Richard Feynman said, we are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress. How ironic. The guidance TardaGrada was providing this year was good, while the execution was bad. This year’s lesson learned is to adapt the strategy’s guidance with more discipline. While last year, the information TardaGrada provided fit external research to a larger degree, this year it did not match at all. Unfortunately, disebelieve was the choice, resulting in a deceiving performance. The amount of bearish research during the first six months of the year led to the believe, that protecting capital was more important than taking risk, eventhough the strategy disagreed. Feynman also said, don't pay attention to "authorities," think for yourself. Following this sholarship, the allocation process has been refined and any external research will be abandoned. The “candidates buy list” has been subdivided for each sector to attain a better overview and selection process. Most importantly, targets for longer timeframes will get a higher weight than short term targets. TardaGrada did a little bit better relative to benchmarks, but still underperformed the HFRX Equity Hedged Index, due to the strength of the US-Dollar. Best performers were the Physical Uranium Trust (+ 15.81%) Civitas Energy (+ 9.83%) Medmix AG (+ 8.45%) and Cameco Corp. (+ 7.85%). Worst performers have been Ivanhoe Mining (- 14.02%) Antofagasta (- 13.68%) and Glencore (- 11.09%). Exposure into the weakest performers has not exceeded 1.00% of AUM in each of the holdings. Largest changes in asset allocation were made in the consumer staples sector, were exposure was cut to 1.96% while exposure into the energy sector has been increased to 7.30%. Total long positions increased slightly to 63.70% while equity net exposure (excluding Gold, Silver, Uranium and Bonds) stands at 13.89%. Beginning September, the portfolio got rid of the remaining bond exposure. The US economy is much stronger than expected, and treasury bonds can’t outperform within this framework. While most market participients expect a weak equity market in September, pre-election seasonality does not agree. In addition, TardaGrada can’t produce significant downside for US equities, while the situation in European markets looks a bit more fragile. Net exposure in the portfolio will remain tight and we can’t rule out that equity indices will show a distributive character during the month of September, also know as a top building process.
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