Hello Alfonso. Thank you for another great piece! Also, excellent idea on the model ETF portfolio, as it helps us visualize your current market biases.
Two questions if I may:
1) If you were a retail investor with no mandate and no open position in the market, do I understand from the article that you'd probably remain mostly (all?) in USD cash for the time being?
2) If so, what would be the event that would "wake you up" out of the cash hybernation? Perhaps the Fed completing their expected tightening cycle circa 2023?
Thank you Alfonso — loved you conversation with 42Macro on RV Daily! Great platform to expand on your ideas from the Macro Compass. Excellent! Happy holidays.
Really looking forward to following your writing. I’m learning so much so thank you! Do you still keep 90% of your investment portfolio in MSCI World (70%), TLT (20%) and gold (10%)? Thank you sir
Hey Alf, quick question related to the Fed's tightening process please:
It's clear that the Fed is starting a tightening period, perhaps even progressively selling off some of the assets stored at the Fed's balance sheet. I assume that most of the bonds at the Fed's balance sheet yield nearly zero interest rate, which makes them virtually worthless in an environment of raising interest rates.
My question is: Why would any financial institution buy those bonds if they could probably get "better bonds" from the market? Will perhaps the Fed sell them off at a heavy discount? Or am I simply misunderstanding how the balance sheet sell off works?
I would very much appreciate some clarity on the topic. Thank YOU!
your model asset allocation enticed me to sample as a new reader!
how do you reconcile your mid-term play with the fact the international value:growth spread is among the highest ever as measured by multiple parties (AQR,swedroe,GMO,RA,alphaarchitect, etc...) using multiple metrics?
given the past shows multiyear, if not decade-long, value reversion, then it seems switching to value after inflection would be nothing other than a basic momentum\sentiment strategy.
also, is there some tax hurdle you use in re-allocating?
Hi Alfonso. Thought that I have a lot of good words to say about your comeback in this comment , I'd like to say , that the podcast is a very very good way to communicate your analysis and your views.
However, FED started raising interest rates in late 2015 just as gold bottomed and made a 30% return for 6 months. And in case you said that the inflation then made up for the real rates to stay low, I can see in the 2004-2007 period real rates rose as gold soared by over 50%.
Overall, I think gold is a cyclical/fear commodity. Let's say there is fear of default. Real interest rates are likely to soar; so is gold (provided that it already is in a bull market, which I think it is).
Love the short audio at the beginning, thanks Alf.
Thanks for the summary!
Would be interesting to hear your thoughts about what this means for equities in the coming years.
Succint and v clear messaging, thank you and pls keep it up!
Great stuff Alf! Thanks for including the audio
Do you see a role for public and/or private infrastructure in your model?
Video is great and I like the EFT portfolio idea. Good analysis on ECB balance sheet for 22.
Hello Alfonso. Thank you for another great piece! Also, excellent idea on the model ETF portfolio, as it helps us visualize your current market biases.
Two questions if I may:
1) If you were a retail investor with no mandate and no open position in the market, do I understand from the article that you'd probably remain mostly (all?) in USD cash for the time being?
2) If so, what would be the event that would "wake you up" out of the cash hybernation? Perhaps the Fed completing their expected tightening cycle circa 2023?
Thanks again and merry Christmas!
Thank you Alfonso — loved you conversation with 42Macro on RV Daily! Great platform to expand on your ideas from the Macro Compass. Excellent! Happy holidays.
Really looking forward to following your writing. I’m learning so much so thank you! Do you still keep 90% of your investment portfolio in MSCI World (70%), TLT (20%) and gold (10%)? Thank you sir
Excellent Work for sure.
Another awesome piece ALF
Hey Alf, quick question related to the Fed's tightening process please:
It's clear that the Fed is starting a tightening period, perhaps even progressively selling off some of the assets stored at the Fed's balance sheet. I assume that most of the bonds at the Fed's balance sheet yield nearly zero interest rate, which makes them virtually worthless in an environment of raising interest rates.
My question is: Why would any financial institution buy those bonds if they could probably get "better bonds" from the market? Will perhaps the Fed sell them off at a heavy discount? Or am I simply misunderstanding how the balance sheet sell off works?
I would very much appreciate some clarity on the topic. Thank YOU!
Hi,
your model asset allocation enticed me to sample as a new reader!
how do you reconcile your mid-term play with the fact the international value:growth spread is among the highest ever as measured by multiple parties (AQR,swedroe,GMO,RA,alphaarchitect, etc...) using multiple metrics?
given the past shows multiyear, if not decade-long, value reversion, then it seems switching to value after inflection would be nothing other than a basic momentum\sentiment strategy.
also, is there some tax hurdle you use in re-allocating?
Hi Alfonso. Thought that I have a lot of good words to say about your comeback in this comment , I'd like to say , that the podcast is a very very good way to communicate your analysis and your views.
Thank you for your insight!
However, FED started raising interest rates in late 2015 just as gold bottomed and made a 30% return for 6 months. And in case you said that the inflation then made up for the real rates to stay low, I can see in the 2004-2007 period real rates rose as gold soared by over 50%.
Overall, I think gold is a cyclical/fear commodity. Let's say there is fear of default. Real interest rates are likely to soar; so is gold (provided that it already is in a bull market, which I think it is).
Hopefully, this makes sense.
Could you label you OW/UW color code or put OW or UW in the column for each ETF?