Comments: Back again so soon my toothy friend? After a stifling 3% loss last week, the
markets followed that up with... well another 3% loss this week. It's been a rough month for the markets - that is putting it lightly. We have 1 more day in the month and barring a huge gusher upward Monday, the "market" (as designated by the Dow I assume) is on track for the worst June since 1930. Folks, that was the beginning of the Great Depression. Now I am not intimating anything of the sort - in fact in our low unemployment (ahem), low inflation (ahem), positive GDP (ahem) economy - we are not even facing recession not to mention depression. On the positive side - there is only 1 more market day left and (trumpets blaring) the "2nd half recovery" we've been hearing about for half a year begins Tuesday. Goodness, I cannot wait. This has been a very long week, and trying to stay afloat must be akin to what I imagine wrestling a oiled up hog must be like. (those of you who have indeed wrestled an oiled up hog, please do not email me with details, or send a picture depicting the act). One last bright spot - next week is a 3 and a half day work week; I have checked with my sources and indeed there is no way we can lose money in our stock accounts during the day and a half the market is closed. Whew!After a devastating week punctuated by another mistaken (in)action by the Fed Wednesday, we tested the all important S&P 1275 level Friday and lo and behold, no one could of have predicted this (hand raised) but we were able to pull off a miracle and not fall through. Granted it was one weak bounce but a bounce it was. "Mission Accomplished" as those in power like to say - you could almost hear the high 5's in Washington D.C. from here. Yet we remain standing at the cliff and it's tricky to predict where we go next - an oversold bounce would be the more probable scenario after a 6% two week hammering, but who will show up next week into the vacation week? It is going to be light trading and anything can happen - and we cannot read into anything next week. We get auto sales next Tuesday which will be frightening and even more so the monthly unemployment report Thursday (which we summarily ignore for its fiction) on a "get away" day where the only people trading will be people like us! Everyone else in the Hamptons. Boy oh boy - that should be a doozy. For the fund, everything not energy related lost - except solar which is energy related but seems to fall into "technology" since they were decimated as well. Again this is not a tale of 2 markets - its a tale of 1 market versus about 30 stocks. I feel bad for the 98% of people not buried up to their nose in those 30 stocks... it's ugly otherwise.
Frankly the indexes do not show the real damage going on underneath the surface because energy stocks are quickly becoming more and more of a weighting in the major indexes. Only on Thursday was the damage apparent and that's because that was the only day "every sector" was hit. That complex and it's tangental themes are all that is working at this time. There was a lot of carnage and it has spread from the usual suspects to larger parts of the economy. It is quite worrisome in fact - if stock prices are any indication the federal government (read: you) is going to have to pony up for some airline bailouts, some auto company bailouts, and judging from today's action some hog/chicken/and beef producer bailouts (more on that this weekend). On top of the 2nd "stimulus plan" (it's coming folks, trust me). Amazingly it all ties back to the (a) ethanol boondoggle plus (b) easy money policies of cheap and easily printable US pesos that both continue to this day. I am becoming more Libertarian by the hour after watching the disaster these leaders are imparting on us, while pointing fingers anywhere from OPEC to Chindia. Look in the mirror guys - the villians are there.
The S&P 500 continued pace with last week losing another 3.0%; the Russell 1000 (more tied to the US economy) which for some gosh reason has been outperforming the big multinationals finally was weaker and closed down 3.1%. Rising Tide Growth, all things considered, had quite a good week with only a 1.1% loss - our hedging (cash/shorts) along with our remaining 'energy' positions (I've sold off much of this complex anticipating a rotation that Ben stole from us Wednesday) kept us smartly ahead of the markets. After the huge week versus the indexes last time around, I expected to give some back this week but we continue to separate from the indexes. At some point the grim reaper will be coming for us and exact it's toll - perhaps next week; we can't hide forever. But we've built up a huge cushion so we are ok with that. 5 weeks to go to close out the year.
As always if interested in pledging an investment when fund is ready to launch (shooting for late 2008) please attach a comment here, or send me an email (need your state please). We have now breached >$3 million pledged - great news and thank you.
Price of Rising Tide Growth: $12.139
Lifetime Performance to date (vs Aug 3, 2007): +21.39%
Comparable S&P 500: 1278.4 (-12.75%)
Comparable Russell 1000: 702.7 (-11.74%)
Fund return vs S&P 500: +34.1%
Fund return vs Russell 1000: +33.1%
Last week's results here.
Since the market cap of the median stock in the Rising Tide Growth fund (median $7.1 Billion as of April 08) 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 April 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
3 comments:
congrats mark, nice performance in a very difficult week.
I have a few questions Mark.
Out if curiosity, what type of platform would you use at the "trading desk" when you launch your fund. do you use like an online broker, or is there something different for the "fundy" guys like phone calls or something.
Second, I thought the minimum investment was $2500 (2.5K, 2.5G, 5000 curtis jacksons, etc.) Well can investors do incremental additions like say monthly. I just ask because your competition (CGMFX) allows for this and I was wondering if you would too because I would be putting the bulk of money in after 2009 and I fear you will launch before end of 2009 (I say fear in that I wouldn't be able to get all the money invested I could if there was no additional investments allowed not fear in that your fund would be horrible)
Last, I observe your investing strategies now where you make money off the decline of the world/america as commodities soar. Therefore you have lesser tech exposure and financials too except for shorts or trades, because well those are losers for the most part. Now this strategy has been great since Aug 2007 and will probably be perhaps for a few more years or longer. But what type of strategies did you use say in 2000-2003 (bearish market) or say late 1990s..I am quite curious. I mean holding loads of commodity stocks would have made you miss the move in late 1990s in tech, so I was wondering what strategies you implemented, in I guess your person portfolio because well the Rising Tide fund was just a "puddle" then.
Thanks. Good week outperforming by 2% considering Ben screwed you.
nullpointer - thanks
bill,
it is not usually an online broker - there is generally a set of brokers that deal with institutions.
Phone calls are very 1980s.
Yes as with any fund there will be incremental investments and an automatic monthly program to invest (dollar cost average). I don't know the amounts yet - I have to balance things being a small fund since each transaction and account size impact costs.
The only difference between a major fund and a smaller fund is where you can buy it. i.e. brokerages and fund supermarkets. We'll get onto brokerages within a year and then once (if) assets ever hit a certain size we'll get on Fidelity/Schwab supermarkets but the fees are incredibly onerous and they take a huge chunk of money on each account.
My investment strategy is to find the biggest dislocation between what the markets think earnings will be, and what I will think they will be. The sector is irrelevant to me. At this time it just so happens to be commodities, in the past its been housing or tech or whatever. I don't really care.
In fact I've been trying to diversify away from commodities but frankly just about everything else has not worked. This is a very narrow market. If I had just gone "all in" into commodities my performance would of been that much better.
But you are only reading/seeing me the past year. So don't extrapolate the current with the future. In 5 years I could be running and gunning in financials and housing. It all depends where the next leg of growth is. Right now the pockets of growth are very narrow and all related to small subsectors of the global economy so we're stuck in this small part of the sandbox.
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