Tag Archives: apple

New Trend-Following Fund Limits Your Downside

By Alan Gula, CFA Paul Tudor Jones (PTJ), a legendary trader and hedge fund manager, essentially predicted the stock market crash of 1987. In a PBS documentary, PTJ asserted, “There will be some type of a decline, without a question, in the next 10 to 20 months… it will be earth shaking… it will create headlines that will dwarf anything that’s happened up to this point in time.” On October 19, 1987 the S&P 500 dropped 20.5% in a single day. Many investors were eviscerated, and some traders were completely wiped out. That month, PTJ’s fund was up an astonishing 62%. PTJ is an ardent proponent of trend following. That is, you always want to be positioned with the prevailing price trend. If a security or futures contract is trending higher, then be long. If it’s trending lower, get flat (no position) or be short. So how do we determine the predominant trend? In an interview with Tony Robbins for Money: Master the Game , PTJ revealed that his preferred metric is the 200-day moving average of closing prices. Regarding the 1987 crash, Robbins asked, “Did your theory about the 200-day moving average alert you to that one?” PTJ responded, “You got it. It [equity index] had gone under the 200-day moving target. At the very top of the crash, I was flat.” The following chart helps illustrate what PTJ saw: Trend following has been around for ages. But now funds are popping up that automate the process. For example, the Pacer Trendpilot 750 ETF (BATS: PTLC ) was launched in June 2015. This exchange-traded fund (ETF) alternates exposure to the Wilshire U.S. Large-Cap Index (Index) or U.S. Treasury bills (T-Bills) depending on the trend indicators. Here are the allocation rules: Positive Trend Established: When the Index closes above its 200-day simple moving average (NYSE: SMA ) for five consecutive trading days, the exposure of the fund will be 100% to the Index. In other words, the fund will be fully invested in equities. Negative Trend Established: When the Index closes below its 200-day SMA for five consecutive trading days, the exposure of the fund will be 50% to the Index and 50% to 3-month T-Bills. Negative Trend Confirmed: When the Index’s 200-day SMA closes lower than its value from five business days earlier, the exposure of the fund will be 100% to 3-month T-Bills. These rules are designed to keep the fund invested when the stock market’s trend is up but to protect capital with the safety of T-Bills during down trends. Also, the rules attempt to minimize fund turnover during periods of high volatility. PTLC seeks to replicate the performance of a trend-following index. The chart below shows its back-tested results. The trend following index has outperformed over the long term with much smaller drawdowns (peak-to-trough declines). The benefits of trend following as a form of risk management can clearly be seen during the equity bear markets in 2001-2002 and 2008-2009 (yellow circles). The expense ratio of 0.6% for PTLC is a bit high, but the ETF does conveniently simplify the trend-following process. It’s worth noting that the ETF’s current exposure is 100% T-Bills, meaning that a stock market downtrend has been confirmed. The 200-day moving average is such a simple indicator that few people believe it offers valuable information. Also, with so much focus on daily catalysts and short-term moves in the media, the big-picture trend gets lost amid the din. The last time the S&P 500 crossed below its 200-day SMA was at the very end of 2015. I doubt PTJ was caught off guard by this year’s 10.5% decline through February 11.

This Could Signal Apple’s Car Ambitions Are Moving Forward

Loading the player… Apple ’s ( AAPL ) car ambitions look to be moving forward. The tech titan apparently is “significantly ramping” its electric-car project, which could one day compete with the likes of Tesla Motors ( TSLA ), Alphabet ( GOOGL )-owned Google, China’s Baidu ( BIDU ) and even General Motors ( GM ). Apple has leased a 96,000-square-foot facility in Silicon Valley’s Sunnyvale, according to multiple reports, with some speculating that the company is using the space for its “Project Titan” car project. Meanwhile, Fiat Chrysler ( FCAU ) CEO Sergio Marchionne said at the Geneva International Motor Show today that his company would be well-suited to partner with Apple in building the tech company’s electric car. Apple has recruited a large number of auto experts, with specializations ranging from batteries to autonomous driving, but it has yet to publicly confirm any of its plans. Because of that, we still have no idea what an Apple car would look like. Some industry experts say there’s no question that Apple will build a car . The rumored ship-date target is 2019. Earlier this month, Apple received a car-related patent for a mobile device sensor to “determine when the user is in a vehicle that is driving.” But Apple could be hitting roadblocks. In January, reports said that Steve Zadesky, who has led Apple’s e-car efforts, was stepping down . Apple closed up 0.2% to 100.75 in below-average volume on the stock market today . Shares are holding above their 50-day line after retaking that level yesterday, and tested support at the 100 price level. Alphabet dropped below its 50-day line in intraday trade, after climbing above that area in Tuesday’s session, and closed right at that level with a 0.4% loss. Baidu looked for support at its 200-day line, falling 1.8%. And GM, nearing its 50-day line, rose 0.5%.

