whether it be father, mother, grandparents, teacher or some old guy down the street. These people have a lot more life experiences than you. They may have more stress and more knowledge.
Thou shalt not commit adultery. This is pretty obvious. Do not cheat on a significant other whether you are married or not. If there are compatibility issues, try to end it calmly and fairly and move on.
Thou shall not kill. Another obvious commandment. Punishable by death or life in prison.
Thou shall not steal. Also obvious but needs to be reiterated. As thieves get away with crimes, their friends and associates think it is okay to steal. A strong police presence is required coupled with a three strikes law that elevates the severity of the punishment. At the same time, we need to ask why did you steal? There may be a deeper issue such as poverty or drug use.
Thou shall not bear false witness. Plainly speaking, do not lie. Politicians are famous for lying. But they must be held accountable whether it is via fact checkers or some other means. If they get away with a lie, then society breaks down with more lies or by repeating the false narrative.
Thou shall not covet thy neighbors house. Again, plainly speaking, do not be jealous of others. This can lead to bad thoughts and bad deeds. Be happy with what you have.
Conclusion. So what this post is attempting to say is, let us encourage ALL schools to reinforce these remaining 7 non-God Commandments and then all of our communities will be that much better off. Thanks for your time.
For future notification of posts, click Follow. You will NOT be spam’d.
This gallery contains 4 photos.
Renaissance Candidates [from my view] Bill Gates – Computer guy but not really artistic. So no. Steve Jobs – Computer guy with fascination with aesthetics. So yes. Thomas Jefferson – Politician, architect, inventor. So yes. Leonardo da Vinci – Artist, … Continue reading
How would you like to make a lot of money even during a Recession?
And you do not have to sell your soul.
Before having the big reveal, let’s review a little history.
1924 1990 2006 2012
MutualFunds -> ETFs -> InverseETFs->Long-shortETFs
First, mutual funds were created where your broker bought a batch of stocks at the end of a day for the long term. These have usually been industry aka sector specific.
Next, Electronic Traded Funds or ETFs came along that did the same as Mutual Funds with a long term bias by industry/sector but they have been allowed to be traded in real time.
Then came Inverse ETFs which were ETFs but instead of long positions of stocks, these were only invested in shorted stocks for a particular sector or index. Surprisingly, Inverse ETFs have not garnered a huge following though they perform well during a recession.
One unique recession strategy involves timing the move from regular ETFs to inverse ETFs. But timing the market is well known to be very difficult and very risky.
Vanguard created possibly the first long-short ETF called the Vanguard Market Neutral Fund or VMNFX. It tries to balance long investments in profitable growth stocks with short sales on failing stocks.
This is intriguing. Most analysts already concentrate on an industry/sector and know the best companies as well as the worst ones. These analysts already know which ones will beat and which ones will miss earnings estimates.
Unfortunately, Vanguard makes several mistakes with VMNFX in terms of the long/short mix and the industry/sector mix.
First, VMNFX is neutral meaning it is 50% long and 50% short ALL THE TIME as seen in the following portfolio composition figure.
Even though this last year has seen VMNFX beating many normal ETFs, it does NOT increase the percentage of long stocks when the market is going up NOR increase the short position when the market is going down. In other words, VMNFX never changes it long/short percentages.
Secondly, the VMNFX fund is charted to analyze A LOT of industries, as the previous composition figure shows, but with just a few analysts. A group of normal ETFs covering many industries would have hundreds of analysts in comparison. Consequently, the VMNFX fund has grown a mere 20% in 10 years as seen below in a hypothetical growth chart.
Is There A Better Way?
A better approach would be to have a group of sector specific ETFs that invest in a mix of long stocks and shorted stocks. These could be called Super ETFs because they are profitable in good times and could easily make money even in bad times like a recession. How is that possible you ask?
Besides concentrating on a particular sector, Super ETFs would have several fund managers to determine the variable ratio of long purchases versus shorted positions. For example, the ratio might be 75% long and 25% short during a normal market year.
Fund Manager 1 might suggest 70% long and 30% short. Fund Manager 2 might suggest 80% long and 20% short. The third Fund Manager might agree on the average of the other’s recommendations and end up with 75% long and 25% short.
But soon as a recession approaches, such as this year, a Super ETF might have a higher percentage of short positions. For example, 80% short and 20% long.
Fund Manager 1 might suggest 85% short and 15% long. Fund Manager 2 might suggest 75% short and 25% long. The third Fund Manager might agree on the average of the other’s recommendations and end up with 80% short and 20% long.
Returning to Vanguard’s long-short VMNFX ETF, it is clear from the many industries in the portfolio above that the goal was to automate a complete investment portfolio mix for any investor. But as already mentioned, this new long-short investment product took on too many sectors and, thus, failed to consistently beat other ETFs. For example, the Fidelity Biotech ETF (FBIOX) grew 50% in ten years compared to VMNFX which grew only 20%.
Why Super ETFs?
A Super ETF has the higher probability of success because of its variable long-short mix yet dedication to a single sector as most normal ETFs do today.
