As we compiled our newsletter for this week, we looked back over the month of October with a wistful sense of “if only.” Ahh, to be back just a short month ago on October 4th. Global markets were in a pronounced down trend, with the S&P 500 down below 1100, Crude Oil down near $75, and managed futures (per the Newedge CTA index) enjoying a gain of 1.29% through the first four days of the month.

The stage was set for one of managed futures famous moves – performing well while the rest of the world was in crisis mode. Here they were- short nearly everything (stocks, energies, grains, and foreign currencies) and long bonds (typically a boon during crisis periods) while the world appeared on the brink of collapse due to the never-ending problems in Europe.

But, alas- it was not meant to be this time around. The markets rallied significantly after October 4th- going on to set a blistering pace for the rest of the month, with Crude Oil closing higher 11 out of 19 trading days following. Between this complete shift in momentum and the shock to the senses the industry received with the month-end implosion of MF Global, October 2011 is a month that many would love to erase from the books… but for the discerning investor, there are lessons here you’ll want to remember.

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