Saturday, July 26, 2008

'Rising Tide Growth' Performance vs Peers June Update

Posted by TraderMark at 10:12 AM TweetThis
Aside from measuring Rising Tide Growth versus market indexes, the past few months we have begun new measures to track performance versus it's peer group, the "mid cap growth" category of mutual funds.

Apr 23: 'Rising Tide Growth' v Mid Cap Growth Mutual Fund Peers
May 9: 'Rising Tide Growth' Performance vs Peers April Update
Jun 23: 'Rising Tide Growth' Performance vs Peers May Update

Note: For newer readers, the Apr 23 post has a detailed methodology breakdown, and is worth the quick read.

This is still not an apples to apples comparison until we hit the July period as that will be the completion of our first year, but as each month passes we get closer to a direct comparison. With June complete we have 11 months of direct comparison and the other 1 month we assume 0% return, to reach a 12 month return (ending June 30, 2008).

Our general big picture goals once live is to try to finish in the top 10% of our category most years - that would place us at the very top over 3 year, 5 year, 10 year time frames. Of course that goal won't be reached every year, but have to aim high. There are about 1870 funds in this category so any finish near the top 200 or so would place you in the top 10%.

I figured June would be an excellent month because we did great versus the indexes, which had a horrible month at -8.6% on the S&P 500 for example. We lost 1.1%. Knowing 99% of our peers do not hedge with short exposure I figured we'd expand our lead as May's #1 fund in the category which we did. July, of course, is going to be awful and push us back to the pack but I still hold out hopes to finish as #1 :) And a top 10 finish (out of 1860 funds) seems assured. Always good to keep things in perspective even though I love to have winning periods every month - it's just not realistic.

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As of June 30, Rising Tide Growth NAV was $12.11, creating a 21.1% return (we started at NAV $10.00). As always my results are kept by third party, which I link to in the left margin of the blog.

RTG Return: +21.1% (19.4% after fees)
Top 25 peer range (1 year as of June): +16.4% (1st place) to +3.0% (25th place)
Average of all peers: -6.6%

Here are the top 25 performers in the category for June 30, 2008.

So let's put things into perspective. Our annual expense ratio will be 1.75% so +21.1% turns into +19.35%. So we'd be the best fund in America in our category by 3%. We'd be beating the 25th best fund in our category by 16%+. We'd be beating the average of our peer group by nearly 28%.

As I scroll through all the non sector funds - we are ahead of every small cap fund in America (growth, value or blend) - by a wide margin. We are ahead of every mid cap fund in America (growth, value or blend) - value and blend has no close competition. Only in the large cap arena are a few funds ahead of us - a few Janus funds, 1 Fidelity fund, and Quaker Strategic Growth.... and of course Mr Ken Heebner. :) So all in all we'd be top 10 in all the non sector mutual funds out there of any size through June. We'll check back in 4 weeks to see how far we fall back in July but I believe I'd be winning Rookie of the Year if we were up and running. ;) If you can survive this market, you can survive anything...

Obviously our long term goals are to be near the top of this list in the 3 year, 5 year, and 10 year categories...

[Legal Disclaimer: Rising Tide Growth fund is a hypothetical fund and in no way, shape, or form can we guarantee similar results in a similarly structured product when launched]

Posted by TraderMark at 10:12 AM Comments (6) | Edit This Post | Create A New Post

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6 comments:

rosesryellow2 said...

Mark,

+20% is pretty darn good. Did you get the link comparing Heebner, Montgomery, and Danoff over a 5 year or so time frame on the email?

Pretty impressive for all 3... Heebner a bit better for sure. Growth over a 5 year time frame is what Montgomery shoots for and says over and over again in his quarterly reports...

Regarding CEF... Gold and Silver... lower volatility then miners which can be good or bad depending.

Similar to GLD except with silver.

Hedging: I looked at top holdings or DIG and DUG 3-4 months ago and they were in the top 5 for both... that allows them to sell some when one hits a short term extreme range and buy the other and vice versa on the other extreme. You can't do this with stocks but could by buying opposite ETFs or (can you short etfs?). It might be a nice supplement to the fund... If it's good enough for Goldman... good enough for me...

Other points...
Companies that triple earnings (MOS and POT and other commodities) don't stay flat for long... we'll see how long but if they want to keep shorting I will short with them along with my long positions with buy to cover stops for shorts.

Bollinger Bands:
It really behooves you to include these in your charts. You'll see.

July 25, 2008 6:47 PM  
rosesryellow2 said...

Than miners. GLD and CEF charts are very similar... the slight difference in the silver...

