The mutual fund is now on schedule for a summer 2010 launch. If, after reading the blog content you might have an interest in participation please consider reading why this blog exists.
- [Jan 7, 2008: Reader Pledges Toward Mutual Fund Launch]
- [May 26, 2008: Frequently Asked Questions]
- Our story in Barron's [A New Kind of Fund Manager]
- [November 2009: General Updates, Questions]
Or if you are just here for daily market / economic commentary or stock trades to follow on your own, consider supporting the blog via donation (paypal buttons can be found on the upper right margin of the blog)
For those who read the content of the website via email or RSS reader, you can come to the website at any time and click on 'Performance/Portfolio' tab in the menu bar to get updated positions (weekly) and performance.
Total Portfolio Value, as maintained by 3rd party, can be checked here each day with 20 minute delay vs real time (starting value $1,000,000 or $10.00 NAV)
I will post an update of performance versus Russell 1000 every 4 weeks; we've moved over to a new tracking this year (Investopedia.com) as the old system would not allow shorting ofindividual
Under the new tracking system, our twelth 4 week period is now complete. (Data is through last Friday's closing prices)
(click to enlarge)
Aside from a quick move up early in the period, this time frame was market with a very range bound market. Earnings season was winding down in the first half of the period, and a Dubai surprise (quickly forgotten) marked the second half. The S&P 500 rallied over key moving averages and essentially consolidated over these levels; whereas the smaller Russell 2000 under performed. There was no specific sector that stood out but the inverse dollar trade once more was dominant - this has been a theme for quite a few periods in a row and might not change for a long time. Precious metals were a darling of this time frame except for the tail end of week 4. Large caps were dominant over small and mid caps. One strange factor were how almost all the gains seemed to be concentrated on Mondays as for this period and the last, markets rallied on the same weekend pledges of 'easy money' and 'more stimulus' (which caused the dollar to fall, and every asset on Earth not named the dollar to rally).
For the 12th four week period the fund returned +5.2%, versus the market's +3.4%, so an out performance of +1.8%.
On a cumulative basis the fund is now +78.3%, versus the Russell 1000's +19.6%, so an out performance of +58.7% for our year to date if you will. (thus far 48 weeks)
Please note we did not start on Jan 1st... so this is not an apples to apples year to date performance but obviously close.
Our yearly goal of beating the index we track against by 15% has been reached, and we're now at the highest level of out performance versus the market for the year. Both absolute performance (making money) and relative performance (outperforming the market) were achieved in the period - which is always the best outcome.
*** Long/Short Discussion below
Period 12 was actually a difficult period to navigate in terms of trying to create much outperformance. An index trade created at the very end of period 11 helped to push the fund to a large gain very early in week 1, but after that the going was tough. Weeks 2 and 3 were random and directionless whereas some failed breakouts in week 4 cost us a few percentage points of performance. During the period, market participants rewarded very large cap companies, especially mutual fund favorites such as Google (GOOG), Apple (AAPL), and Amazon.com (AMZN). In the mid cap and small cap space sectors we are not exposed to very much such as healthcare or retail were favored. We did have some nice gains in precious metals but most of our stocks simlpy traded back and forth in a narrow range much of the period, similar to the S&P 500. Having a very good year, we decided to go to a very heavy cash position for much of the period, only wishing to commit further funds if the market could break out - which it never did.
Please note on the right margin of the blog is an archive in which you can see all these events in chronological order, clicking on any link within the sentences below will take you to that transaction - a summary below:
Week 1: As the market bounced upward at the tail end of period 11, we had some index long positions (including options) in the portfolio, hence we entered period 12 with 70% cash, 26% long, 3% short. (a) We enjoyed a big surge Monday morning so we sold half the SPY calls we had bought the previous Friday for a quick 30% gain (on 2.5% of our portfolio) as the S&P 500 rushed to 1080 (b) we were forced out of our only real short exposure: Costco (COST) short for a 4.6% loss. (c) we added 1% exposure to Discover Financial (DFS) under $15 as it broke back above key resistance levels. (d) Late Monday we sold another quarter of our SPY calls as the S&P hit 1090 for a 70% gain. (e) Tuesday afternoon we sold the last quarter of the SPY calls for about a 65% gain. That quick in and out SPY call trade was the main highlight of the entire period, and we should of just called it quits.
(f) With Costco gone, we wanted to have some sort of hedge on so we decided to short a small long position we had, which was struggling - E-House Holdings (EJ); with a 3% allocation. (g) By Wednesday, after such a strong move from the Friday bottom we decided to begin selling off some individual stock exposure: HDFC Bank (HDB), BHP Billiton (BHP), Wyndham Worldwide (WYN), Market Vectors Brazil Small Cap (BRF), Las Vegas Sands (LVS), Discover Financial Services (DFS) were all harvested to the tune of 33-50% of stakes, for nice gains. (h) By Thursday the S&P had raced to a double top pattern near S&P 1100.... so traders simply waited for the next pledge by Fed officials to punish the US dollar so the inverse dollar trade could begin anew.
Week 2: In process...
Week 3: In process...
Week 4: In process...
[Jan 30, 2009: Fund Performance Period 1]
[Mar 2, 2009: Fund Performance Period 2]
[Mar 30, 2009: Fund Performance Period 3]
[Apr 27, 2009: Fund Performance Period 4]
[May 28, 2009: Fund Performance Period 5]
[Jun 21, 2009: Fund Performance Period 6]
[Jul 20, 2009: Fund Performance Period 7]
[Aug 17, 2009: Fund Performance Period 8]
[Sep 14, 2009: Fund Performance Period 9]
[Oct 13, 2009: Fund Performance Period 10]