The GA...A Ship for All Seasons
'You don't see too many ice breakers in the Caribbean; then again you don't see too many catamarans in the Arctic."
Summer is the time to be in a cat, winter an ice breaker, and a nice schooner in spring and fall.
In Germany, post-WW!, a portfolio of all gold (summer) would have been perfect; as a portfolio of long UST (winter) would have been during the Great Depression.
In normal times, spring and fall, some mix of junk bonds, corporates, and mortgage backed bonds will provide both income and appreciation.
So the goal is to have a ship that could carry an 'all in, zero hedged' position in TLT/SJB, GLD/LTPZ, LQD/MBB, or JUNK/TBF. By definition one of those asset pairs will be a winner, and the favored asset a huge winner.
KEY: Focus on the current season cell asset pair (HYEM/HYG:TBF) and forget the rest.
Currently the global economy is strongly in spring. The two spring loving assets, both favoring faster growth and inflation, are HYG/HYEM and TBF.
The challenge is to figure out which, since they are diametrically opposite in market action, unlike the other seasons whose paired assets move together.
During a season the pairs will transition from a zero hedged position in each asset. Right now the transition is taking place moving from JUNK => TBF.
As of the close Friday, 3/3/17, the GA is carrying a fully invested position of 2:1 HYG:TBF.
The next investment shift will either be back to 'all in' JUNK, or 1:1 HYG:TBF.
If 1:1 happens, the final shift would be a zero hedged position in TBF.
AI
