Category Archives: Uncategorized

Still Floating – An Update on Oil Markets

Seven weeks ago, I wrote a post about the contango in oil markets. To summarize, the world was falling apart and there was nowhere to put all the extra supply of crude oil and refined crude products, causing oil to briefly trade negative and oil tanker rates to skyrocket. As a result, tanker companies presented an extremely attractive investment opportunity.

What We Got Wrong

The length and severity of the oil price contango. The price of oil has rebounded significantly since its collapse into negative territory in April, leading to a flattening of the crude oil forward curve and a reduction in the contango opportunity:

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Our April Commentary

April was a considerably better month than March.

Massive global fiscal and monetary responses fueled a strong market rebound in April despite macroeconomic data that showed the huge economic cost of the COVID-19 shutdowns.

Once again, we were reminded that markets look to the future. However, in March, with markets down 35% from their peak in February, the future looked very bleak indeed. We saw the exact opposite when markets rallied on the day when the worst unemployment numbers in US history were released. Crazy.

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The Problem with Pessimism

In today’s hyper-connected world of news alerts, emails, tweets and Facebook posts, it can be hard to not notice all the problems in the world in 2020. Whether it’s negative political developments at home, worries of international conflict, unprecedented environmental disasters or, more recently, a global epidemic, it’s hard to be optimistic about the state of the world and where it’s heading. But why is pessimism so prevalent?

For one, it’s easy and immediate. The amount of information we’re exposed to on a daily basis is unprecedented and problems are always easier to spot in the moment, which is why the nightly news is full of negative stories on scandals, injustices and disasters. This is further exacerbated by the way that our brains operate. Not only do we tend to focus more on the negative when trying to make sense of the world, we also remember negative events more vividly than positive ones. This might be helpful when you’re trying to survive in the wilderness and avoid being eaten by predators, but overwhelming if you’re among the rest of us living in modern society.

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Taking A Page From Amazon

A couple of weeks ago, Amazon released Jeff Bezos’ annual letter to shareholders (you can read it here). Whatever you may think of him personally, the fact of the matter is that he is one of the world’s most influential business leaders and Amazon is among the greatest companies on the planet. When people like Jeff Bezos talk, we tend to listen, and many of the things he lays out in this latest letter reflect our approach to money management and how we make decisions and allocate capital.

A clear view on managing the current situation

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Contango & Cash

Crude oil’s historic run into negative pricing

This week one topic has dominated the financial news cycle- collapsing oil prices that at one point went deeply negative on Monday. As oil futures contracts came due, traders were left desperate to offload contracts rather than take delivery of the physical product, leading to a situation where they were paying to people to take these contracts off their hands. The reason? There is just not enough storage capacity available given the precipitous fall in demand for oil and its derivative products.

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Brīdinājums! Blakusparādības var būt…

Es domāju, ka mēs visi esam diezgan pazīstami ar placebo efektu. Google placebo definē šādi:

“LABVĒLĪGU ietekmi, ko rada placebo zāles vai ārstēšana, ko nevar attiecināt uz paša placebo īpašībām, un tāpēc tai jābūt pacienta pārliecības dēļ par šo ārstēšanu”.

Tas, ko daudzi neapzinās, ir placebo ļaunā dvīņumāsa – nocebo.

Google nocebo definē šādi:

“KAITĪGA ietekme uz veselību, ko rada psiholoģiski vai psihosomatiski faktori, piemēram, negatīvas gaidas pēc ārstēšanas vai prognozes.”

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Ātri braukt uz nekurieni

Izņemot, ja saucamais ritenis, izrādās velo trenažieris.

Mūsdienās gandrīz katrs jaunuzņēmums, kas ienāk tirgū, cenšas sevi pārdot kā nākamo lielo tehnoloģijas kompāniju. Dažiem no viņiem patiešām ir potenciāls būt revolucionāriem un mainīt pasauli. Lielāko daļa no tiem tomēr tiks atcerētas kā mežonīgas idejas, kas tolaik dažiem šķita daudzsološas, bet šobrīd šķiet smieklīgas.

“Peloton” ir nākamais šāds tehnoloģijas uzņēmums, kas pirms nedēļas publiskoja prospektu un iesniedza dokumentāciju savu akciju sākotnējam publiskajam piedāvājumam. Es nevaru prognozēt nākotni, bet man ir tāda jocīga sajūta, ka šis nebūs no tiem uzņēmumiem, uz kuru mēs atskatāmies ar cieņu un izbrīnu.

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Kā emocijas un uzvedība ietekmē investēšanu?

Ir pagājis kāds laiciņš kopš mana pēdējā raksta, jo esmu bijis nedaudz aizņemts. Pavadīju divas nedēļas ASV, kur redzēju, kā apprecas viens no maniem vecākajiem draugiem un pirmo reizi divu gadu laikā satiku brāļus un māsas.

Bet, pats svarīgākais, es otrdien apprecējos ar cilvēku, kuru bezgalīgi mīlu un apbrīnoju.   

Šis ir bijis laimes un pozitīvu emociju pilns laiks, tāpēc par kādu labāku tēmu rakstīt nekā par emociju un uzvedības ietekmi uz investīcijām un tirgiem? Šeit ir neliels ieskats par šo tēmu:

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OUR JULY RESULTS

Our weighted average return in July was +0.09%. Since 2015, we have generated a net return of +33.57%.

In terms of investment strategy performance, our weighted average net returns for July were (a) +0.62% for conservative strategies, (b) -0.01% for balanced strategies, and (c) -0.05% for aggressive strategies.

July was a relatively calm month in global financial markets. At the end of the month, the US Federal Reserve lowered US interest rates for the first time in 11 years. Although this move had been anticipated by the bond market, many hoped that the Fed would cut rates by 50 basis points. Moreover, Fed chair Jerome Powell stated in his commentary that this was not the start of a “lengthy cutting cycle”. This was a considerable disappointment to those who had been clamoring that the Fed had raised rates too much too soon and were supportive of a more robust rate cutting strategy. In the meantime, the European Central Bank hinted that there was more easing on the way. The ECB also confirmed that Christine Lagarde (who is pro accommodative monetary policy) would replace “Super” Mario Draghi in November as Europe’s head banker.

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Kas ir risks?

Riski, jo īpaši finanšu un investīciju jomā, bieži vien tiek konceptuāli skaidroti ar skaitļiem un aprēķiniem, bet šāda pieeja ignorē riskam piemītošās cilvēciskās iezīmes. Vairāk nekā vienkārši noteiktības trūkums, risks ir mūsu nespēja saprast un reaģēt uz  varbūtībām konsekventā un saskanīgā veidā un diskomforts, ko rada fakts, ka var notikt vairāk, nekā notiks. Kā mēs uztveram un piedzīvojam risku, ir vienlaicīgi ļoti unikāls mūsu personiskās pieredzēs dēļ un tomēr uz to attiecas mūsu kopējie uzvedības ierobežojumi.

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