- Here at Archbridge Capital we are judged on our performance. We are done so continuously and relentlessly. And we exist because judgement has been favourable. In that spirit we thought it was worth tracking how we did on our published research, even though our published research occurs after we have already entered/exited into the positions we advocate.
- We have published a number of views/trades in our publications in the last few months (list and results to date below).
- Out of the four suggested trades since our last scorecard ALL have been profitable (one has been Neutral).
- Overall the portfolio has been profitable. Please note that it is the fact that profitable trades are much more profitable in comparison to losing trades that assures the portfolio overall to be profitable.
- "There are good trades that make money and bad trades that make money. There are good trades that lose money and bad trades that lose money. Money in the long-run is made from continuously taking the good trades." - Old Trading Adage.
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We shall end 2013 by updating our Score Card. Please note that we have substantially reduced all our positions before the illiquid Christmas Season, although our Macro-economic themes remain in place. Please find below trades we thought would make money back in the year and what should be done with them going forward. Since September, all recommended trades have made money.
THE GOOD:
Long US Equities: Positive
This trade has done very well since the last scorecard published in September. Equities are increasingly responding to the underlying economic growth and the great rotation is slowly beginning: we are seeing a substantial outflow out of bonds and some of it is finding its way into equities.
Long US$ vs EM FX: Positive
The US$ has indeed strengthened against some EM markets, especially those with current account deficits, as predicted. However, since the last score card the South African Rand has not moved substantially. The Turkish Lira on the other hand has performed handsomely and we suspect this story of EM weakening is not over yet. As a vital guideline we believe this story will only come to a halt when real rates in the EM become substantially positive - and they are far from that especially in Turkey, where further currency pressures are to be expected.
Short US Treasuries: Neutral
This trade has performed well, with tapering now having started and with the markets realising that the US is in a cautious monetary tightening cycle. The Fed is careful not to destroy the recovery that is in place, while being aware that extraordinary measures like its QE programmes cause unwanted risk-taking. Though since the last ScoreCard on September 17th this trade has been neutral we see further profit potential going forward.
Short JPY long USD: Positive
We view this trade as a structural trade where the monetary policy over the next year or more of the USA will be the exact opposite of Japan's. The USA will tighten monetary stimulus further, while Japan will continue to loosen it. If what we believe about China's slowdown becomes reality over 2014 we could see Japan doing even more QE than currently planned over the next year. We expect to see levels above 115-120 in the US$ JPY trade, though this will take some time. In the meantime we would suggest keeping stops wide and positions moderate, since corrections to 93 could occur over this time scale.
THE BAD
Not this time and for that we are grateful.
THE UGLY
Not this time and for that we are grateful.
Overall, we had a solid period with all of our recommendations bearing fruit and making gains, even when published after we had already entered into the trades ourselves ahead of time.
Disclaimer: This report was prepared and distributed by Archbridge Capital AG, a company regulated by the Swiss Financial Market Supervisory Authority FINMA via VQF. The report was prepared and distributed for information purposes only. It contains information and opinions, which may be used as the basis for trading undertaken by Archbridge Capital AG and its officers, employees and related associates. The report should not be construed as solicitation nor as offering advice for the purposes of the purchase or sale of any asset, security or financial instrument or provide any investment advice or service, nor is it an official confirmation of terms. All information, opinions, estimates, forecasts, technical levels and valuations contained herein, are subject to change without notice. The report also contains information provided by third parties. Whilst Archbridge Capital AG has taken all reasonable steps to ensure this information is correct, Archbridge Capital AG does not offer any warranty as to the accuracy or completeness of such information. Any views or opinions expressed do not necessarily represent those of Archbridge Capital AG. The assets, securities and financial instruments discussed herein, may not be suitable for all investors, depending on individual needs, objectives and financial conditions. Any person placing reliance on the report to undertake trading does so entirely at their own risk and Archbridge Capital AG does not accept any liability whatsoever for any direct or indirect loss arising from any use of this material. You should be aware that returns can be volatile and you may lose all or a portion of your investment. Past performance of any investment or trading tool or strategy is not necessarily indicative of future performance or results. This information is not intended tax or legal advice. Unless otherwise stated, any pricing information given in this posting is indicative only, is subject to changes and does not constitute an offer to deal at any price quoted. As electronic publications are subject to alternations, Archbridge Capital AG shall not be liable for the improper transmission of this message, including the completion of information contained herein, the delay in its receipt, any possible interference, any possible damage to your system, or transmission of viruses.
