SARA SILVERSTEIN: And you've said our inverse ETFs remain in play, at least for now, with the potential volatility on the table. But this has been the case since we initiated these positions in 2022. What are we looking for to take these off and stop hedging our exposure to the market?
CHRIS VERSACE: Great question. We've talked about it. The strategy remains the same. What we said last time on the monthly call, Sara, was we would look to revisit the inverse ETFs that are SH and PSQ when the Fed adopts a more dovish tone. And what have we seen? Well, the last time we were here, the Fed was still more hawkish than not. Last week, Fed Chair Powell adopted a more neutral stance.
Again, that doesn't mean that they're done raising rates. Excuse me. As he said, monetary policy is in a better place. I think the key for that is going to be what we see in next week's inflation data with the October CPI, PPI. If we don't see a lot of traction, I think that's going to renew concerns that a rate hike may not be off the table., but it may not necessarily be on the table. But that's going to be a little different what the market has been thinking over these last several days. So that'll be a key data point that we're looking for. But ultimately, when do we let go of the inverse ETFs? It's when we start to see a definitively more dovish Fed.
SARA SILVERSTEIN: And one of our members asked specifically, how do the losses in our inverse ETFs weigh into the decision to keep them in the portfolio? And I think this is a really important to address because I do think look at these differently.
CHRIS VERSACE: You're 100%, Sara. We know that these are not stocks that we own necessarily to go up. I know that sounds kind of counterintuitive. We're looking for them to limit the overall impact of the market, either its volatility or when it is going lower. Again, we shared with members a note on this that exiting October, the best performers, not necessarily that they made the most money, but the best performers in the portfolio from late July into the end of October were our inverse ETFs.
Again, that's the job that we have assigned them. And it's a job that they do well in a very nervous market. And again, once some of these issues that are driving that uncertainty in the marketplace, the questioning, as those start to fall by the wayside, particularly with the Fed being more dovish, that's the time to revisit owning them.
And again, we haven't seen that yet. Data we get next week could bring us a little closer to that. It could also push that timetable out. We're going to continue to evaluate the positions and holding them as we get more data.
SARA SILVERSTEIN: And you look at gold and oil in the same way that you look at our inverse ETF positions, and have they performed as you expected?
CHRIS VERSACE: So gold a little bit because it's more of a defensive position. Oil, no, not so much. The oil position was really predicated on supply cuts and the US economy being stronger than expected, something we clearly saw with the initial GDP print for the September quarter, but also the potential for China's economy to rebound as more stimulus from that government as those benefits had.
Now, we haven't really seen that. We have seen Saudi Arabia continue to reiterate their supply cuts. So I do think that as we start to get on firmer footing with the market, less uncertainty, we'll start to revisit gold along with our inverse ETFs. Oil is a different animal altogether. And if we don't necessarily see the global economy picking up, or conversely, if we see it decelerating at a faster rate, that would give us a reason to rethink owning the XLE shares that we do own.