Surf's Special Situation Journal

cornix · Nov 5, 2012

Quote from syswizard:

Don't forget that IF Farmer was a big player in the NYMEX market, every penny move was +/- 1.25 million dollars.
Thus: a 1 buck move in copper was worth $125 million !!

Yes I understand. Meant more letting the fund fade by like 50% though. That's quite a hit.

syswizard · Nov 5, 2012

Quote from cornixforex:

Yes I understand. Meant more letting the fund fade by like 50% though. That's quite a hit.

It's simply a part of the fund manager's DNA and how he decides to run a fund. No question, he could have bankrupted the fund had the market continue to go against him after a -50% move.

cornix · Nov 5, 2012

Quote from syswizard:

It's simply a part of the fund manager's DNA and how he decides to run a fund. No question, he could have bankrupted the fund had the market continue to go against him after a -50% move.

Yea, apparently fund manager mentality is often different from the mentality of a trader trading for him/herself.

Pekelo · Nov 5, 2012

I didn't realize the original Bloomberg article was from 2008. Here is a newer one from January:

http://www.bloomberg.com/news/2012-...eap-47-sowing-bet-on-china-copper-market.html

"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."

This year he was betting on copper falling. Copper went sideways with 2 big runups, so I don't think this year's performance is good...He had other funds with better performances:

" Its $400 million Red Kite Compass Fund tops Bloomberg Marketsâ ranking of midsize hedge funds for the first 10 months of 2011, with a return of 47 percent, according to investors."

marketsurfer · Nov 5, 2012

Quote from cornixforex:

Yea, apparently fund manager mentality is often different from the mentality of a trader trading for him/herself.

Exactly, the reasons provided by wiz and others, are exactly why fundees like farmer are influential and wealthy from trading very unlike the retail player. Put simply, these guys embrace risk while most others shun it ( stops, etc). If you want a job that is inherently risky and teaches nothing, keep doing what the books teach. If you want to be rich, you need to take big risks and learn from what the folks who have made it do, not what they say.

cornix · Nov 5, 2012

Quote from marketsurfer:

Exactly, the reasons provided by wiz and others, are exactly why fundees like farmer are influential and wealthy from trading very unlike the retail player. Put simply, these guys embrace risk while most others shun it ( stops, etc). If you want a job that is inherently risky and teaches nothing, keep doing what the books teach. If you want to be rich, you need to take big risks and learn from what the folks who have made it do, not what they say.

I think retail traders blow up because of taking too much risk pretty often too. Those who use tight stops probably have even smaller chance of blowing up.

Maybe fund managers are different that they risk OPM mostly and are willing to risk more for that reason?

syswizard · Nov 5, 2012

Quote from cornixforex:

I think retail traders blow up because of taking too much risk pretty often too. Those who use tight stops probably have even smaller chance of blowing up.

Maybe fund managers are different that they risk OPM mostly and are willing to risk more for that reason?

That's part of it, but if they lose clients as in the case of Farmer, they lose fee income as well. Maybe Surf can explain how the Red Lite funds were charging their clients. It does appear that it was easy to redeem funds from Farmer....as that is not always the case with hedge funds.

marketsurfer · Nov 5, 2012

Quote from syswizard:

I feel bad about that one Surf. As I had mentioned in another thread, the FEMA handling of the storm has been construed as positive, despite what REALLY happened regarding the generators:
http://live.wsj.com/video/few-big-f...ticalx8#!9E0237DA-FEC5-4AC9-920C-BECE3F23C02D
Obama was given the election on a "silver crisis platter"....it was just dumb luck. Sandy helped him to win the election ! Partnering with Chris Christy helped as well....that was a shrewd move on his part. Obama's no dummy, but IMHO, he really stinks in basic economics and other areas.

I'm trying to stay positive for a Romney win. I soured on politics after raising $$ at events at my old house on north spring mill in Villanova--- then being snubbed once I didn't own the big house--- bunch of bozos for the most part-- unfortunate, but true.

syswizard · Nov 5, 2012

Quote from marketsurfer:

then being snubbed once I didn't own the big house--- bunch of bozos for the most part-- unfortunate, but true.

So much for "land of the free, home of the brave".
Today: "land of the rich, home of the politicians"

marketsurfer · Nov 5, 2012

Quote from syswizard:

That's part of it, but if they lose clients as in the case of Farmer, they lose fee income as well. Maybe Surf can explain how the Red Lite funds were charging their clients. It does appear that it was easy to redeem funds from Farmer....as that is not always the case with hedge funds.

I know there was a year lock up, so we couldn't bail despite seeing the loss. It was a 2/20 split of which I recd XX% for capital introductions