CIO’s quick comment: passive takes the back seat

stocks pc - Unsplash stock image edited

Just as explained in a previous post, markets are already behaving as if Trump never existed.
The likely side-effect will be sideways markets, given a massive rotation from FANG et co to other sectors and companies.

But BEWARE: only the headline numbers will be giving the impression of a sideways movement ; there will be a volatile storm brewing underneath as liquidity will be shifted across sectors and individual stocks.
This again becomes a quest for alpha, as passive beta strategies seem to be taking the backseat.

Dimitrios NOUSIASCFA

CIO

Whitetip Investments AEPEY

TASIS: An Absolute Beta Strategy

TASIS – Whitetip’s proprietary, in-house developed, investment management methodology – is passing the litmus test of market adversity and provides great hope for the future.

At the start of yesterday’s dismal trading session, our portfolios were already 90% in cash and still stand ready to go 100% liquid if the correction continues, thus maintaining their firepower for any rebound, plus having the ability to go outright short in order to benefit from a protracted bearish period.

The accelerated liquidation started 3+ days ago, in tandem with the market, with absolute discipline and devoid of panic & head-scratching.

The account values ended-up e x a c t l y where TASIS’ risk control was projecting and this allows for the two following statements:

  1. We can invest stress-free, because
  2. we keep portfolio risk under control

This is huge; Not only for the self-explanatory merits of the above statements, but also because it depicts exactly how TASIS is supposed to work.

In the short term, TASIS offers returns that are correlated to the market, offering passivelike performance; TASIS rises and falls with the market’s ebbs and flows. Sideways markets lead to sideways performance; no miracles there.

However, over the long term TASIS offers uncorrelated, absolute performance which is an absolutely miraculous goal for any portfolio manager.

The way that TASIS achieves this is by accumulating “positive-beta” and disposing-off the “negative” one. This leads to the concept of “Absolute-Beta”.

Here’s how it goes:

Given the tight risk control of TASIS, losses are not allowed to rise and positions are accumulated with a worst-case scenario in mind. 

This means that in a serious correction positions are liquidated on-time, thus leading to favorable relative performance over the short- to medium-term. Should the correction lead to an outright bearish market, TASIS stands ready to benefit out of it, leading to seriously favorable absolute performance over the long-term. Should there be a quick rebound, experience has proven that TASIS can quickly follow the market’s short-term positive performance in a matter of days-to-weeks, even if starting 100% in cash.

Experience has also shown that a couple of weeks-to-months of favorable market performance is enough to produce handsome gains which will be sacrificed to some extend in the first correction, but will lock-in a sufficient amount of profits to serve as a higher stepping stone in the future.

This (should) lead to an “absolute-beta” effect, the equivalent of the Holy Grail in investing.

To re-iterate:

  • We don’t attempt to time the market, or individual stocks.
  • We don’t micro-manage individual positions.
  • We strive to produce returns by managing risks, not by managing positions.
  • We believe that a disciplined systematic approach is the only way towards achieving a robust & reproducible long-term success (skill vs. luck).
  • We believe that positions are mere statistical properties of the global portfolio, not the culmination of our life-long convictions, biases & preferences (a bit extreme of a statement, but we like the poetry in it…)

There’s not one single way to be successful in investing, but each investor can be successful in only one way; Having a crystal-clear view of its investment approach sets any company apart from 90% of its competition to begin with. We at Whitetip strive to position ourselves in this group.

Dimitrios NOUSIASCFA

CIO

Whitetip Investments AEPEY

The fallacy of the unprecedented and how to navigate it

Show me someone using the term “unprecedented” with regards to market situation and I’ll show you a person with either little market experience, or no clue, or both. The evolution of market dynamics is a continuous series of unprecedented events and anyone not realizing, or accepting this fact is doing a disservice to herself and her clients.

