Bookkeeping: 'Rising Tide' Performance Week 36

Week 36 performance of the mutual fund

Comments: We had a generally quiet week, where bad news was constantly ignored as the S&P 500 trended above the 50 day moving average for the first 4 days of the week. Wednesday and Thursday the market sold off a bit, testing S&P 1350 on the bottom but never (magically) breaking through. No amount of bad news, even horrid retail sales, could do this market in because each line item of negativity was met with "yeh so what you factual thinker - we're looking to tomorrow and in 6 months everything will be fine" Singing of "Tomorrow" could actually be heard emanating from trading floors across NYC each time a new fact came out - this is called "drowning out the bad news". And then Friday hit... and a sell off led by General Electric (GE) surprising the hordes of NYC Harvard MBAs with a dirty thing called...."reality". After a bout of denial early in the morning (old habits die hard), eventually the Kool Aid ran out (lasted 4 days this week!), and the NYC traders retreated awaiting the next solution from the Nanny state to bail them out and/or prop up the market (preferably both). Uncle Al and Uncle Hank were busy with that darn G7 meeting but already have been hard at work, laying out the plans for the next way to kill off free markets and further put risk on individual tax payers back [Fed Makes Plans for More Historic Actions] and away from the tired & poor of the top 0.5% in NYC (ok well not poor, they're all millionaires many times over - but they are tired!). Next week is a new week, where more 'free market' solutions can be introduced to make sure those who take outsized risk in lightly regulated markets are not made to pay the price. Looking forward to it!

I spent most of the week constantly mocking the "6 months everything will be fine" mantra - but then again I've been doing that for nearly 3/4 of a year now. When I was not busy doing that, I was reading about massive inflation, global famine, and socialization of losses. Then again, I've been doing that for a while too. In between, I was watching the charts, and starting to doubt what looked like a breakout move Monday [A Lot of Reversals Today] and then turned chicken [Getting More Conservative - Waiting for Direction]. Outside of that Mechel (MTL), the top holding most of the week outperformed nicely, giving us a snazzy boost. And the Ultrashort exposure helped Friday.

Most stocks I am interested in have had large runs in a short span and in the past when that has happened, the market has taken away those gains shortly thereafter. So my "great outperformance" quickly turns into "good outperformance" in those weeks. So this time around I am trying to mitigate that issue, while understanding I can't turn into a 80% short exposure like a hedge fund could. So I'm raising oodles of cash instead. We sit in the same spot we've been sitting for a long time - bad news on the ground, acceptance of bad news/fear in the bond market, and denial of bad news in the equity market. It's Groundhog Day.

We enter this earnings season in very similar fashion to the horrific January season - denial the economy is really that bad (but we've moved from "no recession" to "short, light, and shallow recession" so that's progress in 90 days), way too high earnings estimates for any domestic facing company, way too much belief the Federal Reserve can fix all our problems (although they've made historic moves to meddle with free markets since last earnings season), and awaiting handouts/bailouts from the government - the home builders are getting theirs [Congress is Rushing to Help Home Owners!! (Not)]; and the rest of corporate America awaits theirs. Once all the important corporate donors are fed milk from the federal governments breast, we'll move on to finding a bailout for the masses of peasants. All in good time peasants.

We are in week 36, so amazingly only 3 weeks left in my "3rd quarter" of year 1. Time has flown, but our country's policies have changed quite a bit in that time - I continue to believe the actions being done will be in historical text and marveled at in the future. After a very strong week led by a huge 1 day gain in the indexes last week, the market gave back much of that this week led by a large 1 day loss (Friday). The S&P 500 and Russell 1000 both lost 2.7% this week. Rising Tide Growth Fund's conservative stance this week led to my favorite type of week; with both relative (vs indexes) and absolute outperformance - gaining 1.0%.

Price of Rising Tide Growth: $11.650
Lifetime Performance to date (vs Aug 3, 2007): +16.50%

Comparable S&P 500: 1,332.83 (-9.03%)
Comparable Russell 1000: 727.18 (-8.67%)

Fund return vs S&P 500: +25.53%
Fund return vs Russell 1000: +25.17%

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