{"id":47484,"date":"2019-07-28T10:10:08","date_gmt":"2019-07-28T15:10:08","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47484"},"modified":"2019-07-28T10:10:11","modified_gmt":"2019-07-28T15:10:11","slug":"whistling-past-the-70-trillion-debt-graveyard","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47484","title":{"rendered":"Whistling Past The $70 Trillion Debt Graveyard"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/realinvestmentadvice.com\/whistling-past-the-70-trillion-debt-graveyard-07-26-19\/\">Whistling Past The $70 Trillion Debt Graveyard<\/a><\/h3>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<ul class=\"wp-block-list\"><li><strong><em>Review &amp; Market Update<\/em><\/strong><\/li><li><strong><em>Whistling Past The $70 Trillion Debt Graveyard<\/em><\/strong><\/li><li><strong><em>The Real Crisis Is Coming<\/em><\/strong><\/li><li><em><strong>Sector &amp; Market Analysis<\/strong><\/em><\/li><li><strong><em>401k Plan Manager<\/em><\/strong><\/li><\/ul>\n\n\n\n<p><a href=\"https:\/\/realinvestmentadvice.com\/sp-3300-the-bull-vs-bear-case\/\" target=\"_blank\" rel=\"noreferrer noopener\">Last week,<\/a>&nbsp;we discussed the setup for a near-term mean reversion because of the massive extension above the long-term mean. To wit:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em>\u201cThere is also just the simple issue that markets are very extended above their long-term trends, as shown in the chart below. A geopolitical event, a shift in expectations, or an acceleration in economic weakness in the U.S. could spark a mean-reverting event which would be quite the norm of what we have seen in recent years.\u201d<\/em><\/p><\/blockquote>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/realinvestmentadvice.com\/wp-content\/uploads\/2019\/07\/SP500-Trend-Line-Support-071119.png\" alt=\"\" class=\"wp-image-420888\"\/><\/figure>\n\n\n\n<p>This analysis is what led us to take action for our&nbsp;<strong><a href=\"https:\/\/riapro.net\/\" target=\"_blank\" rel=\"noreferrer noopener\">RIAPRO subscribers last week (30-Day Free Trial),<\/a><\/strong>as we added a 2x-short S&amp;P 500 index fund to&nbsp;<strong>Equity Long-Short Account<\/strong>&nbsp;to hedge our longs&nbsp;<em>(GOOG, CRM, NVDA, EMN, IVV, RSP)<\/em>&nbsp;against a potential mean reversion.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><strong>\u201cThis morning, we are adding a small 2x S&amp;P 500 short position to the trading portfolio to hedge our core long positions against a retracement over the next few weeks.<\/strong>&nbsp;We will remove the short if the market can regain its footing and move higher, or the market sells off and reaches oversold conditions.\u201d<\/em><\/p><\/blockquote>\n\n\n\n<p><strong>This is the purpose of hedging, as it reduces volatility over time, which inherently reduces the risk of emotionally based trading mistakes.<\/strong><\/p>\n\n\n\n<p>My friends at&nbsp;<a href=\"https:\/\/mailchi.mp\/91ff0fb375a3\/trading-desk-notes-july-27-2019?e=464903b597\" target=\"_blank\" rel=\"noreferrer noopener\">Polar Futures Group<\/a>&nbsp;laid out the same concerns on Friday:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><strong>\u201cThe mean reversion trade<\/strong>: For the past few weeks I\u2019ve been musing that the \u201cirresistible force\u201d that has moved all markets has been the aggressive repricing of future interest rate expectations since last November.\u00a0<\/em><\/p><\/blockquote>\n\n\n\n<p>&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Whistling Past The $70 Trillion Debt Graveyard Review &amp; Market Update Whistling Past The $70 Trillion Debt Graveyard The Real Crisis Is Coming Sector &amp; Market Analysis 401k Plan Manager Last week,&nbsp;we discussed the setup for a near-term mean reversion because of the massive extension above the long-term mean. To wit: \u201cThere is also just [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[8511,15470],"class_list":["post-47484","post","type-post","status-publish","format-standard","hentry","category-economics","tag-lance-roberts","tag-real-investment-advice"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47484"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47484\/revisions"}],"predecessor-version":[{"id":47486,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47484\/revisions\/47486"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}