Meb and Gary on shorting the market

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ochotona
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Meb and Gary on shorting the market

Post by ochotona » Sat Oct 28, 2017 8:18 pm

http://mebfaber.com/2017/03/29/episode- ... -momentum/

Gary Antonacci: Yes, there are. Shorting doesn’t work, I looked at that. But the problem is you’ve got an upward bias to stocks and by the time you get out and then get back in you know, there’s no real advantage to going in on the short side. Because what happens is when the stock market starts to weaken and people see that there’s a flow of money away from stocks into bonds and the stock market is a lead indicator. So when the fed sees that they might think a recession is coming and they have an incentive to try to have interest rates low that’s another positive thing for bonds. So, I prefer to be in bonds. Now you don’t just have to be in AG bonds. I chose AG bonds because they’re very stable and you don’t have to worry much about duration risk. But I also have a dual momentum fixed income model that can go into different areas of the fixed income market. That’s something that I use in my proprietary modeling. Where I’ll combine for a more conservative type people I can combine a dual momentum fixed income along with the enhanced global equities momentum.

Meb Faber: And that makes sense. I mean we’ve looked at it with a lot of trend following stuff in the past and sitting in T-bills of course, is the lowest vol sort of cash substitute in moving out to like a 10 year or an AG certainly will give you another hundred basis points issue or a higher yield. But also introduces a little more volatility. And the biggest point you touched on is the shorting and we talked about this, where we said look shorting really doesn’t increase returns or risk numbers it actually amps up the volatility largely because when markets are down trending their higher volatility than when they’re up trending. The only time that we usually recommended a traditional shorting is if someone’s using it as a hedge to a portfolio they have elsewhere. So, meaning they’re like, “Hey, I have my 401K I can’t move it it’s a long onlys.” In that case, shorting may make little sense because it may help to hedge that out. But in general, shorting, if you were to do it through your entire portfolio, it certainly doesn’t add to the risk-adjusted returns really.
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ochotona
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Re: Meb and Gary on shorting the market

Post by ochotona » Wed Jan 10, 2018 3:34 pm

REK the real estate short ETF is trending up.

AH! It's the interest rates going up!
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