From Mid-July 2016 through the end of August 2016, the S&P 500 Index of U.S. stocks upheld a historically tight range of less than 2%. Price action and volume was subdued, even during the bulk of earnings season. The broad market index closed down -.12% for the month. The Dipsea Capital Fund generated a return of +.39% after fees for August. Year-to-date, the Dipsea Capital Fund is up .86% versus the broad market index gain of 6.21%.
The market clearly wasn’t conveying a lot of price or sentiment information during August. What we can glean from the month’s action is the observation that the market environment continues to remain “fragile”. The ever broadening regulatory requirements upon financial institutions have created the unintended consequence of fewer institutional participants. This reality contributes to the manic nature we have witnessed the past 18 months in the market volatility realm. Specifically the market’s behavior will likely continue to oscillate from very low to extreme volatility, and back again, ever more quickly.
Our best response and adaptation continues to be valuing patience, and avoiding the inclination to place suboptimum wagers. Furthermore we continue to work diligently to test and fine tune our rule based methodology to respond to the market’s mutation to a more machine centered versus human based structure.
We appreciate the continued opportunity to work on your behalf and be a trusted steward of your capital.
I'm busy working on my blog posts. Watch this space!