Using Veritas to Construct the "Per…

29-04-2017 Hits:85885 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

Read more

The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:80099 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

Read more

What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:79956 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

Read more

Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:84437 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

Read more

This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:80975 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

Read more

What is the Value Proposition For Verita…

01-04-2017 Hits:83208 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

Read more

This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:54229 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

Read more

Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:82358 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

Read more

Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:82201 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

Read more

The Country's First Newly Elected Lame D…

27-03-2017 Hits:82065 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

Read more

Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:88123 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

Read more

The Transformation of Television in Amer…

21-03-2017 Hits:85978 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

Read more
The Performance of Inflation Correlated Assets: Reggie Middleton's Opinion

This is part 3 of my thoughts on investing in inflationary times (see Reggie Middleton's Take on Investing for Inflation, pt. 1 and Reggie Middleton's Take on Investing for Inflation, pt. 2). I had my team run independent verification of inflation correlated asset performance, for it appears to me that many investors tend to simply follow what they have heard other say versus looking into what the facts are. In the process of the investigation, we have tracked the performance of asset classes discussed on my blog, including all maturities of treasury, inflation linked treasury, municipal bonds, residential mortgage, other metals and agricultural commodities. We have also computed nominal returns (based on a 255 trading day convention), real returns, asset volatility and Sharpe ratio for each the asset classes across time periods to determine performance of each asset class over a period of time. Below is the summary charts and tables of our findings. (Pro subscribers, please refer to the attached excel document for detailed information for each time period - Q2 2009 Asset Inflation Correlation Datasheet Q2 2009 Asset Inflation Correlation Datasheet 2009-06-12 14:21:51 2.47 Mb)

Agriculture commodities: Historically, agricultural stocks have not provide sufficient hedge against inflation because of lack of storability and more or less constant demand (which is not linked directly to level of economic activity unlike other commodities).  Also due to supply shocks agricultural commodities have one of the highest volatility (in terms of standard deviation) and lowest Sharpe ratio. In addition agriculture commodities have low correlation with inflation, negative real returns (in almost all sub-periods) and low nominal returns.

Emerging markets, real estate and Gold offer one of the highest real returns in that order. However, lower volatility of commercial real estate sector makes this sector one of the most attractive in terms of risk-reward ratio.  Within commercial real estate apartments have one of the highest real returns (after emerging markets) and highest Sharpe ratio amongst all asset class.

image002_copy_copy_copy.png

image003_copy.png

image004_copy.png

image005_copy.png

 

Nominal Return

Real Return

Standard deviation

Sharpe ratio

Correlation

 

Commodities

 

 

 

 

 

Precious Metals

 

 

 

 

 

Gold

6.1%

3.0%

19.6%

0.16

0.68

Silver

3.9%

0.8%

30.8%

0.03

0.23

Non-ferrous metals

 

 

 

 

 

Copper

3.7%

0.6%

28.4%

0.03

0.46

Aluminum

-0.7%

-3.8%

24.4%

(0.15)

0.24

Lead

4.1%

1.0%

25.8%

0.04

0.57

Nickel

5.7%

2.6%

41.7%

0.06

0.52

Tin

1.3%

-1.8%

21.5%

(0.08)

0.61

Steel

0.3%

-2.8%

16.4%

(0.17)

0.39

Zinc

-0.5%

-3.6%

24.2%

(0.14)

0.46

Agriculture commodities

 

 

 

 

 

Live Cattle

1.8%

-1.3%

19.6%

(0.06)

0.88

Livestock

1.3%

-1.8%

19.2%

(0.09)

0.73

Sugar

1.0%

-2.2%

40.2%

(0.05)

(0.31)

Heat Oil

0.5%

-2.6%

33.4%

(0.07)

0.65

Lean Hogs

0.3%

-2.8%

31.1%

(0.09)

(0.19)

Coffee

0.3%

-2.8%

37.4%

(0.07)

(0.37)

Cocoa

0.1%

-3.0%

28.8%

(0.10)

0.09

Cotton

-0.6%

-3.7%

28.5%

(0.12)

(0.36)

Soybean

2.8%

-0.3%

30.1%

(0.01)

0.37

Wheat

2.6%

-0.5%

25.9%

(0.01)

0.33

Grains

2.6%

-0.6%

22.9%

(0.02)

0.34

Corn

2.3%

-0.8%

25.7%

(0.03)

0.31

Energy

 

 

 

 

 

WTI Crude

2.1%

-1.0%

34.3%

(0.03)

0.64

 

 

 

 

 

 

Real Estate Sector

 

 

 

 

 

Residential real estate

 

 

 

 

 

Residential (S&P Case Shiller)

2.8%

-0.3%

3.1%

(0.06)

0.87

Commercial real estate - Total Return (price + income)

 

 

 

 

 

