DON’T TRIM THOSE HEDGES JUST YET
14 October 2009 by TPC
23 Comments
In fact, I am adding some hedges today. This earnings season has already jumped 5% and the market is up in a nearly straight line over the course of the last few days. I would take this monster rally as an opportunity to add some hedges. My favorite plays? Short the Yen and writing some covered calls.
I still have a bull bias thru earnings season, but the move in recent weeks warrants a bit of caution. The TPC Model Portfolio is handily beating the market on a risk adjusted basis. I’ll have full details on it shortly….Stay tuned.
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So the TPC model, mostly in cash with hedges on somehow kept up with this 20%+ move in the SP500? I recall you were cautious some 8 weeks ago.
Explain for the masses how you measure “risk adjusted” as well. Without anything transparent to measure you on the site its hard to really follow the “model” other than in an ethereal way.
Try,
Looks like you started reading the site around August or so. That means you missed my crash call last year, my bearish call at the beginning of the year, my bottom call on March 8th, my bullish calls before each earnings season, etc etc.
If you’re pretending as though I wasn’t bullish heading into this earnings season then I don’t know what you tell you – read the site more regularly perhaps.
Regardless, the Model Portfolio hopes to silence commenters like you who do nothing but add negativity to the overall site. Patience. I am tweaking it so as to avoid misrepresenting my real portfolio performance (which is not a global macro approach at all).
TRY – Where have you been? TPC has been saying for almost a month that we were going to see another quarter of better than expected earnings and a rally. If you are short or on the sidelines then don’t be angry at those of us who are actually making some $. It’s your fault and no one elses.
I read TPC every day.
I wouldn’t characterize TPC making bullish calls into both Q2 and Q3 earning seasons.
My impression of TPC’s recommendations is “be cautious, do not short into earning”.
Guys dont you understand.
Everyone is making $ in this mkt. Bulls of course, Bears like Rosie (long bonds and gold, ignore the short SPX), TPC (ignore the cautious comments since 950spx), Peter Schiff (long EM, ignore the short SPX) ….
Only Peter Thiel is willing to admit he blew it.
BullishMark Reply:
October 14th, 2009 at 2:42 PM
what about you X? You have been bullish for a while. How much money did you lose last year?
TPC Reply:
October 14th, 2009 at 2:52 PM
An excellent question. I see from your past comments that you’ve been very bullish for a long time. Congrats. But how many steps backwards did you take last year before taking your one step forward this year?
X Reply:
October 14th, 2009 at 3:48 PM
Neither BullishMark nor you know how i did last year, unless you assume i am a permabull which would be pure conjecture on your part.
I like your site. You have a few useful datapoints and your writeups are thoughtful. I have challenged you on your views on the consumer, ISM/durable goods, earnings, Rosie favoritism, Elliot Wave etc. All to get a balance view across, because to me the economic recovery was clear.
You are a macro guy/topdowm. I am a stock picker/bottom up. I quite frankly dont care what you view is or Rosie’s view, or how your portfolio is doing. I ran $ for years for a hfund, and dont have to work anymore – just manage my money.
What bugs me is when bears say they have been bullish all along. Like Rosie! When he was with Merrills he came to our place and gloated about a 1Million jobs loss month in 2q2009. I am happy he has been put in his place.
All the best.
TPC Reply:
October 14th, 2009 at 3:59 PM
I think readers know I have not been bullish all along. I have never portrayed that. I have missed a substantial portion of the rally and remained hedged far more than I should have, but the point remains – my risk adjusted returns have been remarkable since I began keeping audited records (Sortino well over 2.0) and my portfolio is at an all-time high.
Whether you want to believe me or use my site as a guidepost is entirely up to you, but I don’t recommend it.
I welcome your criticism, but if you’re going to do so you might be better off finding some proof. Otherwise, you’re no better than what you accuse BullishMark of being.
Personally, I’d prefer to keep the comment section on point by helping one another out and whatnot. You’re clearly an experienced investor. Perhaps your comments would be better served by helping people up rather than trying to tear (me) down?
Thanks for listening to the rant….
TPC Reply:
October 14th, 2009 at 4:01 PM
Also, your comparison of me to Rosey is entirely off base. He has been bearish the entire way up. I have been bullish on and off at strategic and important points.
I read TPC every day also and this comment stood out to me. TPC certainly thought earnings were going to be very good and thought the market would rise. Whether he actually did that is impossible to know, but as he often says, the readers have to decide for themselves. He isn’t your dad:
TPC (author) said:
James,
As I mentioned above, I haven’t run the hard numbers yet, but yes, a leveraged long position into earnings looks likely based on my preliminary results….I know it will be mostly fake, i.e., cost cutting with very little revenue growth, but better than expected is better than expected on Wall Street. The analysts are still way behind the curve….
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[Reply]
# 28 September 2009 at 6:21 PM
Guys,
You don’t really think I will be on the right side of every move do you? I was bullish up to SP 1,000 (not 950 as X says) and missed the run up to 1050 before turning bullish again into earnings. It’s all verified on the site….
More importantly though, my portfolio is at an all-time high because I sat out the 45% losses of last year. Most investors are just fighting to get back to break-even.
Either way, I am working on a way to make my calls more visible and verifiable so this argument is not even worth having….
