Gryning - when dawn is at the entrance of a new day and the Sun looks ahead - Sunrise.
Wake up each morning with me and The Gryning Times - an independent, free to read, journal on the financial markets.
Everyday, before the European markets open, I review the previous days talking points to provide you with an easy to read, concise - Macro Economic Perspective - highlighting data and big picture fundamentals that drive asset trends and prices.
For a full description of all things Gryning and what’s on offer, please click on the link below or see the “HOME” post at the top of the publication.
The Gryning Portfolio is intended to be a total portfolio solution that includes long volatility as well as stocks, income producing assets, commodities, gold and bitcoin with the ultimate goal of making an investment strategy that produces ataraxia.
Stocks do well in Growth – Equities benefit from increasing growth environments. When GDP is increasing, corporate profits tend to increase as well which seems to be the long-term driver of equity prices (though there can be plenty of fluctuations in the short to medium term).
Income does well in Deflation – While stocks can struggle in deflationary periods because of the increased debt service, the bond holders which are providing that debt benefit. While bonds are the most common and easily accessible return driver for a deflationary environment, other assets which provide a yield such as Real Estate and carry trades would also serve the same function. If you own a rental property which is paying 4% yield and you have deflation, then the real yield increases similarly to bonds.
Volatility does well in Decline – the asset class which seems most fundamentally linked to a decline is volatility. A put option on the S&P is guaranteed to pay out if the S&P declines below the strike price before expiry whereas there is no guarantee that traditional safe-haven assets like government bonds will fare well in the case of an equity market sell-off. There is a cost to just holding put options which is why they are a piece of a larger strategy. I believe holding volatility as part of a broader portfolio should improve the portfolio’s risk-adjusted returns.
Trend does well in Inflation – commodities are a fundamental return driver. In the same way that a put option on the S&P is fundamentally linked to a decline in stock prices, commodities are fundamentally linked to increases in inflation since inflation is measured against a basket of commodities. That’s not to say an inflationary environment will just affect commodity prices, currencies, interest rates, and stock markets are likely to move as well. I include exposure to all of them (going both long and short) as part of my trend bucket. The Trend bucket then should help augment the volatility bucket in the case of a prolonged recession while leading the charge in a sustained period of high inflation.
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