Strategic Update: May 12, 2022 (PREMIUM-UNLOCKED)

by Dana Lyons
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The following post was originally issued to TLS members on the morning of May 12, 2022.

Cryptos (and stocks?) crashing.

On March 17, we sold all of our crypto exposure (GBTC @ 27.51 and ETHE @ 22.75). Our analysis pointed to the potential for a substantial drop from the prevailing levels (Bitcoin ~41,000 and Ethereum ~2800) toward Bitcoin ~28,000-29,000 and Ethereum ~1700-1900. We are there now and, thus, adding back some exposure into the crypto funds (some 30%-50% below where we sold them 2 months ago):

  • We added back a position in the bitcoin fund, GBTC, near ~18.02
  • We added back a position in the ethereum fund, ETHE, near ~12.69

Additionally, the breadth and sentiment landscape in equities finally appears to be close to a durable and tradable bottom. Ideally, we’d like to see the S&P 500 drop near ~3825 — and we will get a final plunge that will take it there and register panic-level near-term sentiment readings. However, we are close enough there (and in other indices) that the risk/reward set-up is starting to greatly skew to the upside. Ideally, Therefore, we are peeling off some more portions of hedges:

  • We sold (covered) 1/3 of our remaining hedge (short) position in the inverse (short) financials fund, FAZ, near ~28.29
  • We sold (covered) another 1/3 of our hedge (short) position in the inverse (short) Nasdaq 100 fund, SQQQ, near ~61.61
  • *UPDATE: We added another small lot to our position in the junior gold miners fund, GDXJ, near ~35.89*
  • *UPDATE: We added another small lot to our position in the junior silver miners fund, SILJ, near ~10.19*
  • *UPDATE: We sold (covered) 1/4 of our remaining hedge (short) position in the inverse (short) materials fund, SMN, near ~12.34*
  • *UPDATE: We sold (covered) 1/3 of our remaining hedge (short) position in the inverse (short) gold miners fund, DUST, near ~18.50*
  • *UPDATE: We added another small lot to our position in the gold miners fund, GDX, near ~29.89*
  • *UPDATE: We sold 1/2 our position in the wheat fund, WEAT, near ~11.65*
  • *UPDATE: We sold our position in the commodities fund, GCC, near ~25.00*

That’s all for now. Check back on this post throughout the day for further portfolio moves. And as always, stay tuned to our DSS posts for further developments — they provide the most current updates to our investment portfolio and outlook.

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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. Commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

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