Bookkeeping: 'Rising Tide' Performance Week 32

Week 32 performance of the mutual fund

Comments: I'll begin by saying this was one of the week's I have been most proud of the navigation of the fund through what has been one of the most volatile weeks I can ever remember in the market. Three separate 3% intraday moves in 1 week; simply unheard of. I hate patting myself on the back, because usually that leads to a very bad following week (the market loves to humble), but I'll take some happiness with this week's performance.

I can't even remember half of this week, because we had so much action. After a sharp sell off Monday, on the doorstep of breaking S&P 1270 and sinking into the abyss, the Fed came to the rescue (again) premarket Tuesday announcing they are 1 step away from buying mortgages directly (that's coming later this summer as they turn into America's dumping ground for toxic loans), but for now will only loan Treasuries for 28 days at a time.... until... well forever, or at least the credit markets improve. The market had its best up day in 5 years. I was very fortunate that I lightened up a very heavy short exposure by late Monday anticipating some bounce off S&P 1270, so while I took a drastic hit in my Ultrashorts Tuesday it only affected about 12% of the portfolio instead of 24% or so as I had late last week. Better to be lucky than good at times.

After some follow through Wednesday, we began selling off again on news of more credit implosions at Carlyle group and persistent rumors of Bear Stearns (BSC) issues (promptly denied by management). Thursday we started the day awfully, before staging a huge rebound based off of a mid morning call by rating agency Standard and Poors (who have been SO accurate in their ratings of mortgage based securities that we should trust their every word) assuring us the end of the tunnel is around the corner in the credit mess (not). Facts could not get in the way of a good swig of Kool Aid, and the market rallied from its early depths intraday 3% to finish in the green. Then Friday, a (cough) "great" CPI number showing inflation has been defeated dragged the indexes from a red print in premarket to a big green open. But within minutes the Bad News Bears (Stearns) news hit, and the 2nd step (I should of stated that the Countrywide purchase by Bank of America was really the 1st step) of nationalization of our financial system was on. The market promptly dropped intraday 3%. And somewhere hundreds of CNBC pundits were saying "the bottom in financials is in" "you should be buying" and "just trust us."

For the fund, results were all over the place day to day, and in fact hour by hour as these swings took the positions up, down, and all around. There was no major trend this week, but I did make a nice batch of buys on Monday (about a 10% fund allocation from cash to long positions) [Bookkeeping: Purchases Today (A Whole List)] that I sold off in the mania Wednesday (about 8 of the 10% allocation right back to cash) [Bookkeeping: Making Some Sales] so we had a nice trading gain there (thanks Ben). Just could not resist those huge moves in such a short time. Not much more you can do in this type of market. The only other key trend was some severe weakness in the coal names this week.

Despite all the huge moves intraday this week, the markets finished the week not too far from where they started (at a cost of $200 Billion of course). Both the S&P 500 and the Russell 1000 were down 0.4% this week, while Rising Tide Growth Fund gained 1.9%, so both absolute and relative (vs indexes) gains this week; can't beat that. I am now once again far exceeding my targets of beating the indexes by a yearly rate of 15%; usually when I reach this point of outperformance (in the past) the market has come in and smashed the fund the following week so I'll be vigilant about that. But I do think since last summer I have been doing far better than most general equity mutual funds (and most hedge funds but shhh... don't tell them that since their Wall St pedigrees would be offended), so I am happy with the overall results. 20 more weeks, and Year 1 will be in the books.

Price of Rising Tide Growth: $11.194
Lifetime Performance to date (vs Aug 3, 2007): +11.94%

Comparable S&P 500: 1,288.14 (-12.08%)
Comparable Russell 1000: 702.31 (-11.79%)

Fund return vs S&P 500: +24.02%
Fund return vs Russell 1000: +23.73%

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