Newsletter end of November 2020

For the month of November 2020, the Enhanced Permanent Portfolio account added 3.07%.
November was an incredible month for equity with performances of more than 10% for most developed markets. After the US elections, investors felt more secure and continued the rotation away from safe haven assets (Gold and Treasuries) into riskier equity. General market volatility came also slightly
down, which allowed us to slightly increase the equity exposure of the strategy.

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

Newsletter end of October 2020

For the month of October 2020, the Enhanced Permanent Portfolio account lost -1.39%.
October was a difficult month, with all major asset classes going down. The Stoxx600 dropped -5.2% and the S&P500 was down -2.5%. Unfortunately also our safe haven assets declined, with Gold declining -0.5% and Treasuries declining -3.4%.
This decline of all major asset classes means, that many investors just went to cash until the November 2. US presidential elections are over. Most of our decline however was due to again increasing volatility which had a negative effect on our option based long positions. This losses however will be recovered quickly, if volatility drops. Hopefully this should be the case, once the US presidential elections are over.

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

Newsletter end of September 2020

For the month of September 2020, the Enhanced Permanent Portfolio account returned net -0.16% which however was still much better than equity performance.
In September only Treasuries showed a +0.77% positive performance. Gold (-4.17%) and the S&P 500 (-3.74%) had negative performances. Altogether, the base Permanent Portfolio ETF based strategy had a -1.6% negative performance in September. This negative performance however was nearly offset by the good +1.44% option premium received due to still high volatility.

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

Newsletter end of August 2020

For the month of August 2020, the Enhanced Permanent Portfolio account returned net -0.54%.
Gains in Equity got overcompensated by weakness of the US Dollar, and increasing volatility in fixed income, equity, and gold derivatives. For the coming month, we are maintaining the allocation and implementation method.

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

Newsletter end of July 2020

For the month of July 2020, the Enhanced Permanent Portfolio account returned net 2.49%.

The strategy succeeded in compensating for the significant weakness of the US-dollar, which would have reduced the performance of dollar-denominated products in the month under review, by means of partial hedges. The S&P 500 volatilities are still high at “25”. This favors the profitability of the strategy, as we hold synthetic long positions (short put instead of long underlying). Due to the high decline in the time value of these put positions, the portfolio gains much more than would be expected with such a low portfolio volatility. For the coming month, we are maintaining the allocation and the implementation method.

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

Newsletter end of June 2020

For the month of June 2020, the Enhanced Permanent Portfolio account returned net -0.73%.

The reason for the slightly negative June performance was the massive near 5% rise in the value of the euro against the dollar. We mitigate the currency risk of the portfolio (instruments in dollars) to a certain extent, but not completely. We keep the portfolio allocation, as well as the implementation method unchanged for the coming month.

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

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

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

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

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