Wednesday, August 19, 2009

Pledge Update August 2009

I have not done a pledge update in ages, which quite a few readers have emailed me I should be doing more often to keep reinforcing the reason for the blog. They make a good point, so I am trying to train myself to be a bit more self promotional.

The #1 question I am asked each week is when do you start. My answer is always the same - it is not up to me, it is up to potential investors. When I see enough capital ready to go that won't cause me to lose $150K a year running the fund, I'll go. We actually were getting mountains of pledges this time last year before the market imploded in September & October 2008; which I believe drove out many retail investors from the market. I suppose for mutual fund purposes, as much as I scoff at green shoots I should be rooting for a market that only goes up 30% a year, to inspire confidence in those who have been burnt repeatedly by the stock market this decade. But since we are ambivalent on market direction in our strategy I tend to not care too much about which way the market goes. But obviously "up, up, up" is better for the masses.

Anyhow, the days of getting $600-$700K a month in pledges seem to be gone but I assume anyone who has pledged in 2009 has some tough skin after what you've experienced the past few years. For newer readers, we started a new pledge sheet this January [Jan 6, 2009: New "Pledge" Sheet - Obama Era 2.0] since the crash within the crash (Sep/Oct 08) changed the landscape, and I assumed some of my older pledges were not going to be valid. Of course than we had another crash mid January to early March. ;) Nothing easy. But I am confidant we'll get there.

I will work on updating this sheet on a more regular basis and being more "promotional" if you will about it, with reminders more often than say once every 6 months. Let me copy the same caveats for pledges as I listed in January here:
  1. Assume a pledge amount that is firm based on a fund opening in "6 months"
  2. Assume at any point in 2009 the market may be down 30% from here
  3. Make your pledge based on liquid assets that are not currently in some high octane mutual fund that loses 40% when the market falls 30%, nor gains 50% when the market gains 40%. That money is not something that can be counted on with the volatility in this market.
Same format as before: first name, last initial, pledged amount, and state you live in. To be clear, you are not sending me money that I'm going to hold until launch when you 'pledge' - you are simply making a verbal commitment: "when you are up and running, I have $X amount ready to invest". You can attach a comment to this post or as most people do, send me an email (my address is found on the upper right of the blog) with the above information. I'd prefer an email if possible.

Here are the pertinent posts if you have not read through them
  1. The overall goal and why I'm aiming for $7 approx million [Jan 7: Reader "Pledges" Toward Mutual Fund Launch]
  2. Frequently Asked Questions [May 26: Frequently Asked Questions] Very important to read
  3. Why I need your state [May 23: Investment Pledges by State] Keep in mind a state's eligibility can be turned "on" overnight once we're up and running
Let me also throw in the Bernie Madoff sidebar

Q: How do I know you won't run off with my money?
A: Well, that would defeat the purpose of this endeavor and pretty much waste the last few years of my life, but over and above that I won't ever see your money. I will be paying a 3rd party source to handle just about everything outside of making buy and sell decisions. So as with any fund, you're going to be sending money, receiving paperwork, etc from someone I outsource to. No different than many smaller independent funds.

Updated list below of pledges - some people said "I'd pledge" but did not give an amount and others did not give a state; those are at the top. If you tried to pledge and don't see it on the list below - please email me, I might of missed it in the avalanche of emails. If you wish to change your amount, please email me as well.

