Dear Investors and friends,
Reporting live from the tall building on the right: The RSA building in down-town Mobile, AL.
I have received so many nice e-mails all of them voicing concerns for me and the decision to resign from Capinordic, but let me put you all to rest:'
- I resigned as the match was not right - most of the job needed to be done out of Stockholm, something I initiated myself and believe in.
- We did NOT lose money at all - actually 12/15 of our funds are beating benchmarks as we leave - and do remember this is LONG ONLY pretty much, so it would have been hard to lose as I joined March 1st ! Yes, maybe me being back in hedge fund world is as much a sign as it was me joining long only fund in March 2009 ;-)
- Remember on my "hedge fund" allocation has been 80% cash - and with 20% unleveraged down-side plays (read: options) you lose money but not a lot!
- I will upgrade this blog to not only being more frequent, but I will also make public all of the trading models we use - and keep the score - making the models more useable by you.
- I am very happy to be restarting my hedge fund later this year - I look forward to running the business and I feel better than in a long, long, long time, so again thank you for all your thoughts - it has been nice to hear from you all.
Now on to the market: I briefly touched on the risk that a US Dollar crisis was the one thing we considered a macro risk: From my Blog May 13th, 2009:
"There is a growing concern among us, that a US Dollar crisis could be the one catalyst which get these markets moving again – we have had remarkable low volatilities considering Swine Flue, Geithner plans 1- through- 50, Non-Farm et al – A break-out in volatility is very likely – and we note that USD vs. JPY is again on the move – almost 102 JPY per USD in early April now @ 96.60 – and if 93.80-ish goes we could have a 5th wave being in action indicating below 87.00 JPY per USD."
Now it seems this risk is getting closer. I read research and news stories daily now on how the foreign "lenders" - read China, Japan, Russia and Middle East is getting frustrated with the policy of "printing money". (
Maybe the White House is about to learn about the key principle of physics: (Newtons third law:(
The real risk for the US being that "speculators" gets the wind of the US Dollar weakness and we could have an attack similar to Soros attack on GBP.DEM in 1992 (by the way reading SOROS: The world most influential investor, by Robert Slater - READ IT!)
For most of 2009 I have been in the camp of long US Dollar based on the cyclical nature of this crisis; where the US clearly is out ahead - while Europe is only about to feel the real pain ......and combined with the fast improving current account I have - wrongly- been assuming the US dollar would see some strength as Europe slowed, but.... this potential US Dollar crisis is REALLY a major tell sign something could happen and I wil reass this risk over the next few days.
On the ground in the US - I am humbled by the amount of FOR SALE signs out - clearly there is desperate final move to getting "some money" out of a loss making situation - I also note the local newspaper main category under classified is: FORECLOSURES - and this even before the moratorium on foreclosures (moving from 90 days to 180 by Obama decreed) runs out! The mood is more "realistic" but the pain is there to see ......
Strategy wise I remain with my "breakout" strategy in S&P - below 880 close I will, again, go short, and I note how the market continues to fail above 920-00, this week could be critical.