Each Super ETF could also use the following standard recession predictors to change the percentage of long versus short positions.
1. Yield curve – Treasury 10 -year minus 2 year rates
2. Dow Jones Transport Index
3. GDP Now
4. VIX – Volatility Index
A better example than VMNFX is the 18-month old Leatherback Long/Short Alternative Yield ETF or LBAY. As the following LBAY performance chart shows, it has grown from $24.50 per share to $29 YTD or 18% when most stocks are down this year. Also, it has grown 45% since its inception in November 2020. By the way, FBIOX is down 46% in that same 18 months.
But unfortunately, LBAY is hindered by the same philosophy as VMNFX of using a few analysts to cover a lot of industries/sectors.
How Should We Invest In Multiple Sectors?
Multiple Super ETFs can be used to achieve the intended VMNFX and LBAY goals of automation of a complete investment portfolio for any investor.
Several brokerages have created Robotic aka Software Tools such as Fidelity’ Go that invest in a mixture of funds, usually their own. The goal of these is similar to VMNFX and LBAY: create a complete, automated, diversified portfolio. But Fidelity Go does not perform well in bad times because all of its ETFs are normal ETFs invested only in long-term products.
A RoboInvestor software tool could be designed to utilize just Super ETFs. That way it leaves the long/short mix to the funds and can concentrate on creating a diverse portfolio.
A RoboInvestor can take advantage of cyclical or seasonal sector trends. It is common knowledge that cyclical stocks are volatile and tend to follow trends in the economy. Also non-cyclical stocks tend to outperform the market during an economic slowdown. For example, the RoboInvestor can invest in the retail sector before the end-of-the-year holiday rush and increased consumer sales. The RoboInvestor can also rotate out of cyclical stocks and into defensive stocks depending on where in the business cycle the economy is headed.
Here is a chart of historical performance of sectors across the business cycle that Fidelity provides and that a RoboInvestor tool can use.
In conclusion, you do not have to sell your soul to have an automated successful investment portfolio. That is because investment success can come with a combination of Super ETFs and a RoboInvestor. Together they can automate a complete investment portfolio for any investor.
Super ETFs will have a proper mix of long and short stocks in a specific sector. A RoboInvestor software tool will pick the correct mix of cyclical and non-cyclical sector Super ETFs. The result is investors will see profitability automatically in both good times and during bad times such as recessions.
To get notified of future posts, click Follow button. You will NOT be spam’d.
- Super ETFs and RoboInvestor (The Long and Short Of Investing) https://michaelekelley.com/2022/06/12/super-etfs-and-roboinvestor-the-long-and-short-of-investing/
- #Assassination Trilogy Books https://michaelekelley.com/2022/05/23/assassination-book-trilogy
- The Federal Reserve is Topsy-Turvy But Can Be Improved https://wordpress.com/post/michaelekelley.com/72199
- Watergate Affected #StockMarket https://michaelekelley.com/2018/02/05/how-watergate-affected-stockmarket/
- The Low and High Trailing Execution (LHTE} Stop Order https://michaelekelley.com/2017/04/27/lhte-stop-order/
- #FCC to Fine #BreibartNews https://michaelekelley.com/2017/03/05/fcc-to-fine-breitbartnews-for-fakenews/
- Explaining #BREXIT https://michaelekelley.com/2016/06/24/explaining-brexit/
- #FederalReserve Discovers Fools Gold https://michaelekelley.com/2016/06/05/federalreserve-aka-fed-discovers-gold-fools-gold/
- #Revenge Knows No #Religion https://michaelekelley.com/2016/04/17/revenge-knows-no-religion-even-in-syria/
- #Daughters Deemed Disorganized https://michaelekelley.com/2016/03/03/daughters-deemed-disorganized/
- #FederalReserve Is In a Pickle https://michaelekelley.com/2016/02/17/federalreserve-is-in-a-pickle/
- #Valentine Viewpoint https://michaelekelley.com/2016/02/12/valentine-viewpoint/
- Why GLD is Bad and GOLD is Good https://michaelekelley.com/2016/02/08/why-gld-is-bad-and-gold-is-good/
- Japan – Why Negative Interest Rates? https://michaelekelley.com/2016/01/31/japan-why-negative-interest-rates/
- Climate Change Contest https://michaelekelley.com/2015/12/08/climate-change-contest-pick-door-1-or-door-2/
- Refugees Refuse to Relinquish Resourcefulness https://michaelekelley.com/2015/10/28/refugees-refuse-to-relinquish-resourcefulness/
- Do Not Take Any Wooden Nickels https://michaelekelley.com/2015/06/25/do-not-take-any-wooden-nickels/
- Never Ever Take The Last One https://michaelekelley.com/2015/05/28/never-ever-take-the-last-one/
- The Kelley Monetary Policy Rule https://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/
- Why Another Recession is Coming https://michaelekelley.com/2015/03/02/why-another-recession-is-coming/
- Burnt Toast https://michaelekelley.com/2015/02/18/burnt-toast/
