Surf's Special Situation Journal
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The guy was up over 160% in 2006 -- made my frind wealthy-- then We invested in 2007 during the death spiral as described here
http://www.bloomberg.com/apps/news?pid=newsarchive&refer=home&sid=a8jtLSxIdqK4
Then starting in 2008, after being wiped out--- he rebounded huge again. Truly amazing
<I>In 2007, Farmer's faith in the commodities boom took a blow. Red Kite Metals made big bets on continued price rises. When aluminum dropped 14 percent and copper barely gained, the value of the fund's holdings fell 50 percent in the first 11 months of the year, according to two investors.
Like the endangered bird of prey for which it's named, Red Kite was suddenly fighting for survival.
Now Farmer, a veteran of U.S. commodities trader Philipp Brothers, has come roaring back. The price of copper rocketed 26 percent in January and February and set a new record of $8,820 a metric ton on March 6. As of March 20, it was $7,840.
20 Percent Rise
Red Kite Metals gained more than 15 percent in January and more than 20 percent in February, according to people familiar with the fund's returns.</I>
He was up 180% the previous year. Big risk is required for big rewards in the markets. Risk means there's a chance for loss ---
When I read Market Wizards, interviews with the top traders in terms of big rewards, I seem to recall that "big risk" was no more than a 7% loss on a position before cutting bait. They'd exit and re-evaluate, re-enter if something changed.
It's quite possible all these different traders trading different things at different times and making huge returns were all in collusion for the book, claiming they used tight risk management just to get more of us amateurs to trade with stops
That's exactly what happens....the "weak traders" with tight stops get taken out, and then the market goes in their direction.Quote from NoDoji:
It's quite possible all these different traders trading different things at different times and making huge returns were all in collusion for the book, claiming they used tight risk management just to get more of us amateurs to trade with stops
Farmer had both the capital and the guts to make sure that didn't happen to him. He knew his fundamentals....and the technicals were short-term against him. All he had to do: just hang in there. Indeed, that's what he did.
No guts, no glory.
Quote from NoDoji:
When I read Market Wizards, interviews with the top traders in terms of big rewards, I seem to recall that "big risk" was no more than a 7% loss on a position before cutting bait. They'd exit and re-evaluate, re-enter if something changed.
It's quite possible all these different traders trading different things at different times and making huge returns were all in collusion for the book, claiming they used tight risk management just to get more of us amateurs to trade with stops
Clearly the market is full of deception. Where do you think the money comes from to lubricate the markets machinery? Most if not all of the large trend funds have drawdowns of 35 plus % regularly, reality is different than what someone told schwager.
Earlier you said he was "wiped out". Now you're saying he held his position through a 50% drawdown and hung in there until fully recovered?
I do agree that sufficient capital will let you hang in there for years if necessary waiting for the market to make you whole again, unless you're too highly leveraged, in which case there's always a naturally occurring stop loss.
Do you see any irony in your comment "the technicals were short term against him" and your insistence that TA doesn't work?
During that "against him" phase, technical traders were riding a nice trend and making money. When the trend ended, they reversed sides and made some more money.
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