BullishMark Reply:
October 14th, 2009 at 2:48 PM
ignore the assholes. i have found that critical people are generally just jealous because of their own personal faults.
TPC Reply:
October 14th, 2009 at 2:50 PM
I actually welcome the critics. If I am going to refer to my performance I should be able to back it up with verifiable facts. Trust me, I am working on something, but because I don’t only use global macro (which is all I talk about here at TPC) it’s a little difficult to come up with the model portfolio that appropriately reflects my actual performance.
PLT Reply:
October 14th, 2009 at 4:25 PM
TPC,
It is your site, and do what you think is best, but I would also prefer that you ignore the bashers. Regular readers know that your information and predictions have been very good, and if someone doesn’t like it they should just go elsewhere, rather than bash. I don’t think you need to respond to these jerks in order to keep your readership, but that is just my $.02 (now only worth $.01, the way the printing presses are churning out money).
TPC Reply:
October 14th, 2009 at 4:57 PM
Thanks PLT. X and TRY are both fairly new readers and blindly ignored both of my earnings calls and instead prefer to focus on the fact that I have a macro bearish view – which regular readers know has little impact on my actual short-term trading. I think they’re highly misinformed or prefer not to give me credit for my bullish calls over the last few months. Why they do that is beyond me.
Regardless, it’s nice to know that there are readers like you who don’t have a directional bias or an axe to grind.
I was a reader of TPC back when you had the original blog format (which I much preferred btw) and I have to come to TPC’s defense here. TPC was not only bearish for the first 2 months of the year, but called the bottom nearly to the day. It is the best call I have ever seen a blogger make. He claims to have called the crash last year, but I wasn’t around for that so I can’t verify. Anyhow, I remember his bottom call only because I didn’t buy anything and I kicked myself for it. He turned neutral after a 20% move in stocks before turning bullish again before each of the two earnings seasons. He has only been short during this rally at one point and it just so happened to be the largest move down in early June (he turned bullish heading into that earnings season). Following his moves would have netted you 75% of the entire 60% move while sitting out all of the losses of Jan/Feb and even getting short for a brief period in June. I can’t be positive what your returns would be but north of 20% is an almost guarantee.
TPC was bearish from 1000 to about 1050, but recently turned bullish heading into this earnings season – another prescient call. He stresses risk adjusted returns and his returns have clearly been stupendous this year. Anyone who can’t see that has not been following the site very long.
Personally, I am extremely greatful for the hard work he puts in. Thanks and keep up the great work.
TPC Reply:
October 14th, 2009 at 6:22 PM
Glad to see some people have stuck with me form the beginning! Thanks for the kinds words OR.
re:”because I don’t only use global macro (which is all I talk about here at TPC) it’s a little difficult to come up with the model portfolio that appropriately reflects my actual performance …”
TPC, is there some reason you don’t show a complete model portfolio? Unless you’re running a big market moving hedge fund what can be lost with a little transparency (you can always delay your portfolio update by 48 hours as well … go ahead front run us!)? Any reader that wants to track your performance can do so if they wish.
The other advantage of showing a model portfolio is that it clearly shows when you are taking a clear position as opposed to blogging about some uncooked investment thesis (PS nothing wrong with that). Some of the readers’ criticisms may be misplaced because they are not clear when you are just blogging (“I wouldn’t feel comfortable shorting XLF”) versus clear positioning (today: 60% cash, 10% long EWZ, 30% short JPY; yesterday: 100% long TLT).
Keep up the good work.
TPC Reply:
October 14th, 2009 at 6:24 PM
jt,
I am working on a model portfolio which I plan on disclosing on a weekly basis in the next few weeks. I think readers will find it really helpful.
And I don’t disclose my actual portfolio because my strategies are proprietary and I would be doing my clients a great disservice by disclosing positions and revealing the methods I use.
jt26 Reply:
October 14th, 2009 at 7:40 PM
Thanks TPC. Agree, it’s undersirable to use your actual portfolio, but a generalization that relates to your blog posts are helpful. For example, “short GS” is not the same detail as “short XLF”; “long INTC” is not the same as “long SMH”. It’s possible to use the closest ETF portfolio as a broad asset generalization. Similarily for options, “write covered call, SPX, Dec09″ is not the same as “write covered call SPX” or “far out of the money call DE” or even “far out of the money call, farm/construction equipment”. All the best.
TPC I do believe you make pretty decent calls but I also don’t think you trust them fully enough to take full advantage and you seem to urge a lot of caution which doesn’t lead to high rewards. Like you said you sat on the side lines when the markets were crashing, yet you didn’t short. And I truly doubt you began buying all you could in March, even though you turned bullish. I have the same problem though, it is called risk aversion. Then again, I am only 19 and don’t have a hell of a lot of money to gamble with…but try and trust yourself more and actually trade on that trust. I turned very bullish in March, and I should have put a lot of money into the markets, but didn’t. Though I did buy Ford at like 3 dollars and sold around 6, but that was my best trade…I am beginning to turn bearish for the first time in a while, and will probably begin buying puts shortly (like in a week or two)…anyway good luck and I read your blog every day because I do believe you are in tuned and you have good blog entries.
TPC Reply:
October 14th, 2009 at 11:59 PM
I hedge. That is very clear. I am never all in on anything, but I certainly always lean in a direction which has been pretty clear….
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