An Investor's Log, Week 12

The dashboard:


The ChatGPT summary: (completely changed the prompt this week. For full conversation, see: https://chatgpt.com/share/6a12aff1-a9f8-8324-aaea-be22b86280ba)

Global markets spent the week transitioning from a growth-centered narrative toward a liquidity-and-fiscal-risk narrative. The immediate catalyst was Moody’s downgrade of US sovereign debt, which intensified investor focus on the structural trajectory of fiscal deficits, rising Treasury issuance, and the long-term sustainability of sovereign borrowing costs. (reuters.com)

The downgrade itself did not trigger a classic panic. Instead, it accelerated an ongoing repricing already visible across global bond markets. Long-duration sovereign bonds sold off sharply, with yields rising not only in the United States but also across Europe and Japan. The most important development occurred in Japan, where super-long Japanese government bond yields surged toward multi-decade highs amid concerns over inflation, fiscal expansion, and the Bank of Japan’s gradual withdrawal from ultra-loose policy. (bloomberg.com)

This matters globally because Japan has historically been one of the world’s largest exporters of cheap liquidity through the yen carry trade. As Japanese yields rise, global capital allocation dynamics begin to shift. The market increasingly fears that a slow unwinding of yen-funded leverage could tighten global financial conditions even without additional Federal Reserve tightening.

At the same time, geopolitical tensions in the Middle East pushed oil prices higher, reinforcing concerns that inflation may remain more persistent than central banks had hoped. (investing.com) The result was a difficult environment for long-duration assets. Equity markets remained relatively resilient overall, especially high-quality US technology franchises linked to AI spending, but the underlying macro foundation became noticeably less stable.

Against this backdrop, the portfolio behaved defensively and preserved capital effectively. Weekly performance was approximately flat, materially lagging strong rebounds in some developed-market equity benchmarks but avoiding the volatility associated with more concentrated risk exposure. The portfolio’s large cash position, meaningful gold allocation, limited duration exposure, and diversified global equity structure all helped reduce sensitivity to the week’s sovereign bond turbulence.

The strongest contributors were developed-market growth and dividend-oriented global equity funds, while China-related consumer exposure and gold modestly detracted. The weakness in gold was likely tactical rather than structural. In fact, the week’s rise in fiscal concerns and sovereign-duration instability arguably strengthened the long-term case for gold as a hedge against deteriorating confidence in fiat systems and government balance sheets.

The broader regime shift now underway is increasingly centered on sovereign financing conditions rather than purely on growth optimism or AI enthusiasm. Markets appear to be entering a phase where fiscal credibility, bond-market stability, and liquidity transmission mechanisms matter more than they did during the post-2020 recovery period. If Japanese bond volatility continues rising or energy-driven inflation persists, cross-asset volatility could increase materially during the coming quarters.

Suggested adjustment: gradually increase exposure to high-quality US mega-cap technology while maintaining elevated gold exposure and keeping long-duration bond exposure minimal.


I also asked it to make it into a poster:




Next week I plan to ask ChatGPT to help me spot some currently underpriced market space, the expected price range, and the reasoning behind.

Comments

Post a Comment

Popular posts from this blog

Family education is not that important

(translated from my Chinese blog) This is my new project, “Nietzschean Philology”. In each installment, I’ll read a passage from Nietzsche’s original writings. By practicing text analysis, we can enhance our ability to understand the world. The reading of "We Philologists" continues. Section 11 continues the discussion of external factors hindering genius individuals from the previous section, shifting from professional education (unqualified philologists) to family education. It's no surprise that Nietzsche views the importance of family education very lowly; ultimately, there are too few cases where families can provide the life possibilities for geniuses. Let it be considered how differently a science is propagated from the way in which any special talent in a family is transmitted. The bodily transmission of an individual science is something very rare. Do the sons of philologists easily become philologists? Dubito. Thus there is no such accumulation of philological c...
Read more

The value of life depends to a great extent on pure hazard

(translated from my Chinese blog) This is my new project, “Nietzschean Philology”. In each installment, I’ll read a passage from Nietzsche’s original writings. By practicing text analysis, we can enhance our ability to understand the world. "We Philologists" Section 1. Starting from the two main themes of classical linguistics and education, Nietzsche discusses how the specialization of education leads to premature decisions that result in foolish choices in life. He also explores the dilemma of choosing a career: it’s impossible for a person to know what kind of career they should pursue while actually engaging in that career at the same time. As a result, life becomes something determined purely by chance. To what a great extent men are ruled by pure hazard, and how little reason itself enters into the question, is sufficiently shown by observing how few people have any real capacity for their professions and callings, and how many square pegs there are in round holes: happ...
Read more

Can Writing be fun?

 My dear friend suggested, after reading my last post, that writing can have more than one purpose, and what I was arguing, namely writing as a form of thinking, was merely one of the many purposes for writing. For instance, writing can be for remembering; writing can also be for fun. Now I would like to leave the remembering part for the next post. For now, let's talk about fun. Can writing be fun? Yes. But what kind of fun is that? To answer this question, there are basically two approaches, both of which lead to the same conclusion. I will start with the easy approach: the supply side of the fun. Now, what are the things that are mostly considered fun? Entertainments. Movies. Music. Video games. Hanging out with friends. Partying. Sightseeing. Travelling. TikTok. Youtube. Netflix. These things can be placed into an imaginary spectrum, with one side being totally brainless, and the other side requiring some sort of effort. Let's take music for example. Listening to music can ...
Read more