Comments on Fund My Mutual Fund: Circus of a Day

sdk,

I am always scratching my head when pe...

2008-10-24T09:20:00.000-04:00

sdk,

I am always scratching my head when people think I'm aggressively positioned. I think people need to read the title of the blog, and read on the left side what I'm trying to do. I am not a hedge fund manager or individual trader here. Many of my readers obviously are. Compared to 99.999% of fund managers who have 0 short exposure and consider 2% cash to be conservative I've always conservative versus peers. I cannot compare to you guys out there in trading land; I have to compare versus my peers. I doubt 99.9% of my peers are 1/3rd in cash. I doubt 99.9% of my peers have held any short exposure nor do they care to. I know of a handful of funds that have went to high cash over the past 3 months but they are the rare breed.

Next, do I wish I was at my typical 20-25% short exposure right here? Yes of course. That would be great. I'd also wish I was 100% short starting on Sept 1. It is easy to point things out in retrospect. These are unprecedented times and we are now having a crash on top of a crash. I don't have any context for a 18% down week, and then a crash following it with a 1 week break on top of it. At the Oct 10th low a lot of long time bears went bullish - Jeremy Grantham, Barry Ritholtz, and Hussman to name 3. So apparently they join me in idioticy in assuming a market cannot go down 35-40% in 1 month. Maybe it can.

I run a very open platform where my mistakes are exposed. I don't think almost anyone does what I do - or want to do. I'm beating 99.9% of my peers on performance even with how crappy the performance has been. I am not beating you guys who are 100% cash nor is that my mandate. I'm not beating you guys who are 80% short or 40% short - thats not my mandate. I have to measure against my peers and if people want something that puts them up in this type of market or goes to 100% cash there is no mutual fund for them and they best manage their own money. Again, I realize I am attracting the "wrong" people (traders) not mutual fund investors with this blog which is a problem because most traders won't send anyone money anyhow. And it seems strange to me that people with all the answers would even read this blog, because by nature of knowing the future and being cautious and shorting this market the whole way down - they already are 100 steps ahead of me.

All I can say is I have to measure against my peers and I think both on economic calls and relative performance (not absolute) I think I've done ok. As well as I wish; no. Do I make mistakes. Every day. Is this market tough. Tougher than 2000-2002 to me. Am I losing money. Yes. And I'm not happy about it. Sorry if thats not enough for readers but there are many blogs to read of people who are probably doing better and best suited for traders. I'm just trying to give my honest assessment day to day and I thought I'd be a stock picker when I began this - not have to deal with the worst crisis in a century. So every day has no historical precedent and I wish I were doing better than I am.

Yesterday (10/23) was a one ring circus, today wil...

2008-10-24T08:11:00.000-04:00

Yesterday (10/23) was a one ring circus, today will be a three-ring circus. Cash is and has been king.

Mark, I'm surprised you're so heavily long right n...

2008-10-24T05:47:00.000-04:00

Mark, I'm surprised you're so heavily long right now given the pessimistic/sarcastics tones of your posts. You would be up HUGE had you left your earlier short ETF weightings alone--FXP, EEV, TWM, SRS, SMN, etc.

You're being too short-term oriented trying to catch the next "kool aide" runup when the truth is, we've BARELY scratched the surface of this recession after what is the biggest bubble (credit) in history.

I feel crappy about my holdings.. and today about ...

2008-10-24T01:41:00.000-04:00

I feel crappy about my holdings.. and today about 1/3 of them got stopped out, only for the whole market to go back up late in the day. However, i also take a small amount of comfort in the fact that all the top rated Morningstar funds are down (except for the bear funds.. ), and it is expected that by he end of this year, that 25% of the hedge funds will have closed. I figure if someone like Ken Heebner is down as much as he is.. Can I really fell that bad for being down less than him? Course, I have to keep repeating that to myself so I don't forget..

Anyway, a link to a very good article regarding these feelings:

October-23-2008

You are not as dumb as you think - or - Psychotherapy for Bear Markets
by Vitaliy Katsenelson

http://www.gurufocus.com/news.php?id=37380

jegan

Disclaimer - I work for an investment mgmt firm. ...

2008-10-24T00:11:00.000-04:00

Disclaimer - I work for an investment mgmt firm. (although I'm an IT and not a finance professional).

So far as I can see, throw fundamentals out the window. The market won't stabilize until some non-trivial portion of the hedge fund industry has been purged (whether smaller through redemptions or outright failures). At one time, with $2 trillion under mgmt; 10,000 firms; and 50% of them long-short ... well it's been a long ride (I attribute the cross-sectional volatility even last Aug to the hedgies). And it's not at all clear to me when it's going to end.

What one needs is more information on the hedge fund industry. And while there's some stuff out there now, in general that's a contradiction in terms.

Which isn't to say we can ignore things like a worldwide $500 trillion nominal in derivatives. Or a recession - and probably a deep one - with declining earnings.

One idea is: with credit markets finally easing will some of this credit become available to the hedge funds and will this slow the distressed selling (or buying back shorts)?

No, I think we've advanced past a narrowly rational scenario of that kind. The current dispensation has assumed its own dynamic.

I'd like to be more optimistic but I think it's batten down the hatches time.

luckily i sold a large portion of my MICC around 7...

2008-10-23T17:50:00.000-04:00

luckily i sold a large portion of my MICC around 70 seeing that it might not hold. Unfortunately i should've dumped it all. Just stumped by the action as the numbers don't back up the reaction.

Tom, transport stocks have been rocked on the glob...

2008-10-23T17:43:00.000-04:00

Tom, transport stocks have been rocked on the global slowdown theme. Ryder just said a few days ago they were pessimistic on the future. But having no debt is a positive and I expect a very fragmented trucker market to consolidate a lot and the winners who remain should be in a good position for the long run. Just don't think its time yet - scary chart of late; 28 to 17 on a straight line down

Buy WERN. It seems to be low, should go up in the...

2008-10-23T17:25:00.000-04:00

Buy WERN. It seems to be low, should go up in the short to mid term. They have a great position with no debt, and cash in the bank.

I see you are a MICC fan

I am aghast at wha...

2008-10-23T16:57:00.000-04:00

I see you are a MICC fan

I am aghast at what they've done to it

We used to hold it

This market is doing an excellent job of making every rule learned for 12+ years completely void and useless. It is like flying blind out here. A complete casino.

I've never felt so dumb as the past 3 months, nothing works.

interesting to note that 70% of stocks were negati...

2008-10-23T16:54:00.000-04:00

interesting to note that 70% of stocks were negative today. Unreal action. Some of the big cap like AAPL ended positive pushing the common indices up, otherwise, like you said it was a brutal day in the trenches.