🗞️The Wrap: Delisted

We say goodbye to an old friend (or enemy), how stocks perform at the end of the tax year and how the markets look priced in gold.

5 Most Traded Stocks on Stake in the Last Week

    • Tesla (TSLA) -1.0% in the last week
    • 2x Long Vol (TVIX)* +23.7%
    • Apple (AAPL) +3.3%
    • Boeing (BA) -6.2%
    • Microsoft (MSFT) +3.5%

*Perhaps for the last time

Locking in the Loss

With the end of the financial year approaching down under, let’s see how stocks can perform towards this time of year. Of course, investors have some incentive to lock in their losses for the tax period but does this have any effect on markets?

A Californian study on the US tax year (Jan-Dec) found that trading behaviour did change come Christmas. Overall, there’s no huge impacts on the broader market. Huge institutions like pension funds dominate the market and they have no incentive to sell. That being said, poor performing stocks, particularly small caps, did see abnormal trading activity.

December trading volume for “depressed” Dow Jones stocks is about 25% higher than preceding months; a statistically significant figure. Moreover, come December, these depressed stocks were outperformed by other stocks signifying that selling losers does occur.

Another factor driving the sale of stocks isn’t motivated by tax but perception. It’s a concept known as ‘window dressing’. Funds sell their poor performing holdings so they are not forced to report the losing positions to investors. This study out of Georgia State provides evidence that this practice does occur and indicates continued poor performance in the future.

Delisted

It is with great sorrow that we report the loss of $TVIX. While leveraged volatility certainly hurt a lot of traders, it was a source of gains and comfort for scores of our users.

The ETN Issuer, Credit Suisse, has announced that $TVIX will be delisted in the near future along with 9 other products including $UGAZ and $DGAZ; leveraged natural gas plays. In an effort to “monitor and manage” their product offerings, these products will cease to exist.

$TVIX has been forced into a reverse stock split almost every year given long vol products naturally decay. Understandably it’s an expensive product to operate which could be part of the reason it is being shut down.

While we are uncertain when these products will officially be delisted, once they do, holders can expect to receive a cash credit to their account (just like a sale). Early indications suggest sales of TVIX will cease in the first week of July and it will officially delist in the second week.

Top 5 Gainers

  • Invitae Corp (NVTA) +68.9% in the last week
  • 21Vianet Group (VNET) +61.0%
  • Inovio Pharma (INO) +55.2%
  • Nantkwest (NK) +46.6%
  • Fastly (FSLY) +41.7%

Top 5 Fallers

  • US Steel Corp (X) -23.6% in the last week
  • Corecivic (CXW) -22.3%
  • SouthWestern Energy (SWN) -21.4%
  • Service Properties Trust (SVC) -17.8%
  • American Airlines Group (AAL) -17.8%

More nAUmal

Here’s an interesting perspective on the markets doing the rounds on FinTweet. The S&P500 priced in dollars may seem unjustifiably high to some, but the SPX priced in gold may be a little more reasonable.

The argument goes that with the massive amounts of stimulus being provided to the markets, asset price inflation naturally occurs and markets appear higher based on a devalued base.

The SPX/Gold ratio looks at how many ounces of gold are needed to buy the market. This chart is moving lower since Q3 2018 and signifies that the market is more reasonably priced than first impressions may suggest.

Ok, this seems like a completely arbitrary chart, what does it even mean?

If we price stocks in gold we start to take away the effects of dollar supply changes and counteract the asset inflation/currency devaluation.

Of course, the price of gold is influenced by the increased money supply too which renders this chart moot to some. Pretty interesting view either way; it’s just a reminder to look at things from different perspectives.

Trader Teaser

Start with the word ‘SNOWING’. Remove one letter at a time to create a new, complete word. For instance, snowing to sowing. What are the remaining words one by one?

Best Buy | $VERI +75.6%

This has been a fun stock to own, up 10x from its March lows, this trade has caught on for the ride. Veritone specialises in AI with a focus on audio and video recognition services.

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