If you tuned into the news last week, I hope the market sell-off on Monday and Tuesday didn’t send you into a tizzy. This latest panic was, once again, a reaction to comments from the commander-in-chief down south. With political risk in full effect, I want to open a dialogue with you periodically, especially around the next bout of volatility.
Since it takes two to make a conversation, I welcome your opinions and feedback. We can walk through your questions and concerns about the market’s mood swings. So let me know what you think, whether you agree or disagree.
PROVIDING SHELTER IN A STORM
– a retrospective from the sell-off last week
Last week, President Trump suggested that there won’t be any resolution to the China trade deal until after the 2020 US election in November of next year. Although we’ve heard it before, several times, investors still spun into a sell frenzy.
With Lions Bay, we seek to always be prepared for situations like this. We use hedging strategies to minimize the volatility of the portfolio and protect it from downturns.
This past Tuesday, December 3rd, benchmarks across the board closed in the red. The Dow Jones was down 192 basis points through Tuesday, while S&P 500 was down 150, At the end of the day, Lions Bay was not only fully protected from the selling spree, strategically placed put options on single stocks and index ETFs allowed the fund to generate positive returns over the 2-day period.
Of course the market always bounces back, as it did the next day on Wednesday. But, what happened last week is a perfect use case of how we invest with volatility in mind. You can bet that “Trump volatility” will strike again. You can also be sure that Lions Bay will strive to provide cover for your investments the next time it gets cloudy.
Lions Bay is an equity fund designed to prosper in a volatile market. Our goal is to protect and participate. We protect the downside through active trading and disciplined hedging, while a core portfolio of long-term investments in outstanding businesses allows us to participate in rising markets. Outperforming during market sell-offs positions us to take advantage of asset mispricings when they are most attractive. Our fund is comprised of three cyclically balanced strategies, that can each thrive in different market environments.