July 25, 2008 6:49 PM  
Dr. Baugus said...

I AM A DOCTOR AND CANT UNDERSTAND THIS NONESENSE BELOW; INSANITY AT ITS BEST
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Your Money
Housing Bill Has Something for Nearly Everyone
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By RON LIEBER
Published: July 25, 2008
If you are ignoring the housing bailout bill because you think it benefits only troubled homeowners, you may miss out on a windfall.

Skip to next paragraph
Related
Times Topics: HousingThe bill, expected to be passed by the Senate in the next few days and then signed by President Bush, does offer incentives to certain overextended borrowers and their mortgage lenders.

But it also includes many handouts to first-time homebuyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way.

Huge numbers of people buying homes for the first time, for instance, will be eligible for what amounts to an interest-free loan from the government. Meanwhile, older Americans will now be able to borrow more and possibly pay less for reverse mortgages that allow them tap the equity in their homes.

Whether larding up the bill with all these benefits is good for taxpayers is a debate for another part of the newspaper. But there is no shame in taking advantage of what is offered. In fact, you would be foolish not to.

Here are some of the new benefits:

RENEGOTIATING MORTGAGES Part of the bill is devoted to the creation of a program that may allow some people to cancel their old mortgage loans and replace them with new fixed-rate loans lasting at least 30 years. The amount of the new loans would be no more than 90 percent of what their property is actually worth now.

So who is eligible? You need to have originated your troubled loan or loans on or before Jan. 1, 2008. The loans in question must be on your primary residence. Vacation homes and investment properties are ineligible. You will also need to verify your income, which many borrowers did not have to do in recent years.

Also, as of March 1, 2008, your monthly housing payment (including the principal on all your various mortgage payments, interest, taxes and insurance) has to have been at least 31 percent of your monthly household income. So if you were earning $5,000 a month and had housing payments of $3,000, you are eligible. But if you had payments of just $1,400, you would not be, presumably because that loan is affordable given the size of your income.

Lenders, however, are not required to give you a better deal under the new law, even if you do meet the qualifications. They may not be willing to negotiate unless they think you are truly on the cusp of foreclosure.

If you manage to get a new loan, you cannot take out a home equity loan for at least five years after you get the new mortgage. You will also have to pay a 1.5 percent fee each year on the remaining balance. Finally, you have to hand over no less than 50 percent of any appreciation on the home to the government once you sell. Sell the house in less than five years, and you will have to turn over as much as all of the gain.

This program ends on Sept. 30, 2011. While it does not officially take effect until Oct. 1, lenders may be willing to start their negotiations with borrowers now.

BREAK FOR FIRST-TIME BUYERS If you are buying a home for the first time, and it is your primary residence, you are eligible for a federal tax credit of $7,500 or 10 percent of the purchase price, whichever is smaller. With a tax credit, you subtract the credit amount from the total you would otherwise pay to the Internal Revenue Service. So if you owe $1,500 and you qualify for the credit, you would end up getting a $6,000 refund.

There are two big catches, though. If you earn a modified adjusted gross income of more than $75,000, or $150,000 if you are married and filing your tax return jointly, the credit starts to phase out. For single people, it phases out completely at $95,000 of annual income, while for married people filing jointly, it phases out at $170,000.

But you have to pay back the credit over the next 15 years, in equal amounts each year when you pay your federal taxes. That makes this more like an interest-free loan than a true credit. According to the National Association of Realtors, there were about 2.5 million first-time home buyers in 2007. A large proportion of them would have qualified for this credit, but whether it is enough to push would-be buyers over the edge this year remains to be seen.

The tax credit is retroactive to home purchases on April 9, 2008, and expires on July 1, 2009. If you purchase a home from Jan. 1, 2009 to June 30, 2009, you can claim the tax credit on your 2008 tax return.

ADDITIONAL DEDUCTION If you are a homeowner who takes the standard deduction on your federal income taxes and does not itemize, this one is for you. You can now take an additional federal tax deduction of $500, or $1,000 if you are married and filing your tax returns jointly. Again, this one is gravy; you get it in addition to the standard deduction.
Since itemizers are often people who pay a lot of mortgage interest, this deduction will generally benefit people who pay little or none, like those who have paid off their mortgages entirely or close to it. There is one hitch here: you will need to report the property taxes you paid on your tax form. If they are less than $500 (or $1,000 if you are married and filing a joint return), your deduction will be limited to the amount of the property tax you paid.

Skip to next paragraph
Related
Times Topics: HousingREVERSE MORTGAGE CHANGES Reverse mortgages allow older Americans, generally 62 and older, to get a lump sum or a monthly check that comes out of their home equity. They do not have to pay the money back until they stop living there permanently or their heirs sell the house.

