CIO @ Unlimited | Fmr Bridgewater IC | Described as one of the few "sane" voices on #fintwit (or is it #finsky?) | Comments are not investment advice
Bob Elliott
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Simple math behind how a paltry 6% Macro HF Index YTD return yields double digit returns for a 2x low-cost Macro HF replication:
Macro Index, Net: 5.9%
Fees (est.): 1.7%
Gross Return: 7.6%
Macro Index @ 2x vol: 13.7%
Macro @ 2x vol & 95bps fee: 13.2%
While the techno optimist set likes to ignore the implications of the Iran war (or should I say... "look through"), it turns out that real economy companies cannot keep their head in the sand the same way.
Most institutional investors are in total denial that the oil markets could see disruptions for an extended period of time. Makes sense since none are long commodities and up to their eyeballs in stocks and bonds.
Its no coincidence that financial assets in aggregate peaked right when Google kicked off the supply surge with their 80bln in new issuance.
Looks like it's gonna be tough to absorb all this supply without price pressures ahead.
Sure the equity leaders these days have earnings, but the extremity of the future topline growth expectations are increasingly on par with what was penciled out back in the dotcom era.
Last couple weeks shows clearly that when retail buying evaporates, the market is fucked.
The oil shock is a good stress test of the validity of these types of bottom-up timely price estimates. A measure that claims inflation today is below that of Dec '25 does not pass even the most basic common sense test.
A Hopeful Consensus
Stocks, bonds, oil, and prediction markets are all converging on near certainty the Iran conflict is over. With so much optimism already priced in, the risk here is its slower & messier than expected.
bobeunlimited.substack.com/p/a-hopeful-...
Asset Supply Headwinds
While folks remain hopeful the AI mania can persist, its the surge in stock and bond supply that appears to be dragging nearly every financial asset down. The trouble is, we are just getting started.
bobeunlimited.substack.com/p/asset-supp...
Hedge Fund allocators would have it a lot easier if they accepted the empirical reality that low-cost replication is a much easier path to outperformance than picking individual managers.
unlimitedfunds.com/forget-findi...
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
Bob Elliott
bobeunlimited.substack.com
While folks remain hopeful the AI mania can persist, its the surge in stock and bond supply that appears to be dragging nearly every financial asset down. The trouble is, we are just getting started.
Stocks, bonds, oil, and prediction markets are all converging on near certainty the Iran conflict is over. With so much optimism already priced in, the risk here is its slower & messier than expected.
Allocators search for hedge fund managers that they think will outperform their industry peers over time. Most allocators believe the best way to achieve
