There was a time when "Swiss Made" products were synonymous with quality. This is still the case in the watchmaking industry. Since the turn of the century, however, companies bearing the Swiss label in their name have been synonymous with mediocrity, greed, corruption, wheeling and dealing, and the list goes on.
Swissair, Union Bank of Switzerland, Credit Suisse... These three Swiss giants have been mired in scandal, wrecked and had to be rescued by the public authorities and/or the SNB. The funny thing is that these three protagonists share a common destiny, since the 2001 takeover of Swissair by Crossair, within the new Swiss airline, under the aegis of the two aforementioned major banks.
It's not the size that counts...
Comme si elles étaient unies à jamais dans ce péché originel, ces dernières ont fini également par s'écrouler, UBS quelques années plus tard, et Crédit Suisse désormais. "Too Big to Fail" selon le gouvernement... J'aurais simplement dit "Too Big" (et le rachat par UBS ne va pas améliorer ceci). Il est d'ailleurs étonnant que Crédit Suisse ait tenu si longtemps, tant elle a été impliquée dans des scandales à répétition depuis des années, malgré les paroles rassurantes (et parfois mensongères) de ses dirigeants successifs. Son président Lehmann (un nom qui ne fait apparemment pas bon ménage avec la finance), disait qu'une aide gouvernementale n'était pas d'actualité, avant demander, seulement un jour plus tard, 50 milliards à la BNS. Encore mieux : plus récemment, il a carrément accusé les réseaux sociaux d'avoir coulé sa bank. Bienvenue dans le 21e siècle, M. Lehmann.
How can these people, whose job it is to manage the money of individuals and companies, look at themselves in the mirror, when they tell one lie after another and don't even know how to manage the accounts of their own establishment? Even Granny knows best how to look after her money by storing it under her mattress. This little world seems to be discovering with horror that government bonds are not without risk, even though one of the first things you learn in economics class is that their value falls when interest rates rise.
For a good laugh, let's take a look at Crédit Suisse's stock market performance compared to a regional Swiss bank like Banque Cantonale du Valais.
Depuis 2001, vous avez d'un côté perdu la quasi-totalité de votre mise, alors que de l'autre, la valeur du capital investi a quadruplé, tout conservant une très faible volatility, même durant la crise financière de 2008. D'un côté, vous avez un des "leaders mondiaux" de l'investissement et de la gestion de fortune, et de l'autre une petite banque traditionnelle. Cherchez l'erreur...
What's even funnier is that, while US regional banks were in turmoil over the past month, the "small" Banque Cantonale du Valais gained over 1%, while the "giant" Crédit Suisse plunged into the abyss.
The market
One man's misfortune is another man's gain. While most of the world's stock indices were yo-yoing, the long-undervalued Japanese small caps rose sharply in value. Alternative assets also benefited from this period of renewed uncertainty.
The Swiss Performance Index was once again on a roller-coaster ride, even more so than in the previous month. In the end, it posted a one-month performance of 1,24%, making a monstrous comeback from losses of up to -4% during the month.
The portfolio
THE determining portfolio did significantly better, with a gain of 2.3%. Unlike the SPI, it maintained very low volatility (even though it includes almost 80% of equities). The Japanese component of PF clearly contributed to this result, as did alternative assets. The Big Cap US strategy also performed well, with a gain of 4,47% in dollar terms, driven in particular by the comeback of technology stocks.
This gives us a year-to-date performance in CHF of 5% for the PF determinant, with a volatility of only 10% (annualized). That's quite a quarterly performance. It is now virtually on a par with the market, which got off to a flying start in January, with more than 3 performance points ahead of the PF. What's more, PF's volatility is almost half that of the market.
And since we mentioned alternative assets earlier...
Trading Auto Signal
A promise made, a promise kept. Since September, I've been telling you about an asset in the testing phase. Here it is at last!
I've taken out and updated an "old" instrument from my toolbox: the Trading Auto Signal. For those who remember, this was offered to premium members of the site seven years ago, before changes to my data provider at the time prevented me from continuing to make this useful service available.
The Trading Auto Signal aims to obtain a positive performance during bullish, bearish or flat markets. It tracks the S&P 500 and can be used to trade both the up and down sides of that index.
Objectives of Auto Signal Trading
- trade the S&P and generate capital gains, mainly in capital (interesting from a tax point of view in Switzerland)
- cover positions during bear markets
- reduce the volatility of a portfolio
- deliver absolute performance, regardless of market conditions
How to use Trading Auto Signal
Le Trading Auto Signal fait partie intégrante du determining portfolio. Il est soit :
- bullish (long position), by investing in the SPY ETF (from SPDR - SSGA)
- bearish (short position), by short selling SPY or investing in the SH ETF (from Proshares)
- cash, in USD
Most of the time the position is held "overnight", for a few days or weeks. More rarely, the signal takes an "intraday" position, from the opening, to be closed just before the closing.
