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Wealth management: October, 2016

Rolling 12 months through October, 2016
* Cumulative Return: 7.03%
* Best Return: 3.88% (Jun 2016)
* Worst Return: -1.04% (Mar 2016)

We are having a relatively high exposure to the market and positive beta. According to the backtest we will remain exposed for a period between two weeks and two months with mean around forty days.

False break in SP500?

From the technical analysis perspective the last two weeks rally was a break of the long term resistance line:

This break lacks one ingredient - a volume spike on the day of the break:

Update Nov 1st, 2016: Retesting continues ....

Yen dilemma of BoJ

Bank of Japan buys liquid assets on the Tokyo stock exchange. There is little surprise that some people attempt to front run the bank's actions. The economy is not a stock market, it does not perform, and there are little investment opportunities outside of the equities speculation. Larger companies easily issue more stock, collect money, keep the money in the government bond and enjoy capital gains. The money invested by BoJ does not trickle to those who would spend it, but instead remains in the corporate coffins. The strategy can continue ad infinitum.

AAPL - are the doors too narrow for exit?

Apple stock underperforms SP500 for an year and half. The severe underperformance comes despite a huge buy back program. Between 2015 and 2016 the company has spent almost $90 billion to buy it's own stock. The stock float was reduced by 12% over the period. Despite the efforts the stock price dropped 34% from the all time high.

How to choose a wealth management firm

  • When investors talk to a wealth manager they often assume that he or she is an investment specialist. In many cases this is far from the truth. Very often the first person an investors talks too is a relationship manager or a sales person. The relationship manager objective is to bring in as many clients as possible and the compensation scheme reflects this objective. There is no incentive for a relationship manager to recommend you the best possible investment strategy, but just anything which looks right or "suitable" or generates more management fees.

Wealth management: FAQ

Q. What ROI shall I expect?
A. We strive to be profitable every single month. Our clients generate ~0.5-1.5% monthly returns.
Our historical returns should not be considered as indicative of our future results.

Q. High ROI assumes very high risks?
A. Our Sharpe ratio (August 2016) is around 1.5 and Calmar around 10.0. Most of the time the cash levels exceed 95%.

Q. Sounds too good to be true
A. We provide records of our past trades and access to the accounts at Interactive Brokers to prove that the returns are very real.