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3Mon

What other assets are there to choose from?
I only know equity ETFs, gold, Bitcoin and oil.
Would silver, for example, also be an alternative, it's also having a massive rally at the moment.
And thank you for your efforts, I'm also invested and plan to increase my holdings again soon. @Epi

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Epi@Epi

3Mon

@Farqual The basket also includes TLT, XEON, EURUSD, USDEUR and a latent short ETC on the Bund future (for a major sovereign crisis in Germany). Silver is not in the basket as precious metals are already covered by gold and the correlation is high. In addition, momentum does not work so well with silver because of the smaller market, many false signals. But when the momentum in silver is right, as it is now, for example, I sometimes hold 3x silver in my trading portfolio.

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Simon_n@Simon_n

3Mon

@Epi Have I overlooked this or are EM actually not included? Too high a correlation? They have amazingly high momentum right now, depending on the index, greater than QQQ

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Tino@parlania

3Mon

@Simon_n Yes, EM used to be there... apparently not anymore?

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Epi@Epi

3Mon

@parlania @Simon_n EM have been kicked out of the pool. Why? Mainly because momentum does not work in China (there are several studies on this). This has to do with the market structures and culture there. That is why EM Index constantly generates false signals.

EU50 is a very good alternative. The price trend and performance are similar to EM 😜, but much less erratic. The signals are more reliable. And the correlation to QQQ is similar to that of EM, approx. 0.7.

EU50 is the ex-U.S. equity component where momentum works.

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Simon_n@Simon_n

3Mon

@Epi Interesting, I never thought about that - they are so calm that trends don't interest them? If I'd known that the day before yesterday, I'd already built up an EM position based on the momentum 😬 Well, it'll be fine

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Epi@Epi

3Mon

@Simon_n The lack of momentum effect is due to the structure of the Chinese market. Only Chinese are allowed to invest there, i.e. there is little institutional money, but many private investors who engage in mean reversion. This is why trends break down quickly as soon as they become apparent. 🤷

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Simon_n@Simon_n

3Mon

@Epi Hmm, did the studies also examine whether ex-China EM works better or is that also the case in other countries? They are certainly not leveraged, but for the 1x part of the portfolio?

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Epi@Epi

3Mon

@Simon_n Yes, the studies have examined all major markets. China is one of the only ones where there is no momentum effect. For the others, it varies in strength. The strength probably depends on the involvement of institutional investors.
So an ex-China EM ETF should certainly work.

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Simon_n@Simon_n

3Mon

@Epi Top thanks, then I'll use that for my unleveraged portion next time 😊 For this month I'll let the normal EM run.

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Epi@Epi

3Mon

@Simon_n Better check it yourself instead of blindly believing some guy on the net. 🤫

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