Friday, November 23, 2007

Bookkeeping: 'Rising Tide' Performance Week 16

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Week 16 performance of the mutual fund

Comments: While the market had a decent oversold type of rally Friday, the first 3 days of the week were again quite awful, with a series of lower lows in the major indexes each day. No particular sector was much weaker than the rest, it is just a general malaise at this point with little buying interest. In short to make money on the long side the past month, it's been necessary to be a very short term and nimble trader as upside moves have been very short in duration while the selling has been relentless. Not a great environment for buying and holding or a fake mutual fund. Or a real one!

For the fund, I have simply been lightening up a bit here or there on the short term upswings and trying to funnel money into (mostly) the strongest stocks on a technical basis. Many stocks with great fundamentals are being pummeled and I don't see a lot of difference in terms of fundamentals of some stocks getting trashed versus those holding up "relatively" well (by relative I mean not falling 10% each week), but the market has its favorites so as long as they coincide with sectors/stocks I like fundamentally I will focus on those market favorites. But it's simply a 'relative' game of late - trying to stay in stocks losing relatively less than others. The median drop of stocks in the S&P 1500 is close to 25% from their peaks in October so the damage in individual names has been a lot worse than the weighted average indexes are telling.

The S&P 500 was down 1.2% and Russell 1000 was down 1.4% his week. Rising Tide Growth Fund did a bit better than the averages but nothing to celebrate, down 1.1%, and that took some pretty active shifting around to manage. So a slight outperformace in the fund this week after two weeks of lagging the market.

This was a pretty quiet week overall in terms of individual names - I was more focused on 'allocations' between cash/ETFs on the short side/long positions. I am very happy with the stocks at the top of the portfolio but until the market returns to a buying mood, it really won't matter as just about any non 'recession proof' (i.e. Altria or Coke) long position is a loser. As I mentioned Wednesday it has been like Groundhog Day, and anyone venturing on the long side is simply getting their head handed to them the past 3 weeks. Unfortunately we seem to be going down on the same set of news every day, and this stream of news will probably be continuing for quarters on end from here. None of it mattered in September through mid October - now it seems to matter and not only matter but will continue for the next decade the way the market is acting. But at some point, at least for the near term, it will get priced into the market, and stocks will actually rebound to some degree. When that happens is always unclear, but we are officially in a 10% correction now. At this point the market that will either degrade seriously from here as the technical picture is putrid and declining by the day, or some sort of stand will will be put in. S&P 1440 and 1490 remain key points. I read that this month has been the worst since 2002, which was a year that could take the heart out of any bull (we had many months like this!). The S&P500 was actually down for the year as of Wednesday, before rebounding today, following the Russell 2000 which was down for the year as of last week, and only got worst this week...

Price of Rising Tide Growth: $11.117
Lifetime Performance to date (vs Aug 3, 2007): +11.17%

Comparable S&P 500: 1,440.7 (-1.23%)
Comparable Russell 1000: 783.4 (-1.37%)

Fund return vs S&P 500: +12.84%
Fund return vs Russell 1000: +12.77%

Last week's results here.

Since the market cap of the median stock in the Rising Tide Growth fund (median $9.8 Billion as of November 07) is significantly below the SP500 index (median $13.1 Billion as of September 07) but higher than the median market cap in the Russell 1000 (median market cap $5.8 Billion as of September 07), I am measuring the fund against both indexes. Click here to see all fund's holdings as of mid November 2007.

Basis for indexes is 5 day weighted average of closing prices Aug 3-9
SP500 : 1,465.2
Russell 1000 : 796.2

To see why I use the 5 day weighted average of the first 5 trading days to smooth out the volatility of the indexes as the fund launched, see here.

Please click here: fund performance for previous updates

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