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Short For Three And A Half Years And Outperforming 98% Of Traders: This Hedge Fund Did It
One of the most flagrant "conventional wisdom" market lies is that if one is positioned net short, one is doomed to be crucified, margined out and left penniless, broke and homeless in this quote unquote market, which has been micromanaged by all central banks since 2009 as a confidence-boosting policy vehicle whose only purpose is to levitate higher while creating the wealth effect, ignoring reality, and failing at what used to be a market's primary function: discounting the future.
So what is the truth?
As it turns out one of the best performing hedge funds in the past 4 years is neither a net-long, nor a market neutral, but Horseman Capital, which as of July is -54.2 net short, and has been short since the start of 2012.
Here are the Horseman's stunning returns by years:
- 2012: 16.27%
- 2013: 19.15%
- 2014: 12.63%
- YTD: 7.63%
This means that Horseman's cumulative return in the past 3+ years has outperformed 98% of all hedge funds, and certainly most of the net-long biased ones.
How did he do it? By using a long bond position as a natural hedge. In fact, Horseman's net equity short is more than offset by a 60% net long in bonds.
This means that, big picture, while stocks have levitated higher, bonds have levitated higher-er.
So the next time you hear every single pundit on propaganda TV or in Wall Street research desperate to sell you stocks (which they currently hold), or to force you to sell your bond holdings (to them), think why for a few seconds.
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Musta been short PMs
From the article, last sentence: "So the next time you hear every single pundit on propaganda TV or in Wall Street research desperate to sell you stocks (which they currently gold), or to force you to sell your bond holdings (to them), think why for a few seconds."
Isn't that a lovely Freudian slip, saying "gold" instead of "hold"?
"desperate to sell you stocks (which they currently gold"
Freudian slip?
That bojack is one awesome trader.
thats bold to hold gold bars like it were Hermae. You could get bollocked by the Athenians.
They may do it again : to Mutti; if she holds on too long to their nuts.
HFs are OK when money is cheap if they go passive. As, when QE reigns passive funds are even better.
Bonds are going to be the Black Swan...................event
Ahh no brainer. Go long everything stocks n bonds. Double the profits. Simple !!
wow what a genius
do you advise your family too ?
you are the biggest MORON
Get that damn flea off my screen!
That's a fed-bug.
It's intelligent. It does figure 8s
index funds did better than this guy.
He may have been the best of a bad HF bunch.
Don't fight the FED?
With so many liquid stocks in the US (and around the world if you have access) there are always tonnes of good short candidates.
Look at the miners for example, charts just begging to be shorted over the last several years.
However, if you just short because the'market looks overvalued' then any bull market will soon take you out.
Congrats on doing really quite well. A lot better than most here I would suspect and on a much larger scale.
So a 40-60 mix of equities and bonds? That's the Vanguard Wellesley Income Fund VWINX.
Ok great ...now sell the bonds.
wrr
The tel tale sign of a Ponzi scheme is the trajectory on losses. The dude that took Madoff down was Dr.H. Markopolous<sp?> [see Chasing Madoff] and he determined that Madoff was a Ponzi simply by glancing at the prospectus on earnings that Madoff's company was displaying via the market. Algorithmic Trading would have to be more than spot on to achieve .98 success over time.
I bet they had leveraged bet on bonds in multiples of their equity position. Give me comparison of their risk adjusted returns otherwise this doesn't conclude anything.