- Fed Inflation Target is Abnormal https://michaelekelley.com/2015/02/11/fed-inflation-target-is-abnormal/
- Asperger’s Character is Ticked Off https://michaelekelley.com/2015/02/06/aspergers-character-is-ticked-off/
- A Wild and Crazy Year So Far https://michaelekelley.com/2015/02/03/a-wild-and-crazy-year-so-far/
- Earn 6% Risk Free Without Big Banks https://michaelekelley.com/2015/01/09/earn-6-risk-free-without-big-banks/
- What is Wrong with Capitalism? https://michaelekelley.com/2014/12/10/what-is-wrong-with-capitalism/
- Who’s Been Messin’ With My Workstation? https://michaelekelley.com/2014/12/02/whos-messin-with-my-workstation/
- What Would $4 Billion in Election Money Buy? https://michaelekelley.com/2014/11/19/what-would-4-billion-in-election-money-buy/
- Why Stock Markets and Forex Are Not 24 by 7 https://michaelekelley.com/2014/11/12/why-stock-markets-and-forex-are-not-24-by-7/
- 8 Things To Do When Recession Happens https://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
- Why Humans Are More Important Than Workplaces https://michaelekelley.com/2014/09/19/why-humans-are-more-important-than-workplaces/
- Retirement Plan That Mutual Funds Do Not Want You To See https://michaelekelley.com/2014/08/19/retirement-plan-that-mutual-funds-do-not-want-you-to-see/
- Answers to The Assassination of Political Robocalls https://michaelekelley.com/2013/10/07/answers-to-the-assassination-of-political-robocalls/
- Stock System for the Little Guy https://michaelekelley.com/2013/08/28/stock-system-for-the-little-guy/
- A Spring In My Step https://michaelekelley.com/2013/08/25/a-spring-in-my-step/
- Love or Hate “The Liberty Amendments” https://michaelekelley.com/2013/08/21/love-or-hate-the-liberty-amendments/
- The Assassination of Political Robocalls https://michaelekelley.com/2013/07/26/the-assassination-of-political-robocalls/
- A Quote For Those Who Walk Alone https://michaelekelley.com/2013/04/23/a-quote-for-those-who-walk-alone/
- What To Do With That Tax Refund https://michaelekelley.com/2013/04/16/what-to-do-with-that-tax-refund/
- A Poem For North Korea – Where Have All The Birds Gone?https://michaelekelley.com/2013/04/11/a-poem-for-north-korea-where-have-all-the-birds-gone-2/
- Snacks Are Good For Kids As Well As Parents https://michaelekelley.com/2013/02/22/snacks-are-good-for-kids-as-well-as-parents/
- Setting My Watch At Snack Time https://michaelekelley.com/2013/02/07/setting-my-watch-at-snack-time/
- The Road To A Legacy https://michaelekelley.com/2013/02/02/the-road-to-a-legacy/
- Airplanes Can Be Fun https://michaelekelley.com/2012/09/20/airplanes-can-be-fun/
- Wall Street Crash Could Happen Again https://michaelekelley.com/2012/08/03/wall-street-crash-could-happen-again/
- Three Envelopes https://michaelekelley.com/2012/06/03/three-envelopes/
- Flash Crash Epitaph https://michaelekelley.com/2012/05/25/flash-crash-epitaph-short-story/
Sometimes you just gotta look at history. Watergate affected the Dow Jones.
This chart shows the 1974 recession started months before Nixon resigned. In fact, about 18 months after the Watergate break in.
Here is more information.
You have a connection.
1. Is impeachment gonna hurt?
2. How often does the DJIA go down?
3. Was bitcoin a fluke?
4. Can you say rollercoaster?
Everyone needs the human connection.
To get new posts, click on the Follow button. You will NOT get spam email.
70% of the Trump’s statements on the campaign trail were false aka “fake news”.
Trump’s favorite source of media news was Breitbart.
Therefore Breitbart is the leading source of “Fake news”.
The FCC can fine media for “fake news” as done here.
Therefore, Breitbart should be fined.
Why is this such a shock and what does it mean?.
The financial world is in shock because they like the status quo.
The BREXIT was approved because the world aka the 99% including Britain wants change, any kind of change. Which of course explains Donald Trump’s success in the US.
The polls probably did not reflect the last minute decision makers and instead reflected the people who were able to be polled aka the retired people on the street who had time to answer silly polling questions. These are generally conservative people who do not like change.
WHAT DOES BREXIT MEAN?
Well the financial world is in turmoil because they also do not understand what this means. So you can expect the stock markets around the world to be very negative for quite a while. There may be enough negativity that we may experience a recession, which a number of respected economists have predicted for months.
Change is coming. The demographics show the population is becoming more diverse aka less Caucasian. Also the young voters are saying “We are tired of inequality and of politicians paid by the rich to do their work. Your generation had your chance. Now it is our turn and we are going to do something different.”
If you want some other financial advice, see this.
To get new posts, click on the Follow button. You will NOT get spam email.