Buyer Beware – Know Who Holds Your Money
Navigating the waters of sophisticated investments can be difficult, to say the least. Unless your background is in finance, the terminology alone can be overwhelming. Of course, it doesn’t help when terminology is misappropriated (like Wisdom Tree calling its ETF “managed futures”), or when people who know little to nothing are able to sound like they do by relying on seemingly seamless use of jargon to boost their credibility.
Case in point: the lovely (heavy sarcasm) stock broker (we think) who was next to one of our associates on a flight from Chicago to New York this morning, doling out advice to some finance newbies. He was regaling them with stories of how to make money, and his “market” advice, without any kind of reasons or numbers provided to support his “wise” direction…
A Mostly Intelligent Managed Futures Rebuff
In the beginning of a new year, it’s common to see personalities from across the financial world chiming in as to what asset classes you should be investing in as you modify and tweak your personal portfolio, so it wasn’t all that surprising to see a piece up over at RegisteredRep.com addressing managed futures. After all, with asset flows continuing into the space, understanