Quick hit Sunday.
A few weeks ago we mentioned the Vistashares Bitbonds 5 Year Weekly Income Fund (BTYB) which had just started trading. The fund is 80% long five year treasuries and 20% in a Bitcoin synthetic covered call with the objective of generating twice the yield versus just owning a five year treasury.
Obviously it's been a rough run for Bitcoin since BTYB listed but the result is far from horrible. The chart is price only, so adding back in the 15 cents it has paid out so far and the drag from Bitcoin has been less than 100 basis points compared to the UFIV ETF. YBTC is a crazy high yielding covered call fund tracking Bitcoin. It's only a month but I like the idea of harnessing volatility to add a little bit of yield. Maybe BTYB can actually achieve that. There is still interest rate risk though even with just five years. In 2022, IEI which tracks 3-7 year treasuries bottomed out with just over a 12% decline at it's still $12 below its late 2021 high.
From Torsten Slok. No immigration is economically serious.
- US unemployment rate exceeds 10%
S&P 500 declines more than 30% from its level at time of launch
Zillow Home Value Index declines more than 10% YoY in any of: NYC, LA, San Francisco, Chicago, Houston, Phoenix
Labor share of gross domestic income first-release value for any quarter falls below 50%
CPI falls below 0% in any monthly release
Citrini leads off saying this is not a prediction, it's merely one possible outcome over the next couple of years. Bloomberg added that Kalsi currently shows a 13% probability of three of the five happening by July of 2028.
When I see any sort of gloomsday (play on words of doomsday)
predictions possible outcomes, my inclination is to think about resiliency of not just the portfolio but also my various income streams. Portfolio resiliency could come from small exposures to inverse strategies, managed futures (
after the first 10% down), a mix of different long/short including absolute return, gold can work in a deflationary environment and there will be some others including defense contractors based on the current geopolitical environment. A crazy thought is that funds like BTYB could work too. Higher yield, not crazy high yield.
Later this week I will try to put together an anti-Citrini Portfolio, could be fun.
Resiliency of income streams involves learning new things, making sure current income streams can adapt if needed and not being over reliant on any single income stream. I'd also encourage working on trying to add an additional income stream. I think a related point is to start to build into your planning the idea that Congress will not actually be able figure out the Social Security problem. As crazy as it sounds, they might actually screw this up.
I bet you saw the headline from the WSJ about
The Crossing Guard Making $14,000 A Month Mailing Out Her Musings From The Job. The article says she took the crossing guard job to better "connect with her community" for 50 minutes a day without implying she gave up her day job. Then her day job sort of withered shortly thereafter though. It reads like the opportunity found her but she took on the crossing guard gig expecting nothing, then had an idea and was able to monetize it very successfully. It's a great example of what we've been talking about here for a long time.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
1 comment:
from the reader comments on a WSJ article by Jason Zweig: I always told my clients that, in investing, "new" is a four letter word.
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