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The Logical-Invest monthly newsletter for August 2017

Logical Invest Investment Outlook August 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 46.05% return. The Leveraged Universal strategy with 27.11% return.   The NASDAQ 100 strategy with 19.29% return. SPY, the S&P500 ETF, returned 11.42%. News: Our professional portfolio software QuantTrader has reached version 5.0 with improvements including being able to load your custom set of strategies and a new consolidated signals screen. You can now allocate your funds in multiple strategies and have QuantTrader calculate the number of shares of each stock/ETF you need to buy.   QuantTrader Consolidated Signals   Market comment: Just as we mentioned in our last June newsletter, we continue to observe low volatility and a weakening dollar. The VIX index hit a record low on July 26th, falling temporarily to 8.84, a level last seen back in 1993. Moreover the index stayed under the 10 level for 10 consecutive days showing persistence.  The U.S. dollar fell to a 13-month low against a basket of currencies. The Euro has broken to the upside, reaching 1.18 against the dollar, a level last seen before December 2014. The Euro is 11% up year-to-date. Certain commodities that have had terrible returns for the past years are this month's top performers: Sugar, Gasoline, U.S. diesel Heating oil, Nickel, Coffee and U.S. oil (USO) ETFs all gave more than 10% returns for the month. Of course if you look at a graph you will see this is just a tiny reaction to multi-year bear markets. Taking advantage of the extended low volatility environment, out top strategy, the Maximum Yield strategy, added another +5.93% to reach +46.79% return for the year.  The Universal Investment 3x strategy added 2.54% for a +27.11% YTD return. All our other strategies were positive in July. The exception was the Nasdaq 100 strategy that corrected -3.1% causing this month's allocations to change significantly. As [...]

2017-08-01T07:02:24+00:00 By |2 Comments

The Logical-Invest monthly newsletter for July 2017

Logical Invest Investment Outlook July 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 38.54% return. The Leveraged Universal strategy with 23.91% return.   The NASDAQ 100 strategy with 23.07% return. SPY, the S&P500 ETF, returned 9.17%. News: Our professional portfolio software QuantTrader continues to evolve and can now download data from 3 different providers: Tiingo, Yahoo and Google. Tiingo is an inexpensive solution for DYI investors that need good quality dividend-adjusted end of day data. Market comment: The U.S. Federal Reserve raised its benchmark federal-funds rate on June 15th by a quarter percentage point and hinted to further hikes. Individual investors remain skeptical of the bull market as the AAII survey shows 43.4% being neutral (historical average is at 38%). Mainstream market analysts keep a positive outlook quoting decreased risks and equity strength in Europe, global strength in developed and emerging markets, low unemployment in the U.S. and a sense that the Fed's tightening is predictable. We continue to see a low volatility environment and a weakness in U.S. dollar for 2017 which benefits non-U.S. stocks, bonds as well as gold. The European market returned 17% YTD while India and China achieved 20%+ returns for the year. UUP ETF (U.S. Dollar Index)   Out top strategy, the Maximum Yield strategy, added another +6.85% to reach +38.5% return for the year.  The Universal Investment 3x strategy had a correction in the last few days of July but came out positive adding +1.66% for a +23.9% YTD return. Both the Nasdaq 100 and the U.S. Sector strategies had corrections: -1.98% and -2.47% to achieve +23% and +5% YTD  respectively. All other strategies remained flat with gains/losses below 1%. A final note: We do keep a watchful eye on recent developments in the crypto-currency markets as Bitcoin and Ethereum are attempting to make their way into the mainstream. It may be [...]