NCREIF Property Index

6.5%

3.3%

4.2%

0.81

0.89

NCREIF Property Index - Apartment

7.4%

4.3%

4.3%

1.03

0.90

NCREIF Property Index - Industrial

6.7%

3.6%

4.2%

0.89

0.89

NCREIF Property Index - Retail

6.7%

3.6%

3.8%

0.98

0.88

NCREIF Property Index - Office

6.0%

2.9%

5.7%

0.52

0.87

Commercial real estate - Price return

 

 

 

 

 

Commercial Price Index

3.2%

0.1%

7.8%

0.03

0.94

Apartment Price Index

4.0%

0.9%

8.7%

0.11

0.96

Industrial Price Index

2.9%

-0.2%

10.1%

(0.01)

0.95

Retail Price Index

3.0%

-0.1%

8.4%

0.00

0.92

Office Price Index

4.0%

0.9%

8.2%

0.13

0.93

 

 

 

 

 

 

Equities

 

 

 

 

 

Domestic Equities

 

 

 

 

 

S&P 500

3.9%

0.8%

15.8%

0.06

0.00

Global Equities

 

 

 

 

 

MSCI World Index

4.7%

1.5%

15.3%

0.11

0.84

Emerging Markets

 

 

 

 

 

MSCI BRIC EM Index

4.8%

1.7%

 

 

0.75

Brazil

24.6%

21.5%

48.6%

0.45

0.92

China

4.7%

1.6%

44.3%

0.04

0.58

Russia

13.8%

10.7%

56.5%

0.19

0.79

India

11.7%

8.6%

29.0%

0.30

0.84

JPM Morgan Emerging Market Debt Fund

-2.5%

-5.6%

 

 

(0.25)

Treasury yields have declined significantly over a period of time. Except during 1970's (during high inflation) treasury yields have declined over past 3 decades and currently are at an all time low (pls refer to chart below and suscribers may referenced the attached excel file). High inflation coupled with economic recovery could cause yields to increase.

treasury_inflation.png

 

Change in yield

 

Fixed Income

2000's

1990's

1980's

1970's

Correlation

Treasury Bonds

   

 

 

Short Term

   

 

 

Yield on Treasury (1-month)

     (357)

 n/a

 n/a

 n/a

0.64

Yield on Treasury (3-month)

     (534)

      (254)

     (504)

 n/a

0.63

Yield on Treasury (6-month)

     (541)

      (228)

     (609)

 n/a

0.63

Yield on Treasury (1-yr)

     (557)

      (208)

     (434)

      651

0.81

Intermediate Term

   

 

 

Yield on Treasury (2-yr)

     (551)

      (199)

     (372)

      433

0.76

Yield on Treasury (3-yr)

     (517)

      (199)

     (311)

      247

0.66

Yield on Treasury (5-yr)

     (472)

      (193)

     (299)

      359

0.71

Yield on Treasury (7-yr)

     (423)

      (182)

     (292)

      269

0.61

Yield on Treasury (10-yr)

     (373)

      (193)

     (296)

      300

0.68

Long Term

   

 

 

Yield on Treasury (20-yr)

     (302)

         62

     (337)

      254

0.66

Yield on Treasury (30-yr)

     (287)

      (191)

     (270)

      237

 

 

   

 

 

Inflation Adjusted Bonds

   

 

 

Inflation-indexed Treasury (5-yr)

       (54)

 n/a

 n/a

 n/a

(0.19)

Inflation-indexed Treasury (7-yr)

       (81)

 n/a

 n/a

 n/a

(0.26)

Inflation-indexed Treasury (10-yr)

       (72)

 n/a

 n/a

 n/a

(0.53)

Inflation-indexed Treasury (10-yr)

      222

 n/a

 n/a

 n/a

(0.83)

Municipal Bonds

   

 

 

20 yr Municipal Bond

     (130)

      (115)

       (37)

        59

0.43

 

   

 

 

Corporate Bonds

   

 

 

Investment Grade Corporate Bonds  Yield (AAA)

     (239)

      (144)

     (223)

      283

0.56

High Yield Corporate Bonds Yield (BAA)

          6

      (175)

     (260)

      320

0.55

 

   

 

 

Mortgage Bonds

   

 

 

30-yr, Fixed-Rate Conventional Home Mortgage

     (340)

      (199)

     (314)

      559

0.60

 

   

 

 

International Bonds

   

 

 

S&P/Citigroup International Treasury Bond Index Ex-U.S.

     (143)

 n/a

 n/a

 n/a

0.17

Euro Govt Bond 10-15 yr

     (167)

 n/a

 n/a

 n/a

(0.07)

 India Sovereign Zero Coupon Yield 10 Year

     (479)

        (86)

 n/a

 n/a

0.25

 USD Brazil Sovereign Zero Coupon Yield 10 Year

     (774)

       128

 n/a

 n/a

(0.16)

USD- Euro   Russia Sovereign 10 yr

  (1,076)

 n/a

 n/a

 n/a

(0.69)