Comments on Fund My Mutual Fund: Bookkeeping: 'Rising Tide' Performance Week 32

t-rader: I have a good coal exposure as it is; som...

2008-03-16T13:38:00.000-04:00

t-rader: I have a good coal exposure as it is; some of the charts are breaking down and with the market in such shoddy condition I don't really see a need to add more. I try to weight each sector by allocation and I don't need coal at much more than 10%. It is already near there. No change to long term outlook and if the stocks drop more I would be happy to make it more than a 10% allocation but it would require lower prices.

jeff: I explain most of your question in the far left margin. I am usually in a range of 0-25% cash and 0-20/25% short. Some combination so I can be anywhere from 100% long to about 60% I believe is near the lowest I've been. In normal times its 70-85% long.

kb, thanks I will go read the article. This is just a very different time than any other. If we were only dealing with pending recession it would be one analysis, but we have an entire credit mess that is unprecedented and hence very hard to measure in terms of market effect. What happened to bear stearns could in theory happen to most major financial institutions - its about confidence. This was a bank run. Once confidence is gone there is no reason a bank run cannot happen at Citigroup or Merrill Lynch. So the question than becomes what does the government do if that's where we are headed? All these financial institutions are effectively leveraged - so the "fear" at Bear is they do not have enough money to pay off their obligations but that is true for just about every financial institution - they are not "supposed" to have enough cash on hand to pay off all their obligations at once. But just like Northern Rock, once the belief is something is amiss you get what are effectively institution bank runs, and it could in theory happen to almost anyone. Keep in mind much of the financial world is now leveraged from 5:1 to 30:1... so that is why things could get quite drastic. But I do expect more capital infusions by the Fed to keep propping up these institutions and hence more money supply/inflation.

I'd have a different answer for you in a run of the mill correction/recession. On top of all this is a consumer that I truly belief is facing headwinds they have not faced since the late 70s/early 80s. And loss of house ATM which he/she has relied on for half a decade to mask their falling wage growth adjusted for true inflation. Now as inflation rises they fall more and more behind, and their biggest asset is not only falling but they cannot tap it for capital. This is why I am very worried about the situation overall.

trader mark..there is very interesting article in ...

2008-03-15T22:28:00.000-04:00

trader mark..there is very interesting article in Saturday's Wall Street Journal. The name of article is "Debt Reckoning: US receives a Margin Call." Former Federal Reserve vice president takes same position that you have had from beginning of crisis. It is not a liquidity problem but value of assets. Article really drives home points you have been making. Do you worry that as more of the news is bearish and the general public takes on more of a panic mode..that it is a sign of a bottom in the market? Going back to the theory that when all the market analysts are warning of impending doom, the market is close to bottom.
KB

Mark, I know you move in and out of your ultrashor...

2008-03-15T20:05:00.000-04:00

Mark, I know you move in and out of your ultrashorts to tilt your net delta position one way or another, but being a long fund, am I correct to assume your net overall delta at any given time is positive? How far do you generally tilt that overall exposure one way or another?

I noticed the weakness on the coal names this week...

2008-03-14T17:48:00.000-04:00

I noticed the weakness on the coal names this week as well. I actually bought some today. I'm surprised you didn't buy some for the fund. Has something fundamentally changed or are you seeing another leg down rather than up?

For the near term, meaning 2 hours from now, I don't see the market breaking down 1270 unless the FED really disappoints on Tues. It seems we've had every reason to go down this week. You've had every reason for it to go down with Carlyle going bust and BSC tanking ... well I guess they got bailed out. And the whole TASL thing and not to mention broker earnings next week. I think I just talked myself out of my bullish stance for holding 1270 for the near term. Ugh this market is too tough!