2017-07-02T10:05:11+00:00 By |6 Comments

The Logical-Invest monthly newsletter for June 2017

Logical Invest Investment Outlook June 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 29.66% return. The Leveraged Universal strategy with 21.89% return.   The NASDAQ 100 strategy with 21.80% return. SPY, the S&P500 ETF, returned 8.48%. News: Our brand new U.S. Sector Rotation made its live debut with a +2.53% return for the month. You can subscribe for free. Market comment: Both the U.S. equity and the U.S. bond markets were positive for May. SPY (S&P 500 ETF) added +1.41% and TLT (30-Year Treasury ETF) added +1.89%. Even though SPY is reaching new all-time heights, it under-performed many of our strategies and in particular the ones with foreign exposure, such as the World-Top 4, Global Market and Global Sector Rotation strategies. This shows that the U.S equity market is slowing down compared to foreign and emerging markets. On the other hand, Brazil, with a, -18% drop on May 18th reminds us that these markets suffer from local political risk and need to be properly hedged and diversified. Our top 3 strategies continue to be the biggest gainers for May. Our 3x UIS strategy added another +4.3%, the MYRS added +3.11% and the Nasdaq 100 added +2.99%. On the 4th and 5th spot are the Global Market rotation(+11.23% YTD) and Global Sector Rotation (+11.75% YTD) strategies. Summer is often volatile. Our slow and steady risers cam limit your risk: BRS (+6.81 YTD%) and the BUG (+6.29% YTD) bond-based strategies. We wish you a healthy and prosperous 2017. Logical Invest, June 1, 2017   Logical Invest strategy performances May 2017 Strategy performance overview: Visit our site for daily updated performance tables. Symbols: BRS - Bond Rotation Strategy BUGST - A conservative Permanent Portfolio Strategy BUGLEV - A leveraged Permanent Portfolio Strategy GMRS - Global Market Rotation Strategy GMRSE - Global Market Rotation Strategy Enhanced GSRLV - Global Sector Rotation low volatility NASDAQ100 - Nasdaq 100 strategy WORLD-TOP4 - The Top 4 World Country Strategy UIS - Universal [...]

2017-06-01T08:07:41+00:00 By |0 Comments

The Logical-Invest monthly newsletter for May 2017

Logical Invest Investment Outlook May 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 25.75% return. The  NASDAQ 100 strategy with 18.26% return.   The Leveraged Universal strategy with 16.86% return. SPY, the S&P500 ETF, returned 6.97%. News: Our new U.S. Sector Rotation strategy is live (and for a limited time, free!). Unlike what you may have seen before, this strategy consists of 5 sub-strategies tracking sector momentum, mean reversion and relative under-performance to create a variable-beta play on the U.S. market. And yet it is very simple to implement. Give it a try. Thank you for your support of our QUANTtrader forum were you can share and discuss your own custom strategies.   Market comment: As we are heading into early summer, most assets classes are performing well partly due to a weakening U.S. dollar. Domestic equity continues to reach new highs, foreign and emerging equity markets are up while junk bonds and foreign bonds have now recovered from past corrections. Commodity performance is mixed but commodities do present a longer term opportunity for portfolio unclusion, as inflation resistant assets. Treasuries remain flat. The story in the media is that we are entering a more mature business cycle in the U.S. while foreign markets (China, India, Brazil and partly Europe) are also in growth and recovery mode. The sentiment is positive, at least as far as the major management companies go while individual investors are cautious, expecting a possible U.S. equity correction. The year long expectation of higher volatility due to tighter policy still is discussed but we have not seen this in the actual market. Far from it, we are seeing extremely low volatility levels compared to historical norms as well as perceived political risk in the U.S. and Europe. Our strategies performed as expected. Maximum Yield strategy added another 3.42% in April, keeping it in our top spot at +25.75 for the [...]

