A Summer Like We Used to Know

Does that old-fashioned kind of summer still exist? Probably not. Instead, we kept hearing about new records, including 41 degrees Celsius measured in Stammersdorf, one of Vienna’s wine-growing districts. There, the vines were not the only ones breaking a sweat.

Fortunately, there are alternatives. For the Karas family, August meant two weeks in the Baltics, with sunshine every day and temperatures topping out at 27 degrees. Having been there, I can now say with conviction: We should be glad Lithuania, Latvia, and Estonia are part of the European Union. What wonderful countries.

A Bull Market in Stocks

The markets gave me more than a relaxing vacation in August, which is far from guaranteed. They even threw in the gift of strong equity markets. Quite a bit happened beneath the surface, and the Gutmann’s equity strategy performed exceptionally well. But as you know, past performance says nothing about future returns. It is written below every issue of the Gutmann Viewpoint, after all.

The Gutmann teams were hardly lying around in the sun either, which is terribly unhealthy anyway. They were busy as bees. And so we are heading into the fall with a new Gutmann strategy.

Once again, it is good to have alternatives, in this case to stocks and bonds. Specifically, we invest in trend-following strategies, commodities, and gold. Most of you have probably never come across trend following, so here is the short version: Quantitative models identify market trends and systematically position for them. They can benefit from both rising and falling markets.

A Golden Fall Ahead

Gold will probably attract the most attention. Attentive readers may immediately think: “But Karas has never exactly been a fan of gold!” To which I respond with my usual nonchalance, or at least I wish I could: “When the facts change, I change my mind.”

Gold has historically benefited when government budget deficits rise. And that is exactly what is happening now, especially in the United States, a country that certainly matters to financial markets and beyond. I think the subject deserves a Gutmann Viewpoint of its own before long.
For those interested in the new strategy, we have prepared a presentation. Please feel free to discuss it with your Client Advisor.