It seems that as more time passes, there are more and more financial resources popping up making it harder for you to sift through the important and the not so important. In and effort to make it easier for you to digest the most read articles on our blog, we’re re-posting the top 10 articles written by us, about alternative investments, in 2016.
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Nominated for Best Picture by the Academy Awards, The Big Short tells a story of the people and the financial firms that helped lead to the credit crisis of 2007-2009 through and edutainment lens. Adapted from Michael Lewis’ book, the story does are fairly good job at breaking down complex information in a way that most people can understand. However, not all the character’s names are the same as the real life people. Here’s a chart that tell you the names of those people in real life.
Hillary Clinton was the first presidential candidate (that we know of) that spent a considerable amount of time trading in the futures markets. She is definitely the only candidate that went on record stating that her trades (implying futures trading) isn’t risky. So how did Mrs. Clinton do in her futures trading account? There are various reports on how much money Clinton made in her futures account, but both the New York Times and the Wall Street Journal reports agree that Clinton made a $1,000 investment and at one point had $100,000 in gains in about 10 months.
Just about the time we overhear conversations in bars about buying a couple barrels of crude oil, is just about the time we can tell you we’re entering unprecedented territory in the crude oil markets. It’s just about the time we’re getting calls from people asking the best way to invest in crude oil, the best way to profit from crude oil eventually rebounding. Chances are, you’ve already been profiting from crude oil’s decline (we’ll get to that in a second) so it might not make sense to bet on the other way, but we know better than that. We know there’s those among us who see this down move into uncharted territory (the largest down move in the past 30+ years) and see the opportunity for a bounce higher.
One of the most debated questions regarding alternative investments, is how should be in a portfolio? Most people look to find the Efficient Frontier, crunching data that finds the optimal reward with the lowest risk. In this particular article, we look at the optimal allocation to Managed Futures for each year and the average of them all.
It’s a question we think most investors don’t really think about until their portfolio is down double digits from the peak equity. The rhetorical question that gets asked even less, is how long are you willing to sit in a drawdown before you get out? This doesn’t mean that the investment strategy is doing poorly, it just hasn’t hit new equity highs in a while.
Most people discuss drawdowns but the depth of the drawdown, not the length of the drawdown (aka how long the drawdown lasted. While it’s hard to think about drawdowns while stocks continue to hit new all-time highs, stocks actually have a lengthy history of operating in a drawdown. Stocks were down 20% or more about 1/3 of the time over the past 20+ years (slightly higher than average thanks to two bubbles bursting), while Managed Futures was never down 20% (you know, 0% of the time).
In the end, these binary events are part of the investment landscape. There will surely be more than a few managers and investors yelling bollocks as they watch a market they have exposure to move wildly in reaction to the vote. But they’ll be quick to remember that these events add volatility before and after, which is a good thing; even if the performance on the day of the event is no better than a coin flip. They’re part of the equation, even if they don’t fit in the equation.
The answer lies in what type of investor he is. He picks the stocks he believes in. He’s a feelings investor. And when it doesn’t go his way – he goes ‘activist’ as they call it, pushing his way onto the board and pushing the company through the large ownership percentage to change this. He’s been nothing if not popular with this strategy – continuously in the news headlines. But this trade highlights the ENORMOUS differences between human based discretionary program such as Pershing Square and their systematic, computer based hedge fund brethren.’
For those who don’t know – we have a bit of a problem with the usual numbers reported as assets under management in the space by Barclayhedge, who include the world’s largest hedge fund Bridgewater in the managed futures asset total. In our opinion, this does a disservice to investors, vendors, and business people in the industry trying to gauge the size of the space and where they fit into it. That’s led us to pick apart the numbers a bit and report what the “real” assets and asset growth look like without those two stalwarts (one of which is not managed futures based at all). Without further ado, here’s what the rest of the space looks like:
In looking over the factors at play in each market, you can’t help but notice that there’s some common elements at work across these different commodities. We all know supply and demand affect prices, but what exactly are the supply/demand levers – and what other facts/factors affect prices. We couldn’t help but mashup the CME’s three infographics into our own piece, highlighting 5 main categories of events that move futures prices this way or that. Enjoy: