Stocks Also Do Go Up - The Cestrian Circle Newsletter
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Waiting For The World To Turn
by Alex King, CEO, Cestrian Capital Research
At some point, the war in the Gulf will be over. Could be tomorrow, next week, next year, five years, who knows. Trying to invest in or trade US equities at this time is challenging. In a stable market environment, price is driven mainly by price, which is to say any one security is more or less a closed system of buyers and sellers, and whichever of those has the whip hand determines the direction. The closed system is described entirely in a stock chart and it is why trading can be successful based on a chart alone. In an unstable market like this one, price is driven more by exogenous factors which cannot be known by more than a handful of people ahead of time; this means price shocks come often and I challenge anyone to trade this environment successfully at scale for very long. The rational thing to do is to pull back exposure, move funds to cash, and wait.
Of course, there are plenty of non-US equities in which to invest or trade. The South Korean index has been absolutely on fire for a while now, propelled by (i) rising earnings in SK Hynix and Samsung, two of the three memory companies that matter and also (ii) a frenzy in margin-loan driven retail buying. Even after some cooling off, $EWY remains +26% YTD vs. -4.5% for the $SPY and -5.55% for the $QQQ.
Latin American country ETFs have also been on a tear. Here’s Brazil, $EWZ.
The next set of countries on rotation may surprise you. We highlight two after the paywall, for paying Circle and Inner Circle subscribers only.