So, the question boils down to how going about navigating a series of unprecedented events with any chance of success; It all about having a Strategy which prescribes actions so thoroughly that you never have to make a decision in following it in the first place. From this arises the second necessary condition for decision making under (constant) uncertainty, which is Discipline in following the laid-out strategy.

Current discussion about market evolution assigns almost a 50-50 chance on either direction. Making a directional bet based on some form of “analysis” is akin to a coin toss, given all the extraneous parameters over which no-one has a grasp on.

Luckily, at Whitetip Investments AEPEY we’re as stress-free as ever. Our course of action is dictated by TASIS, our proprietary, in-house developed investment management system that rewards assets for trend and penalizes them for volatility and with its robust risk management overlay provides an integrated approach throughout the entire investment cycle. Thanks to TASIS, our portfolios were quiet passive throughout last summer to early fall, went outright long late October, but started trimming positions by the end of February. By the end of the first week of March they were almost completely liquidated and by the next they were outright short. All this happened naturally, just by following the flow of our system’s dictates.

So how do our portfolios look currently? As said, it’s a 50-50 outlook so they’re positioned accordingly with an almost equal split among long & short positions. The global economy is at a junction point in which some industries will pan out as winners and some as losers. A long-short approach is a natural choice in such a situation. Do we expect (or even demand) that every position is going to be a winner? Certainly not. But, instead of promoting convictions based on a self-induced dogma, we let price action be the final jury, which in the process forces us to follow the simple (to the point of truism), but yet so powerful maxim: Cut the losses short and let the profits run, till the trend becomes your friend…

Happy investing everyone!

Dimitrios NOUSIASCFA

CIO

Whitetip Investments AEPEY

25.71% of Saxo Bank A/S sold to Chinese billionaire Li Shufu

Whitetip Investments AEPEY, IB Partner of Saxo Bank A/S, announces that 25.71% of Saxo Bank A/S was sold to Chinese billionaire Li Shufu.

Whitetip Investments AEPEY is the main partner of Saxo Bank in Greece. Saxo Bank A / S is an investment bank, supervised by the European legal framework, based in Copenhagen and operating in financial centers around the world, including London, Singapore, Paris, Zurich, Dubai and Tokyo. Saxo Bank facilitates trading and investing for private and institutional investors by offering access to global markets, a wide range of product categories and over 30,000 traded products such as stocks, CFDs, ETFs, FX pairs and Options, Futures and Bonds. Whitetip Investments AEPEY customers have the opportunity to open an account with Saxo Bank and make transactions through the innovative and award-winning platform of Saxo Bank, to enjoy a wide range of products and to access global markets while our Company provides the Services Receiving and Transmitting Orders and Investment Advice to customers who wish.

Idle Money Does Not Return…

Republising Babis Aggeletopoulos, CEO of Whitetip Investments AEPEY’s article published on April 6, 2017 on Capital.gr.

Shortly, seven years will have passed since Greece joined the support mechanism of European partners, the central bank and the IMF. Seven years from the day that Olli Rehn, wished to us in a bad Greek accent  to “be strong”, while we, ignoring what he said, continued the party, not having sense of the days that were to come. Days full of recession, overtaxation, unemployment. Days that changed the vast majority of Greeks the way they lived, worked and acted.

During this Armageddon of the new order of things for the country in a non-war period, the effort to protect the savings of those who escaped from the tax office, took the form of a snowball. Fear of returning to the drachma, of capital controls, of the participation of depositors in the share capital increases of the Banks, of the freezing of deposits with any kind of argument inside or outside the limits of logic, led to a mass leak of deposits from the Greek banking system. From 2009 until today, 120 billion euros have left the Greek Banks. A large percentage of them were positioned to foreign bank accounts, to money market mutual funds based in Luxembourg, into chests and drawers, even into pressure cookers !!!.

Continue Reading the Article on Capital.gr

 

 

*Babis Angeletopoulos is Whitetip Investments AEPEY‘s Vice President & CEO