Monday, stocks shot up 2% in Asia, 1.1% in Europe, and 1% in the U.S. on high volume. The VXO fell 14% to close at 17.87 — well below the 20 benchmark that divides risk-on and risk-off. Precious metals gained 1% and their miners gained twice that amount. The market mover was news regarding a trade truce between the U.S. and China.
Tuesday, stocks fell in Asia 0.9%, in Europe 0.7%, and in the U.S. 2.8% on very high volume. The VXO shot up 28% to close at 22.96 — back in risk-off territory. Supposedly, second thoughts about the trade truce prompted the big swing in sentiment from the day before. The Dow and S&P barely hung on to their perspective benchmarks while precious metals gained 1%, and the 10-Year U.S. Treasury Bond yield fell 2% to close at 2.92.
Wednesday, stocks fell 1.2% in Asia and 1.3% in Europe. Markets were closed in the U.S. in respect for the passing of George H. W. Bush. Thursday stocks plummeted in response to friction with China but then recovered. Stocks ended up down 2.1% in Asia, 3.1% in Europe, and 0.6% in the U.S. on extremely high volume. The Dow and S&P indices dropped below their 25,000 and 2700 benchmarks while the 10-Year U.S. Treasury Bond yield fell 2% to close at 2.88.
Friday, stocks gained 0.3% in Asia, 0.6% in Europe but fell 1.7% in the U.S. on high volume. The VXO moved up 15% to close at 27.13. The NASDAQ and NYSE closed below their respective 7000 and 12,000 benchmark levels. Precious metals miners gained 2%. For the week, cryptocurrencies plummeted another 20%.
If you’re looking for a safe place to profit from the movement of stocks during the coming years of likely continued stock market weakness, you may wish to look at HSGFX. To me it’s a poor man’s hedge fund. Although it has performed horribly over the past eight years of Fed-induced nonsense, it’s now finally returning to life. The fund manager has adjusted for investor and monetary policy insanity and seems to be back on track. The first chart in the manager’s market commentary for November in particular is compelling.
That chart shows what we all want from our stock investments — full participation in the gains and even modest gains during times of market weakness. This fund, when it works as designed, does better than that by using leverage for hedging losses and amplifying gains. And unlike other investment vehicles that seek to do similar things (like indexed annuities and market-linked CDs), this stock is very liquid and produces capital gains (and losses) rather than just income.
I’m slowly and carefully accumulating this stock as a hedge against expected prolonged weakness in the stock market and am now willing to begin holding it even in an account that has a very low tolerance for loss. Please note that I too have not done well with stock investments for nearly as long as this fund.
You might want to take that into account if you wish to follow my lead. Of course, based on my recent lack of success, you can always use this as a contrary indicator and do the opposite if you’re so inclined. As always whatever investment decision you make, ultimately it’s your investment and your responsibility.