Newsletter end of May 2020

For the month of May 2020, the Enhanced Permanent Portfolio account returned net 2.57%.

The Enhanced Permanent Portfolio is still heavily hedged with Treasuries and Gold to achieve the volatility target of 5% due to the negative correlation characteristics of these so-called “Safe Haven” assets. The QuantTrader software continues to recommend an underweight of equities as they still have volatilities of almost 30%. This is still about 6x the maximum volatility or risk compared to our 5% low-risk target. For June, we are continuing the strategy more or less unchanged.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email info@rational-invest.com

Newsletter end of April 2020

For the month of April 2020, the Enhanced Permanent Portfolio account returned net 6%.
Throughout April, we maintained our basic strategy, keeping the equity component very low. Earnings are a result of the reduction in volatility (after the peak during the crash). The optimum allocation calculated by QuantTrader remains cautious in May, investing primarily in Gold and Treasuries. The bull market of the last few weeks was mainly driven by a few tech giants. An end to the Corona pandemic is not in sight and the economic implications are uncertain.
We will therefore maintain our low equity exposure for May while our option based investments will profit from high premium decay due to the still historically high volatility levels.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email info@rational-invest.com

Newsletter end of March 2020

For the month of March 2020, the Enhanced Permanent Portfolio account returned net 4.06%.

During the reporting period, we experienced the biggest market crash since 2008, with all equity markets plunging by around -30%. Unlike previous crises, so-called “safe haven” products Treasury and Gold also sold off massively over the period. Volatility exploded across all asset classes.Our futures and options based defensive permanent portfolio strategy which includes safe haven Treasuries and Gold did quite well during the first days of the market crash, giving us time to reduce the stock exposure in time. In a second downturn, Treasuries and Gold also lost quite a lot because investors began to panic sell every liquid asset they had to cover equity losses. An advantage was that we only use very liquid products, most of them traded 23 hours day, which traded also during the crash with tight spreads. This allowed us to actively manage the portfolio risk in real-time.We have back-tested the strategy during previous big market corrections and expected a move from stock positions into “equity-like” far out of the money leap option positions. These options behave like their underlying Gold, Treasury and SP&500 ETFs, but due to the record high volatility they kept between 12-17% of volatility premium. This premium quickly paid out due to decreasing volatilities and even if the underlying assets are still far away from their previous price levels, the positions managed to recover and even ended the month with a gain.We expect a global recession over the next 6-9 months with corresponding price pressure on the stock markets. The Belalp portfolio is positioned in such a way that we can expect a positive performance even in this scenario.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email info@rational-invest.com

Newsletter end of February 2020

For the month of February 2020, the Enhanced Permanent Portfolio account returned net 0.87%

February was an exceptionally bad month for all stock markets worldwide. In the last trading week alone, all stock exchanges lost around 12% of their value. The potential economic implications of the coronavirus are causing worldwide uncertainty, if not to say panic and overreaction. The bond markets in turn reached new highs, while gold initially performed well (as a save heaven asset), but last week also suffered a sensitive diver of over 4%.

Nevertheless, the portfolio closed with a very satisfactory positive return of 0.87%.
Our systems signal an increased risk that the equity markets could enter into a prolonged bearish phase. Accordingly, we cautiously positioned the portfolio for March.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of January 2020

For the month of January 2020, the Enhanced Permanent Portfolio account returned net 0.07%

This time it was the corona virus that caused volatility in the market. The portfolio performance was achieved with desired low volatility. Whilst we are retaining our investment strategy, we are changing the way it is implemented. To date, the portfolio has paid approximately 1% negative interest per year, significantly reducing performance. The reason for this were the very high cash holdings in Euro, that bear negative interest. Since a return to positive interest rates is not expected in the near and medium term, we are changing the implementation strategy so that much less Euro cash remains in the portfolio. We have intensively tested the new implementation strategy (backtesting) and are confident that we will achieve the same portfolio stability as in the past.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Frank Grossmann new post in Seeking Alpha

The World Country Top 4 ETF Strategy – A Way To Fight Rising Rates And
A Stalling U.S. Stock Market
Read more

Going live of Rational Invest AG Homepage

First Edition of Homepage live.

Read more

Frank Grossmann new post in Seeking Alpha

Topic: Aggressive leveraged version of our previously published Universal Investment Strategy