Bookkeeping: 'Rising Tide' Performance Week 24

Week 24 performance of the mutual fund

Comments: Well there is no way to dress up this week. To call it putrid would be an affront to the word putrid. This was the week (as they say) the "generals" (the leaders) were taken out to the back and beaten, one by one. Every good sector I've been invested in was decimated - agriculture, infrastructure, solar, oil service, oil driller, coal, you name - it was trashed. Avoiding the bad sectors as I've done from last summer through last week did not help 1 bit this week. The sectors that held up "relatively best" were areas that investors have been fleeing in droves the past few months - airlines, a few financials, a few retailers and... well that's about it. A few beaten down healthcare stocks did well but even the leaders in that group took a hit. Truly the week where there was nowhere to hide. Unless you were an airline ETF.

This week the S&P 500 and Russell 2000 (indexes for gosh sakes) were both down 5.4% (half of a 10% correction in 5 days). Rising Tide Growth Fund had an awful week led by losses in... well everything.... down 10.45%. Truly a jarring week, lagging the indexes by 5%. While we are giving back positive performance and not in the hole, it is still a massive under performance compared to indexes. This takes us all the way back to week 17 in terms of beating the indexes, as we are now only +15.5% since inception. Still on track for my goal of beating them by 15% each year, but compared to where we were the past few weeks it's a big drop.

There is nothing good to say other than the positions now stocked at the top of the fund are among the market leaders in their respective sectors - and one day when fundamentals are again respected I do expect to see these beat the markets. But until then, fundamentals are meaningless. I am a bit upset that after waiting all fall for a true correction that never came I was caught without more cash/short exposure the time it finally happens. That comes from being too cute in trying to time the market. Lesson learned on that one. This is now the 3rd 10%+ correction we've had (August, November, January) since starting the fund - great timing I've had. :) Two more weeks until "my 2nd quarter" is over; we ended quarter 1 beating the indexes by about 16%. So after all this work the past 3 months fighting upstream against two separate 10%+ corrections in November and January, we are right back where we started the quarter. Trout. Upstream. Swimming.

Going forward I was truly hoping for a wash out event today - a horrific type sell off in the indexes right from the morning bell. We need to break the pattern of opening up in the morning, providing hope - and then selling off all day. I was hoping today would be that day, but then we had some good earnings reports from GE and IBM and it ruined the plan as the market opened up. At this point I'd like to see Dow 12,000 broken and SP 1300 broken to incite a panic. Which in turn will create a (near term) bottom. I had hoped for a tradeable bottom (as stated) last week, as we held above the August and November 2007 lows, but once that was broken this week, our fate was sealed. And the lack of short exposure and cash in the fund exaggerated the fall. Again, sentiment is awful, from such bad moods comes rallies, however brief - but I still think we need a major swoosh down to wash out the last vestiges of hope before I get confident in a bounce. We do have a lot more quality companies reporting next week that can move the market in the right direction ala Apple (AAPL) as opposed to the steady drumbeat of failed financial institutions this week. Unfortunately, we also have the bond insurers such as Ambac (ABK) - a very boring sector but one in which a failure could have massive boomerang effect throughout the credit world as without insurance we have nothing. Just when we thought we were coming out of the woods with Countrywide (CFC) being taken out by acquisition we have these monoline insurance companies hanging over our heads like the Sword of Damocles. Buffet is supposed to be starting his own company in this area - it cannot come soon enough.

Price of Rising Tide Growth: $10.597
Lifetime Performance to date (vs Aug 3, 2007): +5.97%

Comparable S&P 500: 1,325.2 (-9.56%)
Comparable Russell 1000: 719.6 (-9.62%)

Fund return vs S&P 500: +15.53%
Fund return vs Russell 1000: +15.59%

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