Chi è rimasto fregato dal vaccino?

Pubblichiamo oggi, 27 dicembre, tre nuovi Post, ed altri verranno pubblicati nei giorni prossimi. E’ il nostro modo, attivo e costruttivo, per ringraziare i lettori regolari del nostro Blog, ed augurare in questo modo a tutti loro un 2021 ricco di successo e buoni risultati sui mercati finanziari. Per ragioni che questo Blog ha esposto, in modo qualificato e dettagliato, negli ultimi due mesi, il 2021 sarà probabilmente l’anno più complicato e difficile degli ultimi 12. Ma proprio per questa ragione, sarà carico, ma davvero pieno zeppo, di opportunità di fare bene e quindi di fare performance. Noi, insieme ai nostri Clienti, davvero non vediamo l’ora. Con questi Post di fine anno ed inizio anno diciamo quindi addio al 2020, e benvenuto al 2021. Diciamo inoltre addio al nostro Blog nella forma attuale: il Blog (come abbiamo già annunciato) cambierà formato e natura, e questo sarà solo uno dei tanti sforzi che arriveranno a completamento nel 2021, e che stravolgeranno sia le modalità sia la strategia della comunicazione di Recce’d.

Il maggiore tra i problemi operativi, sul mercato dei prossimi giorni e delle prossime settimane, è descritto in modo efficace dalla prima immagine del nostro Post.

Si tratta di un problema che il titolo documenta con riferimento agli Stati uniti, ma noi da fonti certe e dirette sappiamo che la medesima cosa è accaduta sia in Europa sia in Giappone.

Si tratta di un problema che tocca sia il breve termine, e quindi i cosiddetti traders, sia il medio e lungo termine, e quindi noi gestori di portafoglio, ed ogni altro investitore individuale che non intenda bruciare il proprio denaro nella fiamma del trading, ai quali noi possiamo soltanto suggerire di leggere con attenzione l’immagine qui sotto.

Come Recce’d ha già documentato in precedenza, con dettaglio ai propri Clienti, ed in modo più sintetico attraverso questo Blog ed anche la pagina Mercati del nostro sito (che viene aggiornata da noi ogni mattina), non c’è stato alcun rally di Borsa nelle settimane successive all’annuncio del “vaccino di Pfizer” (9 novembre scorso). L’indice di Borsa più importante del Pianeta valeva 3663 punti il 9 novembre, e valeva 3704 punti alla chiusura delle contrattazioni il 23 dicembre, dopo due mesi.

E quindi: c’è stato il “nuovo record” di questo indice, c’è stato un ben più significativo record di investimenti in Borsa (attraverso gli ETF del titolo sopra, ma pure e soprattutto attraverso i titoli individuali (negli Stati Uniti) ed i Fondi Comuni (in Italia), ma gli indici non si sono mossi.

Questo dato di fatto, sul piano operativo, ha un enorme significato, per le due ragioni che seguono:

1. al record di soldi che sono entrati sugli ETF, sui Fondi Comuni, e sui singoli titoli azionari, corrisponde un eguale e contrario record di vendite; chi sono i venditori? e se chi ha messo i propri soldi in Borsa lo ha fatto per “il vaccino” e la “giornata storica”, quelli che invece hanno TOLTO i loro soldi dal mercato di Borsa perché lo hanno fatto? erano forse all’oscuro della notizia del “vaccino di Pfizer”? Impossibile: la notizia è stata strombazzata in ogni possibile forma da ogni possibile quotidiano, TV, sito Internet; e allora? Quelli che hanno TOLTO i loro soldi dalle Borse erano semplicemente ottusi? Erano dei fessi che non vedevano la “storica occasione”? Oppure, i fessi non erano loro ed erano altri?

2. quelli che invece hanno MESSO i loro soldi in Borsa (noi di Recce’d NON siamo tra questi ultimi), perché a loro è stato spiegato che “è arrivato il momento di investire”, adesso, dopo due mesi, che cosa pensano? E che cosa fanno? E che cosa decideranno di fare?

Per ciò che riguarda gli investimenti in Borsa, in tutto il Mondo, oggi quasi tutto dipende da queste due domande.

Come detto, sul piano operativo tutto passa da queste due domande: anche per noi di Recce’d, che NON abbiamo risposto a questo “richiamo della sirena al navigante” che stavolta si chiama “il vaccino”. E’ importante anche per noi che non ci sentiamo intrappolati nella rete, per una ragione semplice: dalla reazione di chi ha abboccato dipende la direzione delle Borse, nelle prossime settimane.

Ripetiamo anche oggi che CAPIRE viene prima, ma molto prima, di AGIRE, quando si tratta di investire immediatamente il denaro.