2017-04-29T14:57:16+00:00 By |1 Comment

The Logical-Invest monthly newsletter for April 2017

Logical Invest Investment Outlook April 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 21.58% return. The  NASDAQ 100 strategy with 15.00% return.   The Leveraged Universal strategy with 13.02% return. SPY, the S&P500 ETF, returned 5.92%. News: Try our QUANTtrader software with our 30-day free trial. There is no better way to understand how our strategies work. Join our new QUANTtrader forum were users dare adjust the strategies and share new ones! Check our new European section.  Our in-depth 2-hour QUANTtrader webinar, with Frank Grossmann. Get a behind-the-scenes look at our strategies. We updated our web-site home page and menu.   Market comment: For the second time in three months, the Federal Reserve increased its benchmark interest rate a quarter point taking the overnight funds rate to a target range of 0.75 percent to 1 percent. Treasuries had small comeback since then signalling that the market had already priced in the Fed move and was bracing for a much more hawkish tone. Treasuries are once again negatively correlated to the equity market which is a positive for our strategies. The market is expecting two more hikes, in June and December. Volatility continues to be extremely at low levels, sending the ZIV etf (medium term inverse VIX etf) and our Maximum Yield strategy to new highs. Just like last month, what is interesting is the unnaturally low expectation of future volatility, with 8-month out VIX futures being below the 17 price level. Last month's VIX Futures term structure:   VIX term structure February 28th 2017 This month's VIX Futures term structure:   VIX term Structure March 31st 2017 This continuing "flattening" of the curve is unusual. In plain terms, future expected volatility levels seem to be low even though we are looking at upcoming French elections, Brexit negotiations as well as U.S. policy uncertainties. Investors seem fearless as the U.S. market is still at the top of the price chart. Investors may want [...]

2017-04-20T11:02:20+00:00 By |0 Comments

Strategies For Trading Inverse Volatility

Update: You can see the most recent performance our our inverse volatility strategy here. Consult vixcentral for the daily VIC term curve. In this paper, I present five different strategies you can use to trade inverse volatility. Why trade inverse volatility you ask? Because since 2011, trading inverse volatility was probably the most rewarding investment an investor could make in the markets. Annual returns of between 40% - 100% have been possible which crushes any other strategy I know. Smartly Trading inverse volatility In modern markets, the best way to protect capital would be to rotate out of falling assets, like we do in our rotation strategies. This is relatively easy, if you are invested only in a few ETFs, but it is much more difficult, if you are invested in a lot of different shares. In such a situation an easy way to protect capital is to hedge it, going long VIX Futures, VIX call options or VIX ETFs VXX. If you trade inverse volatility, which means going short VIX, you play the role of an insurer who sells worried investors an insurance policy to protect them from falling stock markets. To hedge a portfolio by 100% an investor needs to buy VXX ETFs for about 20% of the portfolio value. The VXX ETF loses up to 10% of it's value per month, because of the VIX Futures contango, so this means that scared investors are willing to pay 1.5-2% of the portfolio value per month or around 25% per year for this insurance. Investing in inverse volatility means nothing more, than taking over the risk and collecting this insurance premium from worried investors and you can capitalize on this with a few simple strategies, which I will show you below. Something seems afoot. Why do investors pay 25% per year [...]

2017-04-26T06:38:57+00:00 By |38 Comments

Volatilidad: Como construir una inversión con un rendimiento de más del 50%?

En este artículo quiero explicar cómo funciona nuestra Estrategia de Rotación de Máximo Rendimiento "Maximum Yield Rotation Strategy". Esta estrategia logra muy altos retornos por invertir en fondos de volatilidad inversa. Desde 2011 hasta hoy el rendimiento anual fue de más del 55% por año. Durante el año presente el rendimiento acumulado es del 27%. El ratio de Sharpe (una estimación del retorno por unidad de  riesgo) de 2,1 es un "valor sueño" y dudo que alguien puede mostrar una estrategia con una mayor proporción.La estrategia invierte en 4 ETF diferentes: Mercado de acciones de Estados Unidos Bonos del Tesoro Volatilidad Inversa Equivalente a Efectivo

2017-03-13T18:57:08+00:00 By |0 Comments

Short Volatility: A short analysis of the actual ZIV performance after the July 2014 stock market selloff

