The frantic call

A few of our readers might remember, ‘The frantic call index’. Once in a few years, we receive many anxious calls. What’s happening to China? Are we in for another 2008? Is it going to be worse than 2008? What do you think? What about Oil?
Forecasting is a weak science, whether it is sentiment based forecasting or forecasting based on indicators or statistics. So even if we feel that the frantic index has spiked suggesting some kind of panic bottom, our approach to markets has evolved. We believe in the ‘Law of Ruin’ and the only approach that makes sense to us at Tralio is durational investing. We are not here to catch the knife or even suggest whether it is a knife in the first place. Markets have evolved and so should the investing approach. There are so many opportunities out there that worrying about China and 2008 is not objective, it is a subjective indulgence. Investing has to be objective. Panicking whether the news is good or bad is a human need. The majority of investors can not differentiate the good news from the bad news, or what is relevant from the irrelevant. The simple reason being that news moves from relevance to irrelevance. The news that makes you a profit today, may not work tomorrow. You may like to refer to our research on ‘Is Information Irrelevant?’
Let us give you an example. What are investors asking the search engines today? Are they asking the right questions or are they just reading about falling markets and global recession? Could they ask about the stocks that performed in Jan 2016? Can they search for positive news while media is full of negative news regarding the worst ever year status of 2016? News and markets move hand in hand. When markets go up, there are more good news and vice versa. And is breaking news profitable? Well if one can prove that the “breaking news systems” work then he (she) is a Nobel prize contender. Victor Niederhoffer disproved it in 1971 and a generation of hedge funds have tried and failed to prove it and disprove it. The simple reason being information is durational, it works and fails in time. Hence the question of ‘When’ is more important than ‘What’.
Long story short, do you know a stock that is defying gravity among the US 200 blue chip universe. Well if search engines can tell you that, you do not need a research engine. Tralio can tell you that. Soon you will be able to ask it.
Unitedhealth Group Inc is a USD 140 billion managed health care company. The stock ranked at 92 is a top performer among the US 200 group. This is a growth stock and as the durational behaviour goes, what is in momentum can stay in momentum for 12 – 24 months. The very fact that the stock did not crash with the market is a sign of continued strength. This could be an interesting stock to review. We need systems to see through the deluge of negative information and objectivity to manage our risk.