Name Amount State/Country
Raeann 10,000 ???
Stockspeter 7,500 ???
Heather 10,000 ???
B Shah
??? (no amount)
Bob B 50,000 AR
Ed S 5,000 AZ
Alan N 15,000 AZ
Armour B 50,000 AZ
Art H 50,000 CA
Benjamin W 5,000 CA
Dave K 100,000 CA
Greg B 15,000 CA
Kurt C 10,000 CA
Ron W 10,000 CA
Tom L 25,000 CA
Ted C 5,000 CA
Brian L 50,000 CA
Rich P 30,000 CA
Shannon V 5,000 CA
Sunil K 10,000 CA
Anatoly S 10,000 CA
Wesley W 20,000 CA
Burt B 10,000 CA
John L 5,000 CA
Alven Y 5,000 CA
Piyush M 5,000 CA
Paresh P 5,000 CA
Dinesh K 5,000 CA
Naresh P 5,000 CA
Jay S* 5,000 CA
Mark B* 25,000 D.C.
Vic C 10,000 FL
Wes T 10,000 FL
Ron* 100,000 FL (sailing)
Olivier N 5,000 FL
Bob H 3,500 FL
Chris I 20,000 FL
Sandy S 50,000 GA
Mark L 2,500 IA
Ian J 5,000 ID
Jay S 10,000 IL
Ben 10,000 IN
Jake R 50,000 KS
Bill H 5,000 MA
MB 20,000 MD
Mark 60,000 MI
Ralph B 25,000 MI
Scott L 7,500 MN
Tom S 20,000 MN
Marshall H 5,000 MO
Wolfgang S 7,500 MO
George L 10,000 NC
Brian C 5,000 NC
Colleen P 5,000 NC
Adam B 5,000 NJ
David B 50,000 NJ
Frank G 500,000 NJ
Henric B 25,000 NJ
Ryan T 7,500 NJ
Andrew 100,000 NV
Gary M 10,000 NY
Rob T 10,000 NY
Igor O* 375,000 NY
Jason N 30,000 NY
Tim C 20,000 NY
Atul R 5,000 NY
Rob #2 6,000 NY
Adam M 10,000 OH
Justin K 10,000 OH
Dilip K 5,000 OK
Bill G 10,000 PA
Jatinder M 10,000 PA
V.K.K. 20,000 PA
Bruce R 100,000 PA
Robert T 75,000 RI
Heidi H 25,000 RI
Doris S* 100,000 SC
100,000 SD
Dave S 20,000 TN
Joe P 10,000 TX
Doug M 40,000 TX
H.S. 2,500 TX
Ian* 50,000 TX
"Phong" 10,000 TX
Jason D 5,000 TX
AZ 10,000 TX
Chair 15,000 VA
Lisa 5,000 VA
Zhong L 10,000 VA
Kevin L* 125,000 VT
Ron 20,000 VT
Linda A 15,000 WA
Scott R 60,000 WA
Mike H 2,500 WA
Eric S 40,000 WA
Brian J 5,000 WI
Jason 10,000 WV
Stan T 10,000 Z-Canada
Anurag V 20,000 Z-Germany
Ken 50,000 Z-Hong Kong
S.E.H. 12,500 Z-Singapore
Tomaz K 20,000 Z-Slovenia
Ward P 2,500 Z-Sweden

Total $ 3,187,000
Goal $ 7,000,000
% of Goal 45.5%

To Go $ 3,813,000

Performance Metrics Since August 2007

2009 YTD results here

I was working in another platform that did not allow individual shorting in 2007 and 2008 so I was handicapped in my strategy but you can see my "first year" results (Aug 2007 to July 2008) here. Short story: we beat the market by about 24% through July 2008 even with major handicaps to our strategy - i.e. only being able to employ HALF of it. Long time readers will know I called out many individual shorts that ended up falling 50-100% (Freddie Mac, Washington Mutual, Las Vegas casinos, restaurants, retailers, emerging markets, commercial real estate) yet we benefited not one bit from it - so I believe my 2007 and 2008 performance as solid as it was, is massively understated. In fact we tried to use Ultrashorts (since those were allowed in our old platform) as a hedge and even as the sectors fell 50%, we lost money on the Ultrashort ETFs - talk about insult to injury.

I compared myself to my peer groups in the mutual fund world during summer 2008 at various 1 month intervals, we generally were always in the top 10 (not top 10 percentile, but literally top 10 of all equity funds) and had some time as #1. Last time we looked was August 2008.

We left that old platform ( due to the reasons above, plus technical difficulties constantly encountered there fall 2008. So there is a "window" in my performance while I searched for something new I could use - we found in January 2009. That 3 month window was marked by sharp losses in October and then gains in November and December 2008 by the market - I was only posting trades on the website at the time but have no "track record" for those 3 months.

So unfortunately I don't have a 2+ year track record all in 1 place, nor employing my strategy fully during those 2+ years... only since Jan 2009 can I say it's been what I wanted to do, but this gives you a 40,000 point of view of what we've been up to. My estimate is even with the handicaps of not being able to short for the first 16 months, I'd still have the top ranked record among all equity funds since August 2007, and by a long shot. Of course this is only a simulator and actual results in real world would cause more drag to performance, and last but not least I have to give the tagline - past performance is no guarantee of future results. But that's my "resume".


To finish, while economic calls have no bearing on investment results, most of my big picture economic calls from 2007 - early 2009 are all listed for historical reference on my "Economic Forecast / Track Record" tab at the top of the page. I am also confidant that those calls were more accurate than 99.8% of the investment pundits who are celebrated on a daily basis.

The idea of the blog when I started it was to show my track record both on economic calls and investment results in a transparent basis, and hopefully excel. With that track record out in the open, I'd be exposed as a sham or not very quickly. Thus far I am content with what I have shown and the results achieved and if anyone has the time to read the 4500+ posts thus far - they can see for themselves. ;)

/End of Sales Job

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012