The trades we would have taken in the decade gone by – if only we’d known

Secure in our present-day knowledge and risk-free comfort, let’s indulge in some armchair trading through the 2010s.

Hindsight Trade#1: Long software/short energy

Global growth concerns were bearish for commodities and energy – the Bloomberg Commodity Energy index declined 71%. Meanwhile, the rise of the internet and technology companies powered the S&P 500 Software Index to a 470% gain over the decade from 2009.

$100 became $1,783 as of December 20, 2019.

Hindsight Trade#2: Long S&P500 (denominated in Norwegian Krone NOK)

Hobbled by weak oil prices, the NOK’s weakness combined with the strength in the S&P500 to produce stellar returns of 450%.

NOK100 became NOK550.

Hindsight Trade#3: Long Large US Banks (KBW Bank Index USD)/Short FTSE-Eurofirst Eurozone banks index

After the crisis, the US Government had saved the country’s banks and set them on a path of growth. Not so in the Eurozone. The ECB was unable to be as effective with banks in the Eurozone. While large US banks grew 164%, the Eurozone banks plunged 61.5%.

$100 became $695.

Hindsight Trade#4 (Boring): The old [60:40] chestnut of stock and bonds

A passive investment portfolio of 60% in an S&P 500 exchange-traded fund (SPY), and 40% into a long-dated Treasury bond fund (TLT) would have done quite well, thank you.

S100 became $298.

Hindsight Trade#5: Long the Indexers

This trade is passive investing to the nth. Buy the companies that draw up the indexes that ETFs track.

That means the London Stock Exchange (owner of FTSE and Russell), S&P Global (owners of S&P and Dow Jones indexes), and MSCI,

or an equal-weighted index thereof  😉.

$100 = $999.54

Hindsight Trade#6: Long Bitcoin

The buy-and-hold trade of the decade. Even at current prices so far down from its top, Bitcoin puts other traditional asset classes in the shade.

$100 became approximately $9 million.

Sigh.

(Acknowledgment: The Bloomberg Opinion article “A Decade of Market Wins for Hindsight Capital LLC” by John Authers)

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