We are finally publishing our May Newsletter. On our last Alert paper we were warning that investors would have pushed prices down and challenged March Lows. The CRITICAL question was to decide whether it was the moment to begin closing some of our SHORT positions that we had opened since 13 December 2021 and increased in January&February 2022. Not to mention whether it was the moment to finally purchase some stocks and bonds since we are still holding 100% cash.
By the way, just for the record, here is a brief Year to Date performance review:
EURO CONSERVATIVE PORTFOLIO:
+ 5.4% (13% annualised) Compared to the Benchmark S&P500 which is DOWN 18.6% Year To Date.
And this only by holding cash: 85% USD, 10% CHF and 5% GOLD
This is the performance of most of our EURO based followers.
I will not go into the details of our OPPORTUNISTIC STRATEGIES as everyone who has shorted stocks via PROSHARE INVERTED Funds and/or SHORTED Bitcoin & ETHEREUM and/or leveraged USD purchases, he or she has done it at own discretion and size. However FEEDBACK performances range from +10 to +30% NET.
CONGRATULATIONS, I am very happy for everyone.
Worse performance comes from our Gold exposure that is up only 1.4% since 31dec22, while in March it reached YTD over 15%!! Amazing Volatility this year. However I expect the price to recover, aswel as oil prices as I below.
In summary not only we avoided the blood bath that most investors are suffering but thanks to 2022 Volatility we have Year To Date an EXTRAORDINARY performance while the RISK level is the LOWEST that any investor can desire, being 95% CASH.
As mentioned above we delayed our Newsletter and posted No Alert since 09 MAY 22. We have therefore concluded that it is still too early to invest our cash in any asset (STOCK or BOND) despite the record inflation. In our economic class we learned that to protect our cash
from the depreciation by inflation we should invest in assets. However we are living an extraordinary event whereby prices of every asset have reached unbearable levels in 2021.
Most prices are still too high, but our opinion is that we are well into a global financial sistemic crisis, leveraged by a roaring inflation and worsened by the crash of the Crypto market which is burning billions every month. And this Bear trend in global prices will continue to worsen as many people are still holding their assets despite the continuing devaluation; at some point panic will kick in and everyone will want to liquidate at the same time, eventually depressing prices to EXTREME lows. This is why we still keep our portfolios 100% cash, waiting for that moment.
But why did we hesitate?
We mentioned a few time a phrase that was common use in the Trading Rooms “Sell in May and Go Away” .
Stemming from the fact that on first quarter of the good years, stocks indexes usually have their strongest rise. Slowing down in April while in May, as investors rebalance their portfolios, prices begin to drop on take profits ahead of the summer. It’s a cyclical factor.
And we think that this month of May while prices were reaching March Lows, professional investors decided unload more stocks and bonds fearing much lower prices. The May rebalancing was also characterised by investors taking profit over the strong rise in GOLD prices (gold lost more than 100$ in 1 month and 90$ just in May). Many commodities are now down from the highs reached after the Ukrainian war started.
Now that the deleveraging of gold is finished we expect the price to recover back to 1900 and see the commodities sector resume its uptrend, only at a slower pace than earlier this year. This as inflation settles at high levels and central banks continue to rise rates, depressing BOND Prices worldwide.
What about STOCKS?
From a technical point of view these past two month were revealing but not optimistic. Not only prices went below March levels but to make things worse every MAJOR STOCK INDEX CLosed below the FIBONACCI FAN indicators we have been monitoring closely. Technology INDEXES (Nasdaq, Dax30) were already below the 23% but now closed below the 38% Fan confirming that they will drop at least 50% of the rise between 2009-2021. While the S&P500 closed below the 23% line , the line that CONFIRMS the BEAR TREND for whole 2022 (will find minor support now at 3775). Given it is an average of 500 stocks whose P/E multiples did not reach the same illogical levels than Tesla or Invidia, it lags a little. But hey, Fibonacci’s message is the same : STAY AWAY from stocks. The targets I posted in our previous research are now the MINIMUM.
EUROUSD Still in for parity. EURCHF too, especially when things will get ugly. Gold back to 1900. We will post special ALERTS for Currencies.
WE MAINTAIN STRATEGIES UNCHANGED.