E’ fondamentale capire, sempre, anche quando NON si è operato, anche quando NON si intende effettuare una specifica operazione. Per chi opera in modo professionale sui portafogli in titoli, come noi di Recce’d, è decisivo sapere come valutare 1000 operazioni, per ogni operazione che poi viene effettivamente messa in atto sui portafogli modello che vanno ai Clienti.

E quindi: in questo specifico momento del mercato, noi sappiamo alla perfezione che cosa dobbiamo, e non dobbiamo fare, sui portafogli modello: ma per aiutare chi, tra i nostri lettori, ha qualche fondato dubbio, abbiamo selezionato tre articoli, tra i mille che abbiamo letto al proposito. leggendoli, troverete numerosi spunti utili.

Facciamo questo per aiutarvi a decidere in fretta, sul piano operativo, in merito ai vostri investimenti azionari. Allo scopo di essere utile ai lettori, e velocizzare le operazioni, Recce’d ha evidenziato con il neretto gli spunti più utili.

Il primo articolo mette in luce i rischi di un periodo, come quello del fine anno/inizio anno, caratterizzato da scarsa liquidità sui mercati, e sistemazione delle posizioni da parte dei gestori di Fondi Comuni di Investimento.

There’s an unusual dichotomy between the extraordinary level of consensus around what positions participants want to have in 2021 and the sharp binary divide of the investor base’s capacity to act right now.

Almost everyone wants to be long equities and commodities versus short the dollar next year. However, the extreme moves of November effectively segregated traders into two polarized camps. There are those who, like me, have got the last six weeks entirely wrong. I argued that U.S. stocks had a high chance of correcting lower after the U.S. election was out of the way and the virus news took over; I also warned that complacent dollar bears would probably have to contend with some painful short squeezes. There’s been nary a hint of either theme.

We have missed out on some powerful trending moves and now have no excess capital to play with (whether mental, financial or reputational). It’s been a humbling period, especially as most of this group believes in the long-term theme of central bank liquidity inflating asset prices.

It’s not that we think the 2021 consensus is stupid -- it’s just that we worry about quite how consensus it is and hope to get much better entry levels in the months ahead. We’re not on the trades but probably want to be at some point.

This group has no conviction to act now and won’t do much, if anything, until the new year, no matter what happens.

And then there are the winners: Those that proactively focused on the dynamic of policy-fueled asset price inflation and who made out like bandits. They have positions they believe in over the medium-term, the financial capital and conviction to act in either direction, and the flows to move the market.

These are the believers -- they won’t be derailed by any sense of a move being “stretched.” Quite to the contrary, a signal that equities are breaking higher again, or the dollar accelerating lower, will be a catalyst to add to positions rather than trim.

And while they won’t bail out easily due to some minor speedbump, they can sell en masse and overcrowd the exits if the narrative changes sharply, because it’ll still be about locking in profits on a great year.

The summary is that only half the market is playing with any power as we enter the low-liquidity festive season. That means assets are acutely vulnerable to one final trending move of the year, with a bunch of known catalysts lined up: the Fed meeting, the S&P 500’s Tesla inclusion, lockdowns and year-end funding issues.

Come avete letto, chi scrive in questo primo articolo ha una visione POSITIVA per le Borse, ma segnala il rischio di una eccessiva concentrazione: ovvero, tutti (quelli che si sono mossi) sui mercati hanno fatto le medesime operazioni.

Nel primo articolo, si accenna poi ad uno “straordinario livello di consenso”: tutti oggi la pensano allo stesso modo (o almeno, tutti quelli che parlano). E di questo parla anche il secondo articolo che abbiamo selezionato per i nostri lettori.

Driven by optimism over Covid-19 vaccines, money managers are now the most bullish they have been all year, and piling into so-called “reopening” trades.

That is according to Bank of America’s December fund-manager survey, which finds those managers have been buying consumer stocks, commodities and emerging markets, which 60% of managers say will be the best performers in 2021.

But it’s also an increasingly risky time, says the research team at the bank, as a bullish final quarter of the year has delivered an 8% gain for the S&P 500 and 11% rise for the Nasdaq Composite. Crude oil, meanwhile, has climbed 17% in the same period and the dollar has dropped over 3%.

“We say sell the vaccine,” say Bank of America strategists, who suggest investors steer toward contrarian trades such long positions on cash and short on stocks, long on the dollar and short on emerging markets.

Fund managers were underweight cash for the first time since May 2013, the December survey showed, dropping that level down to 4%. That has triggered a so-called “sell signal,” as fears of inflation and a fiscal policy drag are on the rise.

