Treasury yields did something similar, ultimately rising on the day which might be surprise for anyone thinking we are in the midst of a crash (maybe this is a crash, not saying it isn't). Tech and other more volatile stocks generally did well and just about everything else, I mean just about everything else had a pretty bad day.
The misery in managed futures continued. Gold has had a rough couple of days after a good stretch of doing very well. I saw something on Friday that talked about "banks" selling gold. I don't know if they meant consumer banks or central banks and I don't know if it's true but could account for it especially since the dollar hasn't really been a haven other than going up today.
Markets have been rolling over for a little while, accelerating on the tariff news (yes, fallacy of explanation, but it seems pretty clear). The various alts we talk about and that I use had been doing well coming into Thursday, had a glorious Thursday except for managed futures, but had a rough go on Friday and then a little less rough today. The inverse fund has been working of course as has merger arb and catastrophe bonds.
This is a fantastic lesson. If you believe in hedging or reducing volatility in the context we discuss here, you build that part of the portfolio with hopefully a reasonable basis to believe it will do the trick more often than not and then you just need ride it out. Nothing is infallible as I say regularly. If you had a 3% allocation to managed futures and you threw in the towel in the last few days (I absolutely did not), well ok, maybe that will turn out to be right or maybe it turns out to be wrong but at 20% managed futures and feeling the same way, man, I don't know what you'd do. That is a much harder spot to be in. Diversify your diversifiers.
I won't get into too much detail for now but I've started sub-advising accounts for a couple of other advisors and in two different conversations today I said that the time to hedge a portfolio is before you need it. That is of course one of the high level themes of this blog. We're not trying to guess what could go wrong so much as trying to add in some resiliency into the portfolio and if it works most of the time, then that's a pretty good outcome.
We did not get the kind of whoosh down I had in mind for possibly selling the inverse fund I've been using for this go around. I don't know what will happen but I feel comfortable with the gameplan I spelled out over the weekend. I would reiterate the benefit of mapping something out ahead of time is so you don't have to figure out what to do in a charged situation. If I end up having to do something, it might be a charged situation but I won't have to figure out what to do, I'll already know.
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