Bookkeeping: 'Rising Tide' Performance Week 17

Week 17 performance of the mutual fund

Comments: An interesting week to say the least (aren't they all?). After a terrible open Monday after a post Turkey day rally last Friday, every index was officially in correction mode. The mood was horrible and talk of bear markets approaching were everywhere. You'd think that was a month or 2 months ago - it was just 3 days ago. After a spike down Tuesday that had us test the August lows - it looked like the bull case was lost. Then out of the air as we touched 10% correction, the helicopters and unicorns united in a magical symphony and we had a reversal and a great day for the 'indexes', but paltry volume and weak breadth (many stocks were still down Tuesday). Strange how every time we are on the precipice the indexes (which take far less buying power) reverse - when many stocks stay in bad shape. Well that index reversal was enough to bring the bulls back and Wednesday we had a full bore rally from top to bottom, followed by a quiet Thursday (unless you were in solar or dry bulk stocks). Thursday night investors were treated to the treat that is a Ben Bernanke signal of future rate cuts (insert needle here), following by a uppercut to the jaw of the bears to news Friday morning that legal debts would no longer matter (for potentially 7 years) for those silly subprime borrowers. We are well on the way to bailouts - and I can only assume this is the beginning. Bulls rejoiced, free market disciples were aghast, and we partied like it was 1999. Late Friday we had a dip and confusion reigned momentarily but 'market forces' got back to work in the last few minutes of the session to make sure the week ended with a bang! Magic!

For the fund, I did, as promised selling into the rally to get more 'neutral' from a very long exposure last week. And I did more buying of short exposure as the week passed - while this held back the fund quite a bit (to the tune of over 1% of return) it's a disciplined conviction until the overall index charts show more staying power. In the future I will just have to remember that at every 10% correction the full faith and power of the federal government will come riding on their white horses (along with those pesky computers who run Wall Street) and every 10% correction must be bought. We will apparently never be allowed to have a (gasp) 15% downturn or (horror) 20%.... ever.... now that I know the playbook (which has obviously changed since 2002), I will learn and adapt. But for now we've put a quick 5.5%-6.0% rally and one would think... wait, thinking is wrong. Conventional wisdom would say... wait, conventional wisdom is moot in a government supported market.... well the truth is who knows. We could be at all time highs by middle of next week with all the kool aid running through our veins now. Or down 5%. Just take it day by day. Old playbooks have been burnt - when market forces are not allowed to play out, you cannot even fathom to guess what will happen. I will see what the government wants us to do, and then follow along. "Take me to your leader"..... Wheeee....

The S&P 500 was up 2.8% and Russell 1000 was up 2.9% his week. I know you'd think they would be up much more but remember, we had a terrible Monday (I know, that feels like eons ago). Rising Tide Growth Fund pulled through like a champ with a up 4.1% week only held back by large short exposure in the back half of the week (without which the fund would of been up roughly 5.5%). But that's ok, I like insurance in this market where 300 point Dow moves are now 'expected'. So a nice 1.16 to 1.3% type of outperformance this week and it was great to see the vast majority of fund holdings outperform the indexes by a mile once the veil of darkness over the markets was lifted. When we go through such severe downturns so quickly, one begins to doubt the stocks but these holdings really put on a heck of a show once we left the domain of "every stock stinks, they all go to $0" type thinking. So the fund is nearly back to the +15% over indexes I want to achieve every year...

I can't even hazard to guess where we go from here. The market is under the influence of pressures that are not 'measurable', so I am simply going to rely on technicals at this point. We are still below S&P 1490, when we eventually get the government to push us through that level, I will drop these short positions and join the party with toga in hand. It's as simple as that. Feels 'great' to have so many people looking over our shoulders to make sure nothing gets out of hand to the downside. If we dare go down, I am sure that will be 'fixed' too, soon enough. I'm sure someone from Omar or Bahrain is itching to buy some Etrade or Washington Mutual or (insert troubled institution of your choice here)! And another problem disappears just like that. Magic!

Price of Rising Tide Growth: $11.573
Lifetime Performance to date (vs Aug 3, 2007): +15.73%

Comparable S&P 500: 1,481.1 (+1.09%)
Comparable Russell 1000: 806.5 (+1.29%)

Fund return vs S&P 500: +14.64%
Fund return vs Russell 1000: +14.44%

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