I am simply going to take some off the table in these tremendous moves in commodities. Not large scale sales, but $5-$7K off of both Powershares DB Agriculture Fund (DBA) @ $42.40s and Kinross Gold (KGC) @ $25.60s. I remain very bullish on both, but I'd expect a period of consolidation at some point - nothing straight up? The charts are parabolic at this point.
I'd like to see the former retract to mid $40 range and the latter to $24 or below.
Long both names in fund; long Powershares DB Agriculture Fund in personal account
7 comments:
you meant mid-30 range on DBA?
trader mark.. My question is if your fund investing parameters allow you to use the financial futures? I have used them to some degree to hedge holdings in mutual funds. As you have so well pointed out the 1320 area is critical area on S&P. Would it not be wise to carry stop under the 1320 and if market takes it out you would be short?
Sheng, I'd be surprised to see DBA fall below upper 30s but I've been wrong before. Remember, its tied to soybeans, wheat, corn, sugar which in theory have nothing to do with equity prices.
kb, I've never traded futures and have no familiarity with it. Further I can only trade what Marketocracy.com offers, of which there are no futures.
I am basically doing your strategy but with other means. Being long focused as a mutual fund my main portfolio is long. I am simply hedging with cash/short. Now that we've broken 1320 I've gone back to the short exposure I've been carrying the past few weeks. I've arbitrarily set a 20-25% range for that sort of exposure to simply be a good comparison versus other mutual funds track record so people can compare my record in apples to apples fashion. i.e. I don't want to be 80% Ultrashort (although I could be) because then people will just call me a hedge fund and the only reason I outperformed was being so short at times. So I'm maxxed out at what short level I'd probably take. So being a mutual fund (instead of hedge fund) you are sort of trying to "lose less money" than average (or vs peers) when you are bearish like I am now. But as for specific instruments I am simply using Ultrashorts because that is all I am allowed to use in Marketocracy.com account.
My personal account is a lot more skewed to the dark side at this time ;)
Lol, DBA is nearly at "mid 40's".
Yes I went to go look after the comment and saw 40.60
I did not buy any, but I have to remember this is no longer a sleepy instrument - the markets it is involved with are full of hot money so it will be a lot more volatile. When it used to trade 1.5% up or down that used to be a huge move, now it went 4% today alone. 40.30 is 20 day moving average so thats why I pegged it as a price point - I did not expect to see that correction within a few hours.
Fertilizer finally getting hit - its a miracle. Hope they keep beating these names down to levels that I can find more attractive. Last group to fall, along with coal and gold.
"I don't want to be 80% Ultrashort (although I could be) because then people will just call me a hedge fund."
My understanding is that hedge funds are free to invest in whatever they wish to with fewer regulations then other financial entities. Many hedge funds are short but not all. That said, I like that you ~80% long in a bear market because it shows you have real insight into the market which is what your fund holders will be paying you for. Since anyone can invest in a few ultrashorts by themselves you have to provide a different and profitable product. Great work.
Yes - I have no issue with hedge funds and in fact would like to run one someday. But my goal is to beat both the indexes and the peers in the mutual fund world, mostly through superior stock selection on the long side, with some smaller offset (hedging) with short instruments. It is not a perfect solution since there are days my long positions are down 7-8-9% in 1 day and the short positions, only go up 3%, but it helps to provide some cushion. So far so good, and yes the transparency I hope is a great selling point. I think my fund would be full of "do it yourself" investors who are curious as to the day to day decisions. While I will be wrong quite often, people will at least understand the thinking as opposed to not having any idea what their mutual fund manager is doing. So far so good considering I've gone through 3 10%+ corrections since starting the fund. Toughest environment since 2002, and hard to make any money at all.
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