March has certainly been a turbulent month for US markets for various reasons, with the most pointed condensing around the fears of a banking crisis following the demise of SVB and Signature Bank. The VIX index crossed 25 for the first time in 2023, indicating how uncertainty has been ramping up. Or was it? The S&P 500 began the month at 3970.15 and it closed at 3971.27 at the time of writing on March 28. A 0.03% change is not particularly noteworthy!
The last few weeks of ChatGPT/Bing vs Bard chatter online and in the press has elicited an outpouring of commentary on AI.
Everything from “Sydney” the would-be home-breaker, to evil alter egos, to espionage on the AI’s creators has graced the media.
Just because a data stream is available to use as input in a quantitative model for making trading decisions for an AI-based investment strategy—and it is found to be spiking, whether up or down—does not make it usefully relevant for signaling when and how to trade, be it on an ongoing basis, or even over the short-term.
As US stock market investors watch 2022 draw to a close, the ‘big three’ global macro-economic factors that impacted volatility this year will still be at large in 2023: Inflation, Russia, and Covid. They will continue to drive hard-to-time downward volatility spikes in 2023, impacting, at a minimum, an investor’s short to mid-term risk-adjusted returns.
The sudden recent implosion of FTX provides an opportunity for investors to explore the importance of the role of human narrative in investment decision-making.
The recent political turmoil in the UK has been quite simply a horror show in terms of the damage to its international reputation as a stable reliable partner, particularly in relation to its financial system.
The Federal Reserve meeting this month was keenly awaited to see if the hardline message on inflation control materialized into the expected 75bps rate increase or the less probable 100bps. It was the indeed the former, accompanied by a strong message of staying the course to control inflation long-term, at the cost of short-term pain.
To pun the oft quoted musing, on being, by a fictional Danish prince, we continue addressing a topic we introduced in our July commentary: the need for investors to attempt to go beyond just noise vs. signal identification and to try and understand context.
As investors who have met us, and readers of our monthly commentaries have come to know, our core focus at Plotinus is on US equity markets investing and the application of Artificial Intelligence to seek to improve trade decision-making. To that end, we are always seeking insights that have the potential to be usefully integrated into our AI approach.
The beginning of summer has brought with it a bear market and much uncertainty with the looming prospect of a US and global recession.
The Dow and S&P 500 ended basically flat for May, but those month-end figures belied the brewing unease that was reflected in a turbulent month for the markets. For the S&P 500 to end the month flat, for example, required that it recover from hitting a May 20 low of -8%. Alas, the month-end was but a temporary respite as the market fall reinvigorated itself with the start of June.