It’s been a while since we have made any moves due to the increasing number of risks facing the global environment. Wars and climate change being the biggest factors!
We are concerned that things could still get worse before they getter too. With inflation slowly getting back under control, in the western world, things in many other countries are hardly improving because of conflicts or political uncertainties. Returning from our recent trip to Europe, it became abundantly clear that there’s a lot of stress in the global supply systems and that inflation is not caused by excessive demand but because of limited production and supply. These problems are not helped by increasing a blunt tool such as interest rates. Lower interest rates would actually help those in trouble to finance expansion to meet the supplies needed but instead Central banks are more worried about inflation getting out of control. Of course only time will tell if these Central bankers are right but we all remember that these are the same people that told us interest rates were unlikely to start rising until 2024.
What we can see though are more problems due to both drought and floods in the years ahead that will affect food production and supplies around the world. The breaking of the Ukrainian dam will also affect wheat crops, whilst the fires in Canada and USA droughts are making their supplies worsen too as El Nino is making a comeback.
All of this is being overshadowed by the increasing threat of additional wars between China, Taiwan, and India. Any of which could have significant effects on global supplies and chains.
It’s with all these issues that we are thinking of changing our strategies over the next couple of years. The time has come to start realising some gains and losses to also manage our tax position as year approach the End of Financial Year (EOFY) on 30 June 2023. Some losses have been realised from AXE and ZIP so that we can offset some of the gains and income during the past year. This will help us minimise any tax payable.
In addition, as we are hearing more potential risks in coming months, we will start by using PUT options to allow us to protect ourselves from a falling share market. The first option was bought but more will be added in coming months if everyone agrees with this general approach to risk management. Options do cost us about 2% for the value they protect but if the market falls 10% or 20% then it’s a price well spent. If the market rises, then we will still benefit from the shares we hold. There are other ways to “sell short” the market but they involve additional steps to register “Aware Investors” which we are still investigating as a result of some global legislative changes made back in 2019 as a way to limit market crashes that cause the Global Financial Crisis (GFC) back in 2008. More information about this matter can be found here.
Regarding our Fund, we’re currently around 5.2% positive return but very mindful that any market crash could quickly reduce that back into negative territory. So rather than thinking this is the beginning of a “bull market” and an opportunity to buy which many out there want us to believe, there’s a number of people out there which are sounding the alarm bells that I tend to agree with. As a result, there’s a new subscription, by Mason Sexton, which we believe is in the best interests of us all, of an experienced trader that used a combination of charting and unusual Zodiac methods that he believes goes back to explain many of the unusual events affecting the markets over centuries. William Gann (a well respected writer going back over 100 years ago) was the first person to write books about these charting theories but, whilst he admitted to the effect that the “planets” had, he left that out because it was not seen as credible by publishers back then nor was it easy to explain in his books. The cost is about $5,000 and will last for the next 2 years but this was an offer (for regular market updates) that the large firms have been paying that much or more per month since the 1980’s. So whilst most of us lose money in a falling market, these people have been profiting from it and now we can too. We even have a 90 day guarantee for our money back! So please read his The-Map-Manifesto and let me know if everyone is happy for us to proceed with this new strategy.
For this update, please find less pictures as you can see the attached reports to see our current positions and still high cash levels. Should the anticipated market crash arrive around mid July 2023, then that would the time for timing some new share purchases at much better entry levels. Cryptos continue to be subdued with little changes.
Interactive Brokers Jan – 6 Jun 23
