Thursday Tidbits

I’ve written a few times about some of the income trusts and other funky investment vehicles from Canada. I have always found them intriguing, conceptually, but have never been comfortable pulling the trigger.

You can click on the chart to enlarge it and get the ticker symbols. The last few months have been brutal. Great Lakes Hydro has come closest over the years to doing what I would hope all of them would deliver; very little price movement and a whole lotta yield.

Canadian Trusts

I’ve mentioned a couple of times my intention to add a little exposure during panic days (and have disclosed the couple of things I’ve done) and to put the double short back on in some way if the market goes up a lot in a short period of time. It’s a plan, it is not difficult to stick to but yesterday I realized one thing that is missing. What if it does neither? What if there is a stumble across the bottom such that SPX bounced between 900 and 1000, give or take a few points?

There is probably not much of a reason to re-equitize into a market that ends up not doing anything for a while. If the market stayed between 900 and 1000 I would sit tight for a few months, maybe six or so, and eventually deploy some cash. If this scenario were to play out for a while, ok, but it would not last forever. It is a good bet that if the market is range bound like that for a while it would then break one way or another. My hunch is that it would break upwards as some amount of time will cure this market.

Still no progress on the currency ETF front. Both WisdomTree and Rydex and new funds in registration but have not listed any funds in a while. At some point the market will realize that close to zirp in the US and massive expansion of the Fed balance sheet via treasury issuance is not great for the dollar. After such a violent rise in the dollar a fast retracement (may have already started) of maybe 50% of what was gained followed by some meandering seems very plausible. If that turns out to be close to right it’d be nice to have a little more choice.

A reader left a comment that I think expressed surprise that the market was so quick to sell off yesterday at the close. Tuesday’s 900 point Dow rally was not a sign of health. A healthy market does not deliver 10% in a day. The market could go up a couple of thousand points despite the current lack of health and even then the market would probably not be healthy. We all have opinions about what is probable here but we should not rule anything else out as possible.

About Roger Nusbaum 169 Articles

Roger Nusbaum is an Arizona-based financial advisor who builds and manages client portfolios using a mix of individual stocks and ETFs. Roger writes a popular blog, which focuses on risk management, foreign stocks, exchange traded funds, options etc.

Roger has been recognized by many in the investment management industry for his expertise in portfolio management. Roger has been regularly interviewed by the financial press, trade journals, and television news shows. He has also had numerous technical articles published and has been quoted in a number of professional trade journals, newspapers, and consumer finance magazines. He appears frequently on CNBC Asia as a market commentator.

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