Friday, October 17, 2014

Here's one for Wall Street Whitey: IWM's recent underperformance

Josh Brown and/or Barry Ritholtz (it's hard to tell the Happiness Twins apart) have been talking for a while about how the R2K has been grossly underperforming SPY all year, after small-cap's outperformance through the big 2013 markeet push, and how this was a harbinger of dooooom.

OK, so now I gotta respond with a sarcastic chart:

R2K has now corrected back to below where it was at the big pop of 2013. So Josh can stop talking about it now.

Oh and by the way, small cap is always supposed to outperform large cap when you're seeing economic growth, isn't it? I mean, the larger caps have a more defensive profile generally, don't they?


  1. Did you take a position in the VIX ?

    What do you think of BIWII 's position that gold moves counter cyclical
    to the CRB?

    He seems to be suggesting long gold/short CRB

    You have suggested we follow the Rogers EM bear = DM bull path

    Stronger dollar and Oil prices falling = reduced costs for mining companies.

    So long Gold in CAD or Aussie$ ?

    I am still long my Vanguard SP500 and hedged over to slightly short on my Physical.

    1. Gold is a commodity. That chart predicts nothing.

      If mining companies see reduced costs, in oil and steel products and reagents and EM labour and so on, that will mean they can mine more gold at a lower price, thus supply goes up.

      Rogers' rule means get out of commodities, buy the S&P 500, and go on vacation for the rest of the decade. I don't think gold will do exactly the same as the other commodities, but I think right now everyone else thinks it will.

      Just imagine how cheap everything will get if Lockheed Martin brings fusion reactors to the marketplace in 2020 like they've threatened.

      I grabbed some VFV today. I added to my Japan, because I don't see Japan breaking support anytime soon. And I tried taking a small short $VIX position today, though I might have to sit through a couple days of pain before it conclusively turns. I don't doubt that $VIX could top the way we saw USD top this week.