Should an Investor become a Trader?

By Mitchell Anthony   When markets behave with extreme volatility there is opportunity for traders.  These trading opportunities can enhance returns, or damage returns, of an investor’s portfolio. Many times investors become traders during periods of high market volatility because of fear or greed.   Mitchell Anthony Capital Management (MACM) has not succumbed to the urge to trade during periods of high volatility.  This is evidenced by our recent decisions to stay invested rather than move to treasuries or cash to benefit from the fear that entered our marketplace over the last few months.   Some of our clients have questioned the wisdom of staying long equities, noting how better positioned we could be today if we would’ve left equities in September and came back to them now that equities are 10 to 15% lower.   These questions need a reply and the answer is simple and involves the fact that our dynamic growth and asset allocation portfolios are not trading portfolios but rather asset allocation portfolios.  My objective in managing both of these portfolios is that of an investor who is positioning his portfolio to benefit from the environment that drives financial assets.  This generally involves expectations for central bank policy, inflation, and earnings growth.   The outlook for these leading indicators will determine the ideal asset allocation.  For example if our economy starts to produce high inflation than investors will seek to ride this inflation and commodity prices will rise as a result. I attempt to forecast where inflation will be for the next few years and get ahead of most investors and buy these asset classes before the inflation is notable. Likewise if we have a low inflationary environment with modest or moderate growth than equities will be sought out by investors. Again, if I can forecast accurately the inflationary environment, and the growth environment, that I can position the portfolio today to be ahead of where investors will go next year. Read more

Market Volatility, Trump’s Agenda, and our Fragile Economy

By Mitchell Anthony   The volatility in the markets continues to remain high as traders and investors digest the impact of the significant policy changes in play by the Trump administration.  This administration has plans for change unlike any other administration in decades.  The administration hopes to level the playing field on trade and relieve the burden on America from illegal immigration.  Further the administration is not afraid to take bold steps to keep the Federal Reserve tuned in to the fragility of our economy. On the other side of the aisle we have the liberal Democrats who seem willing to sacrifice the strength of America for equality in the world and use whatever tool is at their reach to carry out their obstructive agenda.  The FAANG's thus far has been insulated from most of the policy changes at play by Trump.  However the Dems have taken aim at the FAANG's despite the liberal agendas of most FAANG companies, and plan to try to obstruct the business plans of these industries once the Dems take control of Congress. These are the problems that investors and traders alike are weighing into their investment posture. As a result our markets are 10% lower today than they were at their highs in September. Traders have left the markets and have taken speculative positions in bonds or safe positions in cash as they await better visibility on these issues.  Investors have not yet changed their asset allocation as a result of these problems.  Our objective is to create alpha for our clients and we seek to stay ahead of what investors do.  We are carefully weighing whether investors next step will be to leave stocks for another asset class.  Likewise we are carefully weighing whether traders will return to equities soon and push stock indexes to new highs. Read more

Markets Fall as Investor’s Hedge the Risks On the Horizon for the Economy.

Markets Fall as Investor’s Hedge the Risks On the Horizon for the Economy.   The equity markets in America have turned downward as result of some storm clouds that have appeared on the horizon that threaten to stall or slow the growth of our economy.  Over the last few weeks the S&P 500 has fallen 10% from its September 30 peak and is now up just 1% for the year. All of MACM's growth strategies have fallen from their September 30th peaks.  MACM's dynamic growth portfolio has declined 13% but is still up 8% year to date.  AAI has given back 10% and is now up 5% year to date.   Diversified equity has given up 12% but is still up 11% year to date. While we are unhappy that we have given back almost everything gained in the third quarter we believe that higher prices remain on the horizon for equities and the cycle is not going to end here!Read more

Economy Accelerates Despite Tariffs and Trouble in Social Media

By Mitchel Anthony The US economy continued on its path of acceleration in the third quarter at the expense of rest of the globe.  Virtually all sectors of the US economy reported robust growth and improving demand for their goods and services throughout the third quarter.  While the naysayers worried about the impact of tariffs and the trouble in social media, the equity markets notched a terrific quarter with returns exceeding 7% or more across most domestic large-cap indices.  MACM’s dynamic growth portfolio advanced 9% in the quarter and its diversified equity portfolio advanced 10.1% in the quarter far exceeding the bogey of the S&P 500 which was up 7.4%. Read more

Strong Economic Data Drives Equity Performance Higher

US Stocks have regained their footing as predicted in our first quarter newsletter. We believed equities would get back on track after first-quarter earnings reports and economic data that we expected to be quite positive. This is exactly what happened in the second quarter. The leadership centered on domestic equities with NASDAQ and small cap stocks at the top of the list.  Foreign markets tumbled as expectations for growth in the globe receded given the current environment for trade and impending tariffs. Emerging markets and China suffered the most with Europe closely behind in the freefall.  This downturn came and pushed money into the US markets as the US economy stands strong in the trade war. In anticipation of this MACM exited all of its investments in emerging markets in Europe toward the end of Q1 and repositioned the portfolio in domestic equities leveraged to consumption themes present in America.Read more