Topley’s Top Ten – September 10, 2019

Author

Matt Topley
September 10, 2019

1.More Information on Low Volatility Funds.

The table belowdetails SPLV’s portfolio characteristics on a year-by-year basis versus SPY.Values in red denote underperformance by the low-vol portfolio. The fund’slifetime numbers, shown in the gray row at the bottom of the table, are indeedimpressive: a higher average annual return, lower volatility and a resultanthigher Sharpe ratio, along with a positive alpha coefficient and informationratio.

Within that timespan, however, there’s a lot of, um, volatility in the numbers. In those yearswhen SPLV’s standard deviation was higher than SPY’s, there was a cascading anddeleterious effect on returns and other portfolio metrics.

So, what’s thepoint of all this? Simply put, capture of the low-volatility anomaly is pathdependent. Just because there’s a low-vol product available doesn’t mean you’llalways derive immediate benefit from its use. Look at the back-to-backunderperformance in the 2012-2013 and 2013-2014 spans. Would you have beendisappointed by SPLV back then? Would you have bailed from the low-volstrategy?

Many investors,in fact, did just that. Net outflows mounted in the 2013-2014 period and evenspilled over into the subsequent period, just ahead of a couple of banneryears. And in the 2016-2017 span, SPLV’s net outflows totaled $1.4 billion asthe low-vol ETF significantly lagged SPY.

Good Full Read

When Low-Vol Is Not-Strategy may require some time to pay off. Brad Zigler| Sep 09, 2019

2.Gold Pullback Recently But See Below Breaking Above Sideways Move Since 2012

3.Russia and China Gold Buying.

GOT GOLD?– Russia quadrupled gold reserves inthe past decade as it diversified away from U.S. assets, a move that has paid offrecently as haven demand sent prices to a six-year high. In the past year, the value of the nation’s gold jumped42% to $109.5 billion and the metal now makes up the biggest share of Russia’stotal reserves since 2000.

Russia’s Gold reserves hit 5y highat $530bn. On way to an all-time high as massive gold stash is now worth morethan $100bn. Value of Russia’s gold reserves climbed 42% in the past year.

China has added almost 100 tons ofgold to its reserves since it resumed buying in December, with theconsistent run of accumulation coming amid a rally in prices and the drag ofthe trade war with Washington.  China has previously gone long periodswithout revealing increases in gold holdings. When the central bank announced a 57% jump in reserves to 53.3 millionounces in mid-2015, it was the first update in six years.

From Dave Lutz at Jones

4.Options Market Seeing Big Bets on Gold and Silver

WSJ Investors Bet on BigGains by Gold, Silver

Uncertaintyfrom the U.S.-China trade war, political unrest in Hong Kong and Brexit pushinvestors into havens

By Inyoung HwangUpdated Sept. 9, 2019 5:05 pm ET

Optionsbets are signaling the precious-metals resurgence has much further to go, withtraders making wagers that gold may rally an additional 40% and silver almostanother 80%.

The most popularoption on the SPDR GoldTrust exchange-traded fund, known as GLD, is tied to pricesjumping 27% to $180 a share, according to options data provider TradeAlert.

Anotherpopular option pays out if GLD reaches $200, or more than 40% higher than thecurrent level. GLD is a widely used gold ETF that tracks the metal’s prices.Shares closed Monday at $141.39 each.

Options arefinancial products that give a buyer the right but not the obligation to buy orsell. Investors tend to use them to make a speculative bet on an asset, or tohedge another position.

5.British Pound Breaks to New Lows.

BlackrockUK political upheaval: market implications 

6.Buffett $4B in Yen Denominated Bonds Biggest Ever by Foreign National

Berkshiretaps Japan’s hunger for yields with $4bn bond debut

Tokyoinvestors flock to overseas blue-chip issues amid negative rates

HIROKO MATSUMOTO and TAKENORIMIYAMOTO, Nikkei staff writersSEPTEMBER 07, 2019 07:17 JST

Berkshire Hathaway chairman andCEO Warren Buffett enjoys an ice cream treat from Dairy Queen beforea Berkshire Hathaway annual meeting in Omaha, Nebraska.   © Reuters

TOKYO/NEW YORK — Warren Buffett’s Berkshire Hathaway headlineda record day in Japan’s bond market Friday by setting the terms on a 430billion yen ($4 billion) offering, the biggest yen-denominated issueever by a foreign multinational.

The U.S. investment group is selling five-,seven-, 10-, 15-, 20- and 30-year bonds.