The problem with these loans, however, is that they often come with high fees. Moreover, some salespeople pressure borrowers who are applying for the loan to purchase annuities, long-term care insurance or other financial products that are not necessarily in the borrower’s best interest.

The bill tries to address both issues. First, it limits origination fees on reverse mortgages at 2 percent of any loan up to $200,000 and 1 percent beyond that, up to a maximum of $6,000.

The bill also states explicitly that borrowers cannot be forced to purchase an annuity or other financial or insurance product as a condition of qualifying for a reverse mortgage.

Finally, the bill raises the maximum amount that people can borrow. Before, the limits were set on a county by county basis, according to AARP’s legislative policy director, David Certner. The biggest allowable mortgage available anywhere was just over $400,000. Now, there is a nationwide cap of $625,500.

REDEFINITION OF JUMBO LOANS Often, if you want the mortgage loan with the lowest possible interest rate, it has to be small enough to be purchased by Fannie Mae or Freddie Mac from whatever bank or other institution originated it.

Under the new bill, Fannie and Freddie have permanent authority to buy bigger loans in areas with high housing costs. (Temporary measures allow them to buy bigger loans, but those expire on Dec. 31.) They can buy loans up to 115 percent of the local median home price, though they cannot buy any loans larger than $625,500. Any larger loan will generally be a jumbo loan, which will cost more in interest.

A BREAK FOR VETERANS Lenders will have to wait nine months, instead of 90 days, before beginning foreclosure proceedings on homes owned by someone returning from the military. Lenders must also wait a year before raising interest rates on a mortgage held by someone returning from military service.

These provisions expire on Dec. 31, 2010.

July 26, 2008 10:00 AM  
hieunguy said...

Hi Mark,

18% cash + 27% shorts, i have not seen you this bearish in a long time, with the ultra in the short side, you not only fully hedge your porfolio, but you seek return on the short side, so my guess is you are looking for the bottom on spx will not hold at 1200. So you agree with me on DBC? by looking at your holding, it's no different then 25% cash, 25% SSO, and 50% SDS, you are saying 1 position mutual fund is a funny concept, but your return and positioning is no different.
Let see what is my view on your current strategy? I would say, you are about 1 week early, (perhaps change your name from trader mark to early mark???) Do i see those 18% cash deploy to 45% shorts by the end of next week? That would be very funny. I do not see the market drop significantly in the next 2 weeks, we are in similar trading range (Nov to Dec time frame), the market is in a reset mode right now, don't get too bearish, that time frame is reserve for aug- sept. Well, this is just my opinion, i hope you have a good laugh at it.

July 26, 2008 4:54 PM  
TraderMark said...

I am always early. I was forecasting all this fallout in the economy last summer but then the market went to all time highs (S&P) in October 07.

Sometimes knowing too much hurts you, you know? Blissful ignorance was the order of the day in the fall. "The Fed will protect us" and "subprime is contained" etc.

So the question from week to week is what the mood of the market will be, the backdrop is not changing nor will change but we had big rallies in the fall and spring 08. So what changes the mood, or why suddenly on Mar 31 everyone is upset and Apr 1 a new run begins.

I've never been over 27-28% short I don't believe since we started. I am bearish because I see a lot of very bad individual charts - unable to bounce, and the S&P 500 unable to even go test 50 day moving average. I find that pathetic but who knows what each day brings. All it takes in this market is two big days of 250+ pts and everyone is giddy and the charts look much better.

This market has no memory of the previous day, week or month. It is abnormal and random. I believe this signifies a lot of unknowns and a lot of nervousness among the masses. The government interventions are also constant unknoweables.

The last reason I am in this position is fundamentals are not being rewarded in most cases so that leaves me very little to buy. The things I like are either being thrashed or trading at 70-80x PE ratio. That doesn't jive well with my idea of buying growth at "reasonable value". So very little to buy in current charts. Hence cash. The short exposure is because we had this epic squeeze of nonsense so I'm able to reinitiate my short exposure at 50% off 2 weeks ago in some instruments (i.e. SKF)

Again, the market can turn on a dime as it has no reason or rhyme and rally 1000 pts from here. I expect nothing each day with this market and since fundamentals have become nearly useless I am moving to emphasis on charts until stocks with quality earnings are rewarded. Or become cheaper.

July 26, 2008 5:11 PM  
JPASSANA said...

Congrats on your performance. Looking forward to being able to actually invest in your fund

July 27, 2008 1:07 PM  

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