And optimism on stocks have risen to the highest since January 2018, with a net 51% of managers—the bank considers more than 50% extremely bullish. That is as hedge funds’ equity exposure remains high at 43%.

The number-one crowded trade for managers is a long position on technology stocks, so a net 52% view that as a crowded trade, down from 80% in September.

A net 89% of managers expect stronger growth in 2021, and a record 87% expect higher long-term yields. A net 34% believe a W-shaped recovery is coming, followed by 29% for a U-shaped, then 26% for a V-shaped one.

As for when the vaccines will start to positively affect the economy, a net 42% say that will probably happen in the second quarter of 2021, with 28% in the first quarter and 19% in the third.

Investors were divided on what companies should do as a recession ends, with a net 44% suggesting they improve balance sheets and 42% advising capital expenditure is upped. A net 78% of managers expect corporate earnings will improve, a percentage that marks an all-time high for the survey.

Il brano che avete appena letto qualifica una nostra precedente affermazione: in particolare, ad ognuno dei lettori sarà venuta in mente almeno una domanda, dopo avere letto che optimism on stocks have risen to the highest since January 2018, with a net 51% of managers—the bank considers more than 50% extremely bullish. That is as hedge funds’ equity exposure remains high at 43%. Ok, chiaro, perfetto: ma allora CHI ha venduito? Come spiegare uno S&P a 3703 punti per Natale? Quando stava a 3663 punti due mesi prima?

Ripetiamo per chiarezza: noi sappiamo bene come rispondere e sappiamo bene che cosa fare. per i lettori che invece non capiscono, e non sanno bene che cosa fare, ecco la nostra terza selezione, selezione che nella parte finale contiene alcuni preziosi suggerimenti pratici in materia di gestione degli investimenti finanziari e del portafoglio titoli. Recce’d non li condivide tutti, ma una buona parte.

Se vi interessano i dettagli in proposito, non dovete fare altro che compilare il nostri forma della pagina “Contatti”.

As we start moving into the last two weeks of the trading year, investors everywhere are hopeful that “Santa Claus” will visit “Broad & Wall.” 

The actual Wall Street saying is that “If Santa Claus should fail to call, bears may come to Broad & Wall.” The Santa Claus Rally, also known as the December effect, is a term for more frequent than average stock market gains as the year winds down. However, as is always the case with data, average returns are sometimes different than reality.

Stock Trader’s Almanac explored why end-of-year trading has a directional tendency. The Santa Claus indicator is pretty simple. It looks at market performance over a seven day trading period – the last five trading days of the current trading year and the first two trading days of the New Year. The stats are compelling.

The stock market has risen 1.3% on average during the 7 trading days in question since both 1950 and 1969. Over the 7 trading days in question, stock prices have historically risen 76% of the time, which is far more than the average performance over a 7-day period.

As I said, while it is a very high probability that stock prices will climb, there is a not-so-insignificant 24% chance they won’t. Such is why we want to analyze the technical backdrop to minimize the risk of “getting a lump of coal.”

However, let’s first analyze the “Santa Claus Rally.”

The Santa Claus Rally

A couple of years ago, my partner, Michael Lebowitz, dug into the December statistics to validate the “Santa Claus” rally. For this analysis, we studied data from 1990 to current to see if December is a better period to hold stocks than other months. The answer was a resounding, “YES.” The 30 Decembers from 1990 to 2020 had an average monthly return of +1.70%. The other 11 months posted an average return of just +0.62%.

The following graph shows the monthly returns and the maximum and minimum intra-month returns for each December since 1990. It is worth noting that more than a third of the data points have returns that are below the average for the non-December months (+0.62%). Further, it is worth noting that 2018 certainly saw a “lump of coal” in investors’ stockings.

Next, we analyzed the data to explore if there are periods within December with price gain clusters. The following two graphs show, in orange, aggregate cumulative returns by day count for the 30 Decembers we analyzed. In the first graph, we plotted returns alongside daily aggregated average returns by day. Illustrated in the second graph is the percentage of positive days versus negative days by day count and returns.

Visually one notices the “sweet spot” in the two graphs occurs between the 10th and 17th trading days. The 17th trading day, in most cases, falls within a day or two of Christmas.

However, with the substantial November advance, the question is whether there is anyone “left to buy?”

Did Everyone Already Buy?

From a technical perspective, the biggest concern is the more extreme levels of exuberance the markets have seen as of late.

“You have to wonder precisely how much ‘gas is left in the tank’ when even ‘perma-bears’ are now bullish. Therefore, the question we should ask is ‘if everyone is in, who is left to buy?’”

It is not just sentiment, but also the speculative positioning of investors. Currently, options traders are too lop-sided with “put/call” ratios very depressed.

