August 26, 2011
Attain Capital
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The big news yesterday was the “bailout” of Bank of America by Warren Buffett. After weeks of attempting to defend themselves and their capitalization (stooping to what Josh Brown called “investor relations on acid” at one point), it was Uncle Warren to the rescue… to the tune of $5 billion.
The Wall Street Journal made a good point on his efforts:
Bank of America shares [were] up 22% to $8.55 in early trading, from $6.99 [Wednesday], on news that Warren Buffett is buying a $5 billion stake. Remember, $5 billion was the amount Mr. Buffett spent on Goldman Sachs back in September 2008. Just for the record, that did not stop Goldman’s stock price from falling, hard, for a while longer.
It seems as though, in some ways, Buffett is displaying signs of contrarian investing- buying into the drawdown. Unfortunately, the only way this strategy works is if the investment is going to rebound. Buffet has not been so lucky in the past- Goldman Sachs stock value has declined over 14% since his September 24th, 2008 buy-in.
But is this investing in a drawdown, or is it the propping up of a financial titan, as some have speculated? But at the end of the day, barring some back door Raj Rajaratnam dealing, how effective is it to try to prop something up- be it bank, currency or entire sector? Let’s think about some of the most recent market interventions:
- Quantitative Easing- Yay, liquidity! Except… maybe not. The value of the U.S. Dollar has fallen by over 14% since QE1 was introduced on March 18th, 2009. All the money in the markets that was supposed to spur hiring? Not so much. Josh Brown from the Reformed Broker summed it up quite nicely: QE2 simply didn’t work. It temporarily jacked up stock and food and energy prices but it resulted in zero hiring, zero new business activity and zero real estate market amelioration.
- Bank of Japan- Seriously, the BOJ may be the worst forex investor in the history of the world. As Zerohedge explained quite succinctly here and here, efforts by the Japanese to keep their currency in check has failed miserably. We’re talking billions of dollars worth of manipulation down the drain. Even though their March 2011 intervention was slightly more durable than the others, generally speaking, their track record is about as bad as it gets these days. Our favorite quote on the subject? “Going forward we will need to measure the half-life of Japanese intervention not in days, not in hours, not even in minutes, but in actual ticks.”
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Date of Intervention
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Max Drop
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Days to Bounce Back
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September 15, 2010
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-0.71%
|
3
|
|
March 17, 2011
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-7.40%
|
118
|
|
August 3, 2011
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-2.73%
|
5
|
|
August 23, 2011
|
???
|
???
|
- TARP- The biggest, baddest bailout on the street, this bill was supposed to deliver us all from the economic hell that was the credit crisis by throwing enormous sums of money around. Here we are, two years down the road, and where do we stand? Housing in the dumps, unemployment soaring, foreclosures up, wages down, and Warren Buffett is instituting what amounts to a second bailout of Bank of America. Fantastic.
The fact is that intervention is all too often a temporary, inefficient means of getting what you want in the world of finance. Stocks and currencies will always be susceptible to this kind of manipulation. Futures, as we’ve discussed in the past, have found themselves both negatively and positively impacted. The end result here? Nobody knows… least of all, Buffett. With Bernanke set to deliver his highly anticipated comments from Jackson Hole later today, everything could change in a moment.
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.