Why so serious?

February 18, 20196 Comments

While down in Florida, I did plenty of work, including some speaking engagements, blogs, and even did a fairly decent sized stock rotation within the ValueTrend Equity Platform. But I had plenty of time for R&R mixed in with that work (I almost never take a non-working vacation). As I often do while in Florida, I focus on a bike race – this time placing third in age class and fairly high up there on the overall standings for the Sebring 100 mile event.

I also watched a couple of movies.

Personally, I find most shows to be formulaic and predictable these days–I rarely watch anything beyond the ever flowing Star Wars franchise and a few other rare exceptions. So if I do bother watching something, I go back to the tried and tested stuff – movies with epic acting, amazing plotlines and writing. One of those repeat movies is Batman, The Dark Knight. If you have not seen this movie, you probably should. The now departed Heath Ledger arguably pulled off one of the greatest acting jobs of all time. My gosh, he played a brilliantly believable psychopath.

His famous line in the movie,”Why so serious” was so riveting when he delivered it, the worlds most prominent bike racer Peter Sagan tattooed it to his body with an image of his own face replacing Leger’s!

Another line Ledger delivered was when he was explaining to Batman (Christian Bale -another outstanding actor) the madness behind their relationship: “We’re what happens when an immovable object meets an unstoppable force!”. I love that line. And it reminded me of what the markets look like right now: Plenty of reasons to decline, plenty of reasons to rise.  Unmovable vs. unstoppable. What an analogy!

Today, I thought I’d examine the relationship between two forces that are more in sync with each other than Batman vs. Joker. Lets take a look at the Commodity Research Bureau CRB index vs. the TSX. The chart below shows us the TSX (red line) vs the CRB (black line). Below it is the correlation line. If the correlation line is above zero, it is more positive (the two are more in sync with each other) than when its below. A reading of “1” means perfect correlation – a rare event. A reading of “-1” means perfectly negative relationship. And “0” means non correlated (no relationship–random). You can see that the correlation is more often positive for the two (above 0). Meaning, we should watch the CRB to see what the TSX might eventually do.

Right now, the two are just starting to diverge in their correlation. The line is turning down. Note the trendlines I have drawn–you can see that the CRB has been declining lately while the TSX rose sharply after its December low. That’s why the correlation line is rounding down.

Perhaps this means that the TSX is positive for a very short period while the correlation starts to decouple for a while. But it is likely that the divergence in correlation wont last–history repeats itself.  This probably means that the TSX may give up some ground pretty soon, unless there is a really nice uptick on the CRB. And that is possible. Note the CRB line is near the bottom of its 3 year trading range.

Keep an eye on the CRB for clues as to where the TSX will go. If the CRB finds a bid and moves higher, that’s likely good for the TSX. If not – well, we can learn from that too. As Batman/Bruce Wayne’s father told him: “Why do we fall? So we can learn to pick ourselves up!”

 

6 Comments

  • Congratulations on your Podium finish, Keith. From one ‘age class’ cyclist to another.

    Reply
  • I’ve followed you on BNN for years and really like your take on the markets. Now I’m also impressed with your riding! Congratulations, 160km race in February is pretty impressive when you’re from Toronto. Must be doing a lot of indoor riding on Zwift or Trainerroad or some other platform. Whatever you’re doing keep it up and if you’re every in the lower mainland and want to do a ride I’d be happy to show you around or invite you out to one of our club rides. And keep the blog rolling!

    Reply
    • Thanks Murray–yes, I am a very structured person in all aspects of my life, so like my trading discipline, I have a pretty strong training discipline. I workout 7 days a week all year, taking only Xmas day off. This time of year its indoors on a trainer–and I follow a structure that includes the famous cycling coach Joe Friel’s Base/Build/Taper schedule, with very specific workouts in each phase to work towards a series of races throughout the year.
      I used a very good coach, Ed Veal, for years-and he taught me enough over the 3 years I was using his services to create my own workouts for each phase-he once noted to me “Boy, you sure do like structure!”
      I told him that my mind works best with structure in my personal and professional life.

      Reply
      • Very impressive! I’ve included more structure the last couple years but probably not close to what you’re doing. You have an eye for quality, I’ve heard good things about Ed Veal even though I live 3000 km away. Friel’s book ‘Fast over 50’ is one of my favourites! As I age I need all the help I can get through structure and nutrition. I’ll do a few club races and condo’s but having fun is still my #1 goal. Great show on BNN on Friday!

        Reply
        • Thanks Murray–yes, Fast after 50 is a great book. I also read Carmichaels book “The time crunched cyclist” years ago–it helped too.
          As far as Ed–he does most of his work over the email/phone–he even gives you the tests to do over email with followup phone calls —-He is in Hamilton, I am in Barrie so getting together was rare indeed.
          But you don’t necessarily need a coach–I made a decision to race to my potential and my business life is such that I can at this point afford to put the hours in–as opposed to just a few years ago when I worked 60 hours a week.

          Reply

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