Flight to Safety = Treasuries… and Natural Gas?
Last year we wondered if natural gas was becoming a “flight to quality” play; rising on days when traditional “risk” assets were decidedly down. While that hasn’t been the case for most of the year, the curious price action of natural gas on down days was on display today.
Newsletter: One Year After MF Global: Are We Better Off?
Our weekly newsletter is out, and now that it’s been a year after MF Global declared bankruptcy and left the futures industry in a state of disarray, where are we? Do we really understand what transpired? Have we made the reforms necessary to prevent it from happening again? Here, we take a look at how the story played out, the reforms we’ve instituted to date, and the steps we need to take moving forward, both as an industry and as individual investors.
Getting More Than You Bargained For
Whenever we try to explain our industry to the uninitiated, we usually get asked some variation of, “So if I buy a corn contract, will a truck full of corn show up at my door one day?” We have to explain that, no, trading futures contracts doesn’t necessarily mean taking possession of the underlying commodity – but a hedge fund’s recent experiences show that sometimes, you might get more than you bargained for.
Afraid? You will be… you will be
Last week, amidst the internet-wide reminiscing about the October 1987 stock market crash, we joined in with our own take on the lessons of that day. However, one of our readers and a blog author himself – Michael Harris – raised a few points of contention with our post. Since there are few things we love more than a good debate, we decided to continue the conversation.
Black Monday 1987 and the 100 foot tall man
Even though it is hard to look anywhere today without seeing a piece on the fateful crash of 25 years ago today, we couldn’t resist getting in on the action. While managed futures were in their infancy back then, but lesson of that day is just as important for CTAs as for any other investor.
Disclaimers
Managed futures, commodity trading, forex trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. You should not rely on any of the information as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments.
The entries on this blog are intended to further subscribers understanding, education, and – at times – enjoyment of the world of alternative investments. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.
The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any 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.
The performance data for various Commodity Trading Advisor (“CTA”) and Commodity Pools are compiled from various sources, including Barclay Hedge, RCM’s own estimates of performance based on account managed by advisors on its books, 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 mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on RCM’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by RCM, and averaging of various indices designed to track said asset classes.
The mention of market based performance (i.e. Corn was up 5% today) reflects all available information as of the time and date of the publication.
The owner of this blog, RCM Alternatives, may receive various forms of compensation from certain investment managers highlighted and/or mentioned within the blog, including but not limited to retaining: a portion of trade commissions, a portion of the fees charged to investors by the investment managers, a portion of the fees for operating a fund for the investment managers via affiliate Attain Portfolio Advisors, or via direct payment for marketing services.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.
See the full terms of use and risk disclaimer here.
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