The biggest chunk, 146.5 billion yen in 10-yeardebt, carries a 0.44% coupon — an attractive yield at a time when Japan’sbenchmark long-term interest rate languishes below zero.

Banks, insurers, asset managers and otherinvestors flocked to Berkshire’s offering, which falls under a global yen bondheading that allows foreign buyers to participate. Debt offerings under thisframework have been growing gradually, with such big names as Apple, Starbucks,and Procter & Gamble joining in, and both Wall Street and Japanesefinancial institutions are pitching bond floats.

YEN Near 2018 Highs

7.Natural Gas Made All-Time Low on Aug. 5th

Nat.Gas (UNG) Heating Up-Bespoke Investment Group

As we noted in Friday’s BespokeReport, the US Natural Gas Fund (UNG)was the top-performing ETF in our asset class performance matrix last week witha 9.16% gain.  That move higher is continuing today as UNG has ralliedanother 3.5% to its highest level since May after breaking above resistance(which also was previous support) around $21.  All of this comes after theETF made an all-time low on August 5th when it opened at $17.75. Since thatopen, UNG has surged 25.86%.

8.The Biggest Increase in Renters is Baby Boomers

Our demographics-based tenant profiles show asteady rise in older homeowners selling their homes to rent. Reasons includerising divorce, need the cash, tax deduction gone, leaving the burbs for urbanlife, following the kids to a new metro area, etc. hashtag#JBRECDailyInsight John Burns RealEstate Consulting

9.MIT and Epstein.

10.Expand Your Leadership Limits by Applying the Law of the Lid-Success.com

By JohnC. Maxwell | September 9, 2019 | 0 

Look onalmost any street corner in America and you see a fast food franchise. Did youever wonder why these places are so successful everywhere they go?

It certainlyisn’t that the food is top of the line, although most of us will indulge in aguilty pleasure now and again. The key is consistency.

If you stopfor lunch at an airport McDonald’s half the continent away, the meal and theexperience will be almost identical to the lunch you could order at theMcDonald’s closest to your home. What’s more, anytime you eat at a McDonald’syou may feel nostalgia because the tastes are so similar to your first HappyMeal when you were a child.

The successof McDonald’s, which truly set the stage for countless other franchisebusinesses all over the world, is owed to a man named Ray Kroc, who in 1954partnered with the founding brothers behind the first McDonald’s restaurants tomake these outposts a nationwide sensation, and later bought the exclusiverights to the entire business.

The higher the person’s ability to lead, the higher the lid on his or her potential.

Kroc wasable to push the restaurants farther than the founders ever could because thedifference between he and the McDonald brothers exemplifies one of the mostimportant concepts in leadership: the Law of the Lid.

Dick andMaurice McDonald had built a small but successful enterprise in SouthernCalifornia. They lived comfortably. Their hamburgers were popular. But theirlid for success was low: They didn’t have the vision to lead their company towhat it would ultimately become. They were efficient managers, but theirthinking patterns clamped down a lid on what they could do and become.

In contrast,the leadership lid in Kroc’s life was sky high. Between 1955 and 1959, hesucceeded in opening 100 McDonald’s restaurants. Four years after that, therewere 500 McDonald’s. Today the company has more than 35,000 locations in over120 countries around the world!

The Law ofthe Lid is the best explanation of the value of leadership; if you can get ahandle on this law, you will see the incredible impact of leadership on everyaspect of your life.

It’s simple:Leadership ability determines a person’s level of effectiveness. The higher theperson’s ability to lead, the higher the lid on his or her potential.

Your leadership ability, for better or worse, will always determine the impact of your organization, your team or yourself personally.

If yourleadership rates an 8 on a scale of 1-10, then your effectiveness will never behigher than a 7. If your leadership rates a 4, then your effectiveness is goingto always be stuck at 3. Your leadership ability, for better or worse, willalways determine the impact of your organization, your team or yourselfpersonally.

Wherever youlook, you can find talented, smart people who are only able to go so farbecause of the limitations of their leadership. That’s why in times of trouble,organizations naturally look for new leadership. When the country isexperiencing hard times, it elects a new president. When a sports team keepslosing, it looks for a new head coach.

The goodnews is that getting rid of the leader isn’t the only way to lift the lid.Continuing in your study of leadership is another sure way.

How can youapply the Law of the Lid in your life?

This articleoriginally appeared in the September/October 2019 issue ofSUCCESS magazine. 

Photo byYuliya Derbisheva VLG / Shutterstock.com