Was yesterday the start of a new down leg in stocks? Managed futures sure hope so…

For anyone watching the stock tickers yesterday (and maybe today…), it was ugly. Dropping over 2%, the stock market had its worst day of the year so far, with the S&P 500 and Dow Jones posting their worst day since last August. Brought on by poor employment and manufacturing numbers and exacerbated by Moody’s downgrade of Greece, the drop has been a long time in the making, in our opinion. In May alone, 28 of the 35 economic reports that came out were negative, and yet the stock market kept chugging along.

Now, typically, we aren’t the ones to see one bad day in stocks and assume the bear market is on (although we would love to see that). But Josh Brown over at The Reformed Broker shared a Kimble Charting Solutions graph that points out an eerie similarity between the ramp up to the credit crisis and our current economic state. We’ve been saying for a while to diversify now – not after the market crashes- and this is yet another shot across the bow to those long the stock market. [Click the chart to enlarge]

[Past performance is not necessarily indicative of future results]

What the data shows is a repeat of the split between high yield funds and long bonds. It started back in 2006, when people were just beginning to question what was driving stocks and when it would give out, and we all know how things played out in 2008.

We’re hoping that things don’t blow up for the sake of the average person’s 401k, but at the same time wouldn’t mind seeing another big leg down in stocks (a la 2008) to really push the point home that you need something other than stocks and bonds (ahem…managed futures) in your portfolio.

And, as we have contended since the beginning of the year – we think the returns for managed futures will come from down trends in commodities this year, not from ever higher highs. Another down leg in stocks would be just the catalyst for grains, energies, softs, metals, and more to retrace a good portion of the large move up they have made since 2009.

Check out our old newsletter for more on historic managed futures crisis performance here.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.