Portfolio Update: 8 March 2019

There are no portfolio changes for the week ended March 15. The portfolio remains heavily overweight short dated Treasuries (85%) with some exposure to DM equities (15%). The latter looks like a mistake to this humble scribe but we always follow the model. I looks likely to me that the sharp corrective rally in risk assets since Boxing Day is over. Market participants believe that central banks have delivered a “put” on bond and equity markets. They are trying but they can’t control the inevitable problems in the credit market that will occur as growth slows. The credit market is where the risk lies.

Our week-to-date performance has been a bit better than most asset classes but we still have developed markets open tonight. The 1-year performance is still running above 10% (apologies there was a glitch in last week’s performance table but it understated our returns so was not misleading).

 

I really hope the portfolio can maintain the performance shown in the following chart.

Portfolio Update: 4 March 2019

We announce a major shift in our fundamental macro portfolio. We are eliminating exposure to EM bonds and equities and cutting exposure to the gold miners; positions held since early Dec. We raise exposure to short-dated Treasuries to 85% and initiate a 15% allocation to DM equities.

As we indicated two weeks ago, this shift is due to a further decline in our cost of capital indicator (COCI). The COCI has now fallen below    -75%, which is the zone where the global relief rally linked to the Fed’s volte-face would normally end to be replaced by increasing concern about the growth outlook and disinflation.

Seagull philosophy- 1

Welcome to Greygull

From error to error one discovers the entire truth

… Sigmund Freud

This blog is about a particular investment method; the Greygull method.

Readers can follow our portfolio on the blog and monitor our performance.

We are hoping that some will like and be encouraged to follow our investment process.

The main purpose of the blog is to explain how financial markets work to the lay investor and also to explain the philosophy behind the way that we invest.

The philosophy behind why and how you invest is important. Consider for a minute the reason why you invest.

Why do you invest? To have money for the future, yes, but there is a deeper reason why we invest.

We invest because we want to be free.

In the modern world investing is integral to the quest for freedom. It is every bit as important as the mental, spiritual and physical aspects of freedom.

In this quest, it is important to understand that freedom is not an amount of money in a bank account. It is a state of mind. Unless you have this state of mind, you will find yourself quickly dominated by emotion when investing. Fear and greed will guide your investment decisions. You will find yourself a long way from feeling free.

Unless one invests in the right state of mind, no amount of effort and amount of financial knowledge will get you closer to being free.

To attain freedom, one must invest in a way that is consistent with the attainment of freedom.

At its core, the Greygull method seeks investment wisdom. Wisdom is simply the ability to make good decisions.

Ancient philosophers identified wisdom with self-knowledge.  Self-knowledge in this sense is preoccupied with understanding our weakness and learning how to overcome it.