If there’s one thing we can say for certain, it’s that fear subsides. People have an extraordinary capacity to adapt to fear and what once they feared they now find normal. Our Optimism Index aims to take advantage of this observation.
We express this observation by selling volatility. Specifically, this means our Optimism Index either owns investments that will increase in value as volatility abates or owns investments that will retain their value during periods of rising volatility. Simply stated, we trade volatility from the short side and the short side only. We look to profit from our trading acumen and though we will suffer periods of financial discomfort as our portfolio values drop, we believe these periods will be temporary since focusing on fear abatement gives us an edge.
THE OPTIMISM INDEX
Carl Sera, CMT is Managing Principal at Sera Capital, Annapolis, MD. He has been working at Sera Capital since high school and has never done anything else, except for that one summer where he worked at a golf course.
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