Apple-FBI Encryption Battle, Facebook Arrest Flash At RSA

SAN FRANCISCO — Apple’s ( AAPL ) encryption battle with the FBI flashed again Wednesday as Silicon Valley bigwigs largely sided with the iPhone-maker during the RSA Conference in San Francisco, Calif., saying the policies of their companies also wouldn’t allow for government backdoor access. The debate at the big annual security event also followed the arrest Tuesday of Diego Dzodan, a Facebook ( FB ) exec in Brazil, who refused to decrypt WhatsApp communications in compliance with a government order. Dzodan’s arrest was yet another flash point in the ongoing battle. Wednesday, a Brazilian judge ordered police to set Dzodan free. At an RSA panel discussion Wednesday Michelle Dennedy,  Cisco Systems’ ( CSCO ) chief privacy officer, said the network gear giant, per policy, wouldn’t provide the government backdoor access to encrypted communications. Silicon Valley companies such as  Alphabet ( GOOGL ), Facebook and Microsoft ( MSFT ) also have sided with Apple. Congress has yet to legislate backdoors, and outdated telecom laws don’t tackle the now-hot topic. The Paris terror attacks and a mass shooting in San Bernardino, Calif., have reignited the issue on Capitol Hill, where legislators are weighing privacy concerns against law enforcement needs. In the latter case, the FBI ordered Apple to decrypt the iPhone belonging to one of the two San Bernardino shooters. Apple is fighting the order. Cisco’s policy would put it in the same hot waters, Dennedy said. “We do not intentionally build in backdoors, and we do not do business with others who do,” she said. “That is our policy.” Dennedy’s position was echoed throughout the discussion, entitled “Can Government, Encryption, Backdoor and Privacy Co-Exist?” Backdoor access can act as a master key to all encrypted communications within a system. Apple’s engineers haven’t created that key, Apple CEO Tim Cook says. Juniper Networks Saw A Backdoor Exploited Intentional or not, backdoor access will backfire, Johns Hopkins University associate professor Matthew Green argued Wednesday. In December, Juniper Networks ( JNPR ) discovered unauthorized code running on an operating system backing their firewalls that let hackers decrypt VPN-protected communications, Green said. Experts have speculated a National Security Agency random-number generator, employed by Juniper, was to blame for the exploited backdoor. “This is the danger with backdoors,” Green said. “Juniper was protecting the Department of Defense and could not keep people from monitoring their code.” Richard Marshall, CEO of Secure Exchange Technology Innovations, says companies need to concentrate on existing vulnerabilities within their systems. “You don’t need a designed vulnerability (such as with a backdoor) when there are so many other vulnerabilities being exploited on a day-to-day basis,” he said. “It’s so much easier for those adversaries to break into our systems and violate our privacy.” But the panelists didn’t side entirely with Apple. Marshall argued that U.S., and other, consumers have accepted the idea of reduced privacy. Chenxi Wang, chief security officer for Twistlock and the panel’s moderator, noted Apple pushed a U2 album out to millions of phones but won’t hand over the keys for government access. “Is this a double standard?” she asked. “This is beyond a double standard,” Marshall said. “This goes to the actual user and their reduced expectation of privacy. It’s a dangerous, slippery slope.” Dennedy, on the other hand, argued that the young-adult millennial generation is “crying” for privacy. Everything from their individualized clothing to the use of Snapchat messaging says as much. And therein lies the opportunity, she said. “People are trusting their commerce, their culture, their families and their communities to us (as corporations),” she said. “We have an ethical obligation to build privacy into their systems.” Her advice for companies? “Educate your users about what they are getting into rather than assuming, because they’ve fallen for your monopolistic practices, that they like it.” Image provided by Shutterstock .