As with other positions, trades are reported on the portfolio page. The signal changes about twenty times a year. To avoid having to constantly monitor the portfolio, it is possible to sign up for email alerts (at the top of the PF page).
When the signal changes, simply place a market order (at Interactive BrokersYou can also use the MidPrice order to trade at a slightly more favorable price.)
Which broker to use Trading Auto Signal with?
A broker with low brokerage fees is necessary in any case. You also need to have access to the NYSE Arca market, in order to trade SPY, and possibly SH. I recommend Interactive Brokers, qui permet de passer un ordre à meilleur cours, d'économiser sur les frais de transaction et de gestion (tarifs avantageux IB associés à la vente à découvert de SPY). De plus, avec l'application mobile du courtier américain, disponible sur Android ou Apple, il ne faut que quelques secondes pour faire le nécessaire, où que vous soyez. Charles Schwab is also very suitable. Finally, Degiro can also do the trick, provided you have an "Active" or "Trader" account (both allow short selling, but it is more expensive than with IB or CS).
The difference between Auto Signal Trading and short selling certain PF assets
Auto Signal Trading works on a daily basis. Although positions change only about twenty times a year on average, they can swap several times in the space of a single month. Short selling of certain PF instruments takes place at the monthly closing, as does asset allocation. As the signal is also used to hedge long positions, and in order not to increase the PF's short exposure too much, Auto Signal Trading is prioritized over short-selling equity indices.
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Hi Jérome,
Indeed, the banking system has long been wobbly, and it's not getting any better with time (quite the contrary). A boon for cryptos and the decentralization of the system? Time will tell.
Concerning auto-signal trading, I don't have an Active or Trader account on DeGiro and I don't feel comfortable with it yet. As my PF is still in its infancy, I think it's premature to use this strategy (not least because of the fees). What do you recommend instead?
Hi Nico,
As far as cryptos are concerned, indeed, the perpetual financial shenanigans of banks, insurance companies, pension funds, governments and central banks are a godsend for cryptos. As for Auto Signal Trading, there's no alternative. The easiest thing to do is nothing if you can't/won't follow it for the time being.
A+
Jerome
Hi Jerome,
Thanks for the update!
About Auto Signal Trading, is its implementation the same as it was 7 years ago?
Out of curiosity, what didn't you like about the (re)-test phase?
Hi
it looks pretty similar, but I don't use leveraged ETFs at all anymore (I used them sometimes in the previous version).
I've also added intraday trades where appropriate, especially when the overnight signal is cash.
In the test phase, I had to ensure that I could switch from the old version, which was totally based on php code and therefore fully automatic, to a semi-automatic solution, which I manage myself, via excel queries. The challenge was to manage everything quickly, simply and reliably.
Oh OK, thanks! Technical aspects then; reading your latest news, I had thought that the production launch was delayed because there was a need to fine-tune the operation to better pass the backtests.
Hello Jérôme, thank you for this new option. How do you recommend I start the Auto Signal Trading: invest "in one shot" on the SPY at 9 % in my portfolio? or invest gradually? How do I then manage the reactivity of short selling or selling for cash? (according to your changes announced via email alerts, proceeding at the same time/day as you)? thank you very much for your advice.
Hi,
as indicated on the portfolio page, we are currently invested in SPY, but waiting for the next signal. It's best not to start a position on a signal already in progress, but rather to invest when the signal changes. When this happens, you can go up to the allocation indicated in the PF (currently 9%). You can put in less if for some reason you don't want to/can't put in the indicated allocation.
When signals change, it's best to react as closely as possible to the alerts. These are transmitted at the latest when the New York Stock Exchange opens.
Okay, that's very clear, thank you very much Jérôme.
Hi Jérôme, is it possible to trade Auto Signal with the CSPX ETF instead of the SPY?
Hello Stéphanie
That's a good question! In theory, yes, because the two ETFs are very similar (both are dollar-denominated and replicate the S&P 500). In fact, their respective share prices are very similar over the short and medium term.
In practice, however, there may be a slight difference, as the signal is designed to match the opening/closing times of the New York Stock Exchange. There is therefore a 6.30 a.m. time difference with London, where CSPX is listed. To be as accurate as possible, you'd have to wait until precisely 3:30 p.m., when the New York Stock Exchange opens (most of the time I don't send the signal before then, but it can happen sometimes).
I've never tested this in real-life conditions with CSPX, but in theory it should work, with perhaps a small deviation, inherent in the way ETFs work. On the other hand, "intraday" positions (which are rarer, and which I specify at the time of the transaction) won't be possible with CSPX because they close at the close of New York, i.e. 22:00 local time, at which point it will no longer be possible to trade CSPX.