Global Allocation Fund December 2018 Commentary: Short in Eurostoxx 50, Nasdaq 100 and S&P 500

Global Allocation Fund commentary for the month ended December 31, 2018, discussing the poor equity markets performance for the year.

Statistically talking, December is historically the best month of the year for equity markets. But this year has been the worst December since 1931.

Global Allocation Fund December 2018 Commentary

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 hedge fund letters, conference, scoops etc

As well, we have witnessed one of the biggest daily rebounds ever, with the Nasdaq gaining almost 7% in just one day.

Bulls have been hammered both for the month and for the year, and Bears have come out of a very long hibernation. Might be because of the global climate change

Global Allocation Fund December 2018 Commentary

We have maintained short positions in the main indices during part of the month, avoiding some of the rebounds and ending up the month with a reasonable return both for the month and the year.

In absolute terms, 2018 has been even worse than 2008 for the funds industry. Differently from 2008, the fall in equity markets has not been compensated by big gains in bond markets. This has been a bear market for almost every asset class.

Moreover, this year we have broken the record number of asset classes with negative performance. The prior record was in 1902. From biggest to lowest return, main losers: Gold and Silver (which recovered sharply in December, 3,94% and 8,40% respectively), emerging markets, commodities, government bonds, corporate bonds, high yield and equities. USD has gained vs the world and some “exotic” equity market has also seen gains.

Global Allocation Fund December 2018 Commentary

Thus, we end 2018 with a bittersweet taste, as we have been able to avoid the generalized carnage but have not been able to hold our convictions at all times, especially due to our short positions in banks, Italian bonds and our long positions in US Treasuries. Our main mistake is to anticipate those movements too soon. Even as we prefer to be two steps soon than one step late, sometimes it is hard to fit our views with the patience and trust of investors.

During the next few days we will send you a paper with more details and analysis of what happened during 2018 and with our views for 2019.

We anticipate that the 2nd of January we opened again short positions in Eurostoxx 50, Nasdaq 100 and S&P 500. Net short exposure is 32%.

Meanwhile, we wish you a successful 2019, and please be prudent.

Global Allocation Fund December 2018 Commentary



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver