Volatile Metals Fund
Red Kite Metals surged 188 percent in 2006 on the back of a global commodities boom, according to investors. It then plunged 50 percent in 2007, rebounded with a 19.8 percent rise in 2008, then fell 0.9 percent in 2009 and 25 percent more in 2010, when Red Kiteâs bet that copper would decline proved premature.
Clients fled the metals fund, reducing assets to $200 million as of November, investors say.
Farmer says that from 2008 to 2010, the U.S. Federal Reserve buoyed markets, including those for commodities, by pouring billions of dollars into the economy. At the same time, he says, analysts mistook Chinaâs aggressive buying of copper as a sign that its construction boom was continuing, when in fact the Chinese were stockpiling the metal.
The sluggish world economy makes Farmer a pessimist.
âWe are not very positive about things,â he says. âThe world is in a bad place. We are still fighting to recover from a very serious recession, and I think it is going to go on for another four or five years.â
