Chinatown
Trade in the Whisky Portfolio;
I’m getting very excited about this chart, which shows high-volatility stocks —the epicentre of the market bubble —and low-volatility stocks, which still haven’t noticed there’s been a bull market. You’ve seen this before, but I'm showing it again because it is currently so important —it illustrates clearly what's been happening. The riskiest stocks have taken the lead, which is rarely a good thing.
High-Volatility Stocks Versus Low-Volatility Stocks
I question whether the recent correction from the high on 15 October and the subsequent 23% correction are a major signal? In the chart below, I have zoomed in since the summer and added the gold miners. In November, there has been a divergence where the high-volatility stocks have corrected further than the miners, which have bounced. Does big tech join the high-volatility train wreck? Sooner or later, it undoubtedly will.
High-Volatility Stocks Versus Low-Volatility Stocks with Gold Miners – Short-Term
It’s an encouraging sign, and the miners remain a core holding, but I am far more comfortable moving ahead with lower exposure than we had. I suspect gold’s advance will moderate from here, but it’s still a great trade. However, the thing that excites me most about the chart is the positive reaction from low-volatility stocks (blue). It may be slight, but it’s positive, which implies that if risky stocks are sold, safe stocks are bought. Where there’s a bubble, there’s an anti-bubble, and that is where I am most focused.
Let us not forget that the most terrifying investment of all is cash, especially in the UK, as the pound has seen better days. I prefer a diversified, value-oriented portfolio of liquid assets. I am currently working double-time to recycle that value.
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