This monthly premium of being short volatility is the only thing which makes the ZIV price go up. Unfortunately there is a second quite strong influence on the ZIV price. This is the market volatility (VIX). In the chart below you see the green VIX chart. Every spike corresponds to a fear spike of the investors. During such spikes we also have smaller market corrections. During these market corrections ZIV is going down, because the ZIV holders play the role of the insurer and they have to cover the losses of the insured investors. The good thing is, that the 3% monthly premium of short volatility investments normally more than covers all possible losses of the investors. 3% per month is 42% per year. In fact we borrow investors money to cover their short term portfolio losses at the enormous rate of 42% interest per year! Continue benefitting from Short Volatility The influence of the VIX short volatility can be considered as a sort of noise which adds to the quite stable premium performance of ZIV. The good thing is, that this volatility is mean reverting, so that even if ZIV has an intermediate drawdown, you know that this is only a temporary drawdown. The last few months, the VIX level was extremely low, therefore also the benefit from being short volatility. Now it is up again at 17 which can be considered as quite a normal average level. So there is no immediate danger because of this VIX level. Only if VIX comes in the region of between 20 to 25, then time comes to exit a ZIV position. Current Short Volatility environment If you look at the 3 month chart below, then you see that ZIV is still up nearly 10% for the last 3 month. Seen that [...]

2017-02-20T12:45:21+00:00 By |0 Comments

Invest in VIX volatility using ZIV

Update January 2017: The recent performance of investing in volatility can be seen here. You are probably wondering how we could achieve yearly performances of more than 50% with some of our rotation strategies. The reason is that the Maximum Yield Rotation Strategy and the Global Market Rotation Enhanced Strategy are investing in inverse volatility. Invest in inverse Volatility So, here are now some facts to show you why I like inverse volatility so much. In this chart you see the performance of the ZIV mid-term inverse volatility ETF compared to some other global market ETF from our rotation strategy. The ZIV performance of 76% for the last 12 month was just incredible. In the next chart you see a comparison of the VIX volatility index compared to the ZIV performance. ZIV has a inverse relation to the VIX index. This means that ZIV goes down when volatility or VIX goes up. For the 1 year period VIX is more or less the same (+0.19%). The VIX index is now at 15.6%. So, why did ZIV go up so much, when the VIX index is unchanged? This is because of the strong contango of the VIX mid-term futures of which the ZIV ETF is composed. If I calculate, then I get an average monthly performance of 4.8% (=12. root of 1.76), during the last 12 month, due to the strong contango of the VIX futures which track volatility. At the moment the monthly "roll yield" of ZIV is a little bit lower, but it is still about 3% per month. Now, if you look at the ZIV performance you see that ZIV only made 0.69% since April 12. Why this??? If you look at the VIX Index, you see that during the same period, it went up by almost 30%. [...]

2017-02-20T12:45:33+00:00 By |0 Comments

Risk Management using Timed Hedging – Avoid DrawDowns

As you perhaps know I have invested all my money in my own strategies, and I and my family (the best wife of all and 4 nice children) are living from the return of these investments. So, I just cannot afford to lose much money in market corrections. Therefore I always try to improve the strategies to lower the risk of major losses through hedging. Timed Hedging The new "Timed hedging" is a major improvement of the rotation strategies. It increases the Return to Risk ratio of all strategies a lot. Timed hedging allows you to reduce the downside risk or the volatility of your investment by about 1/3rd without affecting the performance of the strategies. An excellent way to reduce the volatility or risk of your investment is hedging with Treasuries. Treasuries are most of the time negatively correlated to the stock market and still have a long term positive return. In my strategy emails, I will from now on always give an indication on how you can hedge the current strategy investment. There is a good possibility that 2014 will be a more choppy market than 2013. The 32% performance of the US stock market is just crying for some corrections, even if the economy outlook is still very positive. In a normal year like 2012 without tapering, the stock market (MDY – orange) and Treasuries (EDV – blue) have nearly perfectly mirrored charts. 2013 was a special year with extremely fast rising treasury yields during the summer period. This had the effect, that long duration ETFs like EDV lost up to 20% for the whole year. Since the beginning of 2014 treasuries show again a normal negative correlation of about -0.5 to the stock market (SPY). Since hedging with Treasuries is an extremely simple and effective [...]

2017-03-14T22:11:11+00:00 By |14 Comments