The unusual investment strategy that's returned more than 30% this year
Note: us markets are closed today because of the Thanksgiving holiday.
Today's calendar is fairly quiet. Only New Zealand retail sales for the third quarter are out today, and that's interesting purely as a forward indicator for whether inflation could come down anytime soon.
Next week, it's all eyes on US jobs data and the latest round of OPEC+ meetings. And while we'll tell you more about that on Monday, I thought it'd be worth sharing with you this chart from FactSet through the Wall Street Journal. The divergence between New York Crude Oil prices and the S&P 500 Energy Index is starting to show.
And the divergence is also showing in Australia. While the ASX Energy Index is up nearly 50% year-on-year, Brent Crude prices have come off markedly.
For our chart today, I've called on the work of Charlie Bilello, who published this interesting chart on what would have happened had you traded the S&P 500 index this year. The twist is that the trading strategy channels a little Warren Buffett: buy when the VIX is over 30 and sell when it's less than 20.
If you followed that strategy to the letter, you'd now be up 27% year-to-date. Had you done the inverse (i.e. buy during calm or periods of low volatility, and sell during the panic), you'd actually be down 33%.
So I guess it does pay to be a contrarian!
STOCKS TO WATCH
Today's stocks to watch have all made new announcements this week. In each case, we've also picked out situations where a broker has raised the price target or made rating changes.
Macquarie has boosted the price target on CSL (ASX: CSL) by $13.50, following US FDA approval for the company's haemophilia gene therapy. The broker thinks there could be as much as an extra 6% added to earnings by the end of the decade as a result.
Credit Suisse, Macquarie, and Ord Minnett have all raised their price targets on Qantas (ASX: QAN) following its earnings guidance upgrade earlier this week.
And after Smartgroup (ASX: SIQ) downgraded its earnings guidance earlier this week due to supply chain constraints, Macquarie has downgraded the company to a NEUTRAL from outperform, with a new price target of $4.75/share.
Hans Lee wrote today's report. Chris Conway is away today.
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Charts and Caffeine is Livewire's daily pre-market wrap. We get you across the overnight markets and share the best in global finance so you can start your day on the front foot. Written by Hans Lee (Mondays - Thursdays) and Chris Conway (Fridays).