I came across this quote by the famous physicist Richard Feynman.
You are under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You are here to create yourself, continuously.
This is a wonderful message of hope for the future. We are not prisoners of our past mistakes. We always get a chance to do better. Let’s just do it.
S2N Spotlight
There is a well-known strategy called the golden cross. It is when the 50-day moving average crosses the 200-day moving average. We apply this to gold over a long time frame of close to 50 years. The strategy uses the cross to go long and to sell. It is never short. Here are its performance statistics with markers on the chart.
In summary, buy and hold makes more money, but the golden cross slightly outperforms on a risk-adjusted basis. The strategy as it is would not be something I would promote.
I am including this chart simply because I think it is quite cute when you run some analysis and get two completely different assets starting to meet after decades of being at odds. Probably only I could find this cute.
Gold has produced a 35% return over the last 1-year, to be one of the top performing assets in macro.
S2N Observations
For all my technical analyst friends, I note that the MACD (moving average convergence divergence) indicator is diverging with its histogram turning negative. My best guess would be one more high before we get a more prolonged selloff.
With Friday’s better than expected non-farm payrolls, the bonds sold off, which means yields climbed.
I share a few regions yield curve steepness.
China still has a big roll to play. You can see how the 10-year yield spiked on the news of stimulus. It has strengthened a little post all the bullishness in the equity markets the past week or so. I am just sharing so that you have a picture of this chart in your mind as I am going to be tracking it more frequently. The Chinese stock markets are open today after last week’s holidays, and they are still hot.
Performance Review
For those who are new to the letter, the shading is Z-Score adjusted so that only moves bigger than usual for the symbol are highlighted.