Australian (ASX) Stock Market Forum

Risk Management

This is interesting. Came in my inbox from Share Cafe today.



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US Equity Hedge Series 1-3
Offer Open


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Are you looking to protect your share portfolio by hedging or seeking to take advantage of a potential fall in the US share market this year?

Sequoia is pleased to offer a Sequoia - US Equity Hedge - Series 1,2 and 3 closing 15 February 2023. These investments are offering leveraged downside exposure to the S&P 500 over an investment term of 53 weeks with daily liquidity.

Since the October 27th low, the S&P 500 is now up more than 900 points (approx. 22%) and has officially hit 5,000 for the first time in history. This means that the S&P 500 has added $8.5 Trillion in market cap in just over 3 months which is an extraordinary market event rarely seen in history.

Given the magnitude of the rally over such a short period of time we believe the S&P500 is now running the real risk of becoming seriously “over-bought”. This is especially true given the following:

  • the inflation “genie” is not yet "back in the bottle" and runs the risk of catching the market by surprise during 2024;

  • both interest rates and bond yields remain highly elevated with the Fed very cautious about the prospect of cutting rates given the uncertainty surrounding the inflation numbers due to the geopolitical backdrop;

  • the geopolitical backdrop is worsening by the day in both the Middle East as well as Ukraine. We note that the most inflationary factor historically has always been international war. If we see a direct confrontation between NATO and Russia during 2024 we would expect a big spike in commodity prices and therefore inflation which we believe would be ultimately reflected as a fall in the US equity market;
  • A number of commentators remain concerned of a risk of a US recession during the second half of 2024; and
  • Uncertainty surrounding the US presidential election in 2024.
It is for these reasons we believe that now may be an opportune time to protect your share portfolio by hedging or making an investment which can take advantage of a potential fall in the US share market during 2024.

Register your interest by clicking the button below. Closing Thursday 15 February 2024


 
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