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Sitting on my hands – Feb 11 2018

What a crazy week we had in the markets, maybe we are starting to get back to some sort of normalcy, whatever that is. Nothing has really excited me enough during this selloff to warrant a purchase besides adding to my Dean Foods position. I didn’t like valuations two months ago so why would I like them at the same valuations today. I’ve been quiet on the blog as I have been only looking at stock I’ve been interested in rather than pulling the trigger. Personally, I find comfort in my above 35% cash position.

 

While I don’t care about the monthly gyrations I’ll provide some color commentary on my portfolio year to date. In short, I was battered as the indexes’ marched to their best January since 87’. I was slightly positive for January because of the large EUPIC position as well as FFGRP. I continue to be bullish on Greece and in a broad generalization find it to be the cheapest exchange at the moment and look to deploy as much of my capital as I can there. I’ve outperformed though February as the exchanges have fallen between 7-8% since the start of the month. I’d like to think that is because I have conservatively picked my positions but it’s more likely that this was due to luck. Some days I feel as though I run an inverse fund.

 

While I haven’t been interested enough in the drop to really buy anything I was truly excited that markets have become somewhat interesting again. The narrative that this is due to the VIX spiking and some obscure piece of paper that follows the VIX that wiped out some funds and to me this incorrect and is merely a symptom of the unwind. First it should be noted that the Federal Reserve isn’t buying bonds anymore, as such it makes sense that bonds would see their yield rise as the artificial demand on the part of the Fed ceases to exist. We are going to be seeing larger bond offerings on the part of the US government as we will be running now a trillion-dollar deficit, let me make sure I say that again, we will be running a trillion-dollar deficit in year nine of a recovery but oh well. It would be more surprising to see the 10-year yield fall rather than rise if we continue down this path.

 

That’s all I have to say for now, and because the consensus from “financial experts” seems to be that this is just a correction and not to panic the contrarian in me wants to say that it’s not.

 

Good Luck,

Cameron.

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