Retail investors are fully-allocated to the equities markets as represented by “dumb-money” positioning.

Notably, institutional investors are currently not only “all-in” but “leveraged,” with equity allocations hitting 106% last week.

Even our composite “Fear/Greed Gauge,” which represents investor positioning, is also pushing extreme levels.

The bullish shift in positioning has also “stretched” markets to more extreme levels as well.

Technically Stretched

On a technical basis, the market is extremely stretched above longer-term moving averages. As shown below, the S&P 500 index is currently 11.52% above its 34-week moving average. Such levels have often corresponded to short-term corrections in the markets.

The daily Relative Strength Index (RSI) has also been weak relative to the rally’s magnitude from the March lows. The negative divergence in the relative strength index (declining while the market advances) has historically been a warning sign for investors.

Importantly, none of this means the market is going to start a more significant correction tomorrow. However, multiple signals suggest that short-term selling pressure has picked up, and there is downward pressure on stock prices currently.

Given that no one can accurately predict the future, all we can do is pay attention to the technical signals and weigh them against the statistical probabilities. With a long history of the “Santa Claus” trade working out favorably for investors, it will likely pay to remain long equities until the end of the year. 

However, such does not mean that you have to do it without some risk controls in place. The technical signals suggest there may be some downside risk before “Santa Claus” visits “Broad & Wall.”

Buying Climaxes

The broad market. As measured by the S&P 1500 (comprised of large-cap S&P 500, mid-cap S&P 400, and small-cap S&P 600) has currently also registered short-term sell signals suggesting further downward pressure on prices. Furthermore, as noted in red boxes, the high-low percentages are pushing levels of “buying,” which have typically corresponded with short-term peaks. 

As I have discussed previously, with mutual funds finishing up their annual distributions, portfolio managers and hedge funds will likely look to “Stuff Their Stockings” of highly visible positions to have them reflected in year-end statements.

The problem is the current overbought condition isn’t supportive of an outsized rally over the next couple of weeks. There are also plenty of risks that could pressure stocks further from a government shutdown, no “stimulus bill,” and options expiration all coming due on Friday.

Therefore, here are the rules for the “Santa Rally.”

Rules For “Santa Rally”

If you are long equities in the current market, we recommend following some basic portfolio management rules.

Tighten up stop-loss levels to current support levels for each position.

Hedge portfolios against major market declines.

Take profits in positions that have been big winners

Sell laggards and losers

Raise cash and rebalance portfolios to target weightings.

Notice, nothing in there says “sell everything and go to cash.”

Remember, our job as investors is pretty simple – protect our investment capital from short-term destruction so we can play the long-term investment game. Here are our thoughts on this.

Capital preservation

A rate of return sufficient to keep pace with the rate of inflation.

Expectations based on realistic objectives.  (The market does not compound at 8%, 6% or 4%)

Higher rates of return require an exponential increase in the underlying risk profile.  This tends to not work out well.

You can replace lost capital – but you can’t replace lost time.  Time is a precious commodity that you cannot afford to waste.

Portfolios are time-frame specific. If you have a 5-years to retirement but build a portfolio with a 20-year time horizon (taking on more risk) the results will likely be disastrous.

With forward returns likely to be lower and more volatile than witnessed over the last decade, the need for a more conservative approach is rising. Controlling risk, reducing emotional investment mistakes, and limiting investment capital’s destruction will likely be the real formula for investment success in the decade ahead.

A Final Reminder

Such brings up some essential investment guidelines as we head into year-end.

Investing is not a competition. There are no prizes for winning but there are severe penalties for losing.

Emotions have no place in investing.You are generally better off doing the opposite of what you “feel” you should be doing.

The ONLY investments that you can “buy and hold” are those that provide an income stream with a return of principal function.

Market valuations (except at extremes) are very poor market timing devices.

Fundamentals and Economics drive long-term investment decisions – “Greed and Fear” drive short-term trading. Knowing what type of investor you are determines the basis of your strategy.

“Market timing” is impossible– managing exposure to risk is both logical and possible.

Investment is about discipline and patience. Lacking either one can be destructive to your investment goals.

There is no value in daily media commentary– turn off the television and save yourself the mental capital.

Investing is no different than gambling– both are “guesses” about future outcomes based on probabilities.  The winner is the one who knows when to “fold” and when to go “all in”.

No investment strategy works all the time. The trick is knowing the difference between a bad investment strategy and one that is temporarily out of favor.

While we are certainly anxiously anticipating an arrival from “Santa Claus,” we are also keenly aware of the lesson taught to us in 2020.

Nothing is guaranteed.