mandag den 27. oktober 2008

Monday morning Quarter-backing......

The three driving premises for our research remains:

  1. Cost of funding drives market and valuations
  2. Price of liquidity new unknown (tax on money)
  3. No prior analogy historically will work (because this is different, very different)


We had our Weekly Investment Meeting this morning and we moved our cash from 85% to 95% reflecting this market has now entered what can only be called the final capitulation phase

95% cash reflects that we do not see how we can trade this market with any conviction. Last week we had strong both economic and pricing bias negative – this we maintain; We see our 765.00 minimum target being met shortly – also we have seen almost all of our long-term price target met:

Gold: below 700.00
EURUSD: below 1.2700 – our new target 1.2300 also met – now 1.2000 next level. Note this month end there will LARGE DEMAND for US Dollars on the fixing for benchmark’.
Crude: 50.00 $ getting closer
Bunds 117.00 + met.

We are in process of calibrating our 2009 view as to make money from here you need some “fundamental” valuation/benchmark to work against – not using our rule #3 – we need to asses things from forward-looking perspective not in analogies to history.

Why rule number #3 is some important can be seen in almost every single link below. The Hedge Fund Industry is dying day-by-day due to not accepting rule number # 3! When you talk of a true “paradigm shift” it means nothing can be interpreted the same any longer – Like science before and after it was discovered the world was not round!

I guess for most people paradigm-shift is just a word- maybe it’s time for people/investor to understand the true meaning of Paradigm as defined by Thomas Kuhn in his book: The Structure of Scientific Revolutions. I recommend the book for the few of you who are interested in facts rather than “nanny-stories”.

In my humble European Elitist, high-horsed, arrogant way (Did I miss any of the superlatives?) opinion this market still has 90% amateurs who should not be “authorized” to advice, let alone manage other people money. Look at the odds: There are fewer good fund managers in the world than brain-surgeons. At least with brain-surgeons you know they have performed the task before, has proper medical/surgical training & the have experience, but in fund management you have people who talk more BS than most College do when they seriously intoxicated. Shame on the banking and fund management industry – it is time for: transparency, best-practices, and proper measurement of risk. The evolution right now is fortunately letting the Cowboys die hopefully, there will be some money to manage for the remaining serious players.


Wait-and-see. We are long small down-side in Stoxx50, Short Gold – nothing else on. This market is UNTRADEABLE. Watch for Fed on Wednesday, and mind Sarkozy he is getting more and more dangerous.

Links for reading:

ONE of Britain’s best-known hedge funds, RAB Capital, has stopped investors cashing out of a second of its flagship funds. Investors in RAB’s Energy fund - which has lost more than 50% of its value this year - have been told they will not be able to liquidate their holdings.
Those who want to quit will be handed “redemption shares” instead of cash - a promise on behalf of the fund to pay back investors as and when it can sell out of enough stocks.
The fund, run by Gavin Wilson and Mark Redway, is entitled to do this under existing agreements with investors

Highbridge Capital Management, which is majority owned by JP Morgan Chase and has $25bn under management, is axing 10 per cent of its New York-based staff and plans cuts in Europe and Asia.
The volatility in global stock markets has savaged the performance of some of the world’s best-known hedge funds, raising fears of a collapse in the sector, which could cause a fresh crisis in the financial system.
Big names including Deephaven, Marshall Wace, Citadel Investment Corp, Lansdowne Partners, Third Point and Harbinger, have in recent weeks sustained losses of as much as 20 per cent in some funds.
Investors pulled at least $43bn (£25bn) from US hedge funds in September, according to TrimTabs Investment Research. This is nearly five per cent of the global sector’s estimated $2 trillion in total assets.

CHICAGO (Reuters) - Examiners with the Federal Reserve have questioned Wall Street counterparties about their exposure to debt and other holdings of Citadel Investment Group, The Wall Street Journal said on Saturday.
Citing people familiar with the matter, the Journal said the Fed questioned the counterparties in at least two instances in recent days.
Katie Spring, a spokeswoman for Citadel, said Citadel continues to have more than 30 percent of its investment capital in cash.
The Journal's report came a day after Citadel, one of the world's largest hedge funds, said it had more than $10 billion in available credit. The Chicago-based fund company, which manages $18 billion, held a conference call to quell rumors it was facing liquidity issues.
The fund firm, founded by Kenneth Griffin 18 years ago, denied on Friday market talk that it had approached the U.S. Treasury for a cash injection and that the Federal Reserve was coming to inspect its

Safe trading,

Med Venlig Hilsen Yours Sincerely Steen Jakobsen, Chief Investment Officer, Saxo Fund Management Saxo Bank A/S -London
40 Bank Street, 26th Floor Canary WharfLondon E14 5DA
Phone: +44 (0)207 151 2010 Fax: +44 (0)207 151 2001
Please visit our website at:

Trades in accordance with recommendations, especially in leveraged investments such as foreign exchange trading and investments in derivatives, can be very speculative and may result in losses as well as profits. Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information contained in this email.

Please read our full disclaimer.

0 kommentarer: