Comments: Another week of marking time in the market. After a terrible effort last week, the market rallied the first 3 days of this week looking for any excuse to make CNBC cheer. Buffet bailout? Hoorah! "Better than expected" retail sales? Hoorah! Anything? Hoorah! Then Paulnanke had to go to Capital Hill Thursday and remind people of reality. Even if it's still a watered down form of reality. You know... the "we're going to be rocking in 2nd half of 2008" reality. Remember the 3 big IFs he mentioned as needing to come true for this 2008 rebound: labor holds steady, housing holds steady, credit markets hold steady. Sounds very plausible to me.
My prediction is the 'nanke' side of Paulnanke's credibility will be so shot by this summer he is going to have a very hard time keeping his job past this 1 term. People will go back to last spring and say "well subprime was not so contained after all ", and then by the end of 2008 will go back to this Thursday and say "so much for that 2nd half recovery". **
** Please note: my predictions assume the government will not step in and literally say to the banks "We stand ready to buy every piece of financial junk you have, give it to us". If this happens, it's all a moot point. Kool Aid for everyone (along with a $600 rebate check)
So anyhow we sit here waiting the bond insurer bailout, and then wondering why the financials are degrading so poorly with so many bailouts percolating. And we mark time. Looking at the S&P 500, we made yet another lower high this week but now it looks like we have S&P 1320 as a line in the sand on the downside. So we'll see how things work out once we get there.
Until then I keep staying defensive, but aware my defense could be blown to pieces at any moment by Washington DC. Hence it is not easy to be short (intervention risk) or long (reality) until we make a break one way or the other. We're just going up and down in the markets the past month, making no progress. But I suppose that's an improvement over the first 3 weeks of the year when we made a lot of progress.... straight down. We are definitely building a base here - and off bases come large moves. The only question is which direction.
The S&P 500 made a nice bounce off a horrific week last week and gained 1.4% with the Russell 1000 up 1.3%. Rising Tide Growth Fund had a good week both in absolute terms and relative to the indexes, gaining 2.7%. Not unhappy about that, considering much of the week was spent with large cash position/short position in a generally up market. So the remaining long exposure (60-70% of portfolio) was able to beat the indexes handily and we get back to beating the indexes by 20% from inception.
Price of Rising Tide Growth: $11.236
Lifetime Performance to date (vs Aug 3, 2007): +12.36%
Comparable S&P 500: 1,349.99 (-7.86%)
Comparable Russell 1000: 736.52 (-7.50%)
Fund return vs S&P 500: +20.22%
Fund return vs Russell 1000: +19.86%
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 January 2008.
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
