What’s catching my eye….

Rob Zdravevski

3 June 2020

by Rob Zdravevski

Principal & Investment Advisor at Karri Asset Advisors


Bitcoin fell $700 (7%) overnight – see my previous comments about its correlation to the S&P 500

The S&P 500 is 9% below its all-time high yet the VIX has a reading of 27.

I would expect a VIX of 17 or 18 at this sort juncture following a rally after such a plunge.

Currencies are moving 3%-4% in the past few days while the FX VIX on major currencies remain subdued around the 7 mark. There is a disconnect.

Volatility in currencies tells me that things are not all sailing along smoothly, although not being reflected in the VIX

Today’s AUDUSD upward move to 0.6983 represents a 3 standard deviation move above its rolling daily mean. Not something you see often.

And there is a host of cross-asset analysis that I have also explored which has lead to positioning client portfolios being Net Long 45% by the end of May.

During the month of May, portfolios were re-balanced, profits taken, some losses were realised, cash was raised and some hedge protection placed.

Portfolios are now 50% long securities, 50% cash and 5% short.

About the 50% cash position……..I have always believed, in the absence of value, cash is a reasonable default position and it’s also the best natural hedge.

At this moment, I’ll also reiterate my “market top” call made on May 27th, 2020.

It’s OK if you tell me if I’m wrong but at least allow more than a few days for a thesis to be disproved. 🙂

And to put any hedge commentary in context, it’s not an all-in equities short, as the aforementioned portfolio composition suggests.

In fact, portfolios and clients are conditioned towards being long term investors in specific company shares.

The returns of some stocks within our client global portfolios (since May 1st, 2020) have been extraordinary with some examples of those stocks being;

Spotify 30%, Docusign 42%, Experian 23%, Google 10%, Barclays 18%, BHP 21% and Westpac 18%.

To conclude, my two main observations are……

  • investors are Short Patience and Long Complacency


  • it doesn’t seem much work or research is being done lately before making an investment

Subscribe to my blog: www.robzdravevski.com

Drop me an email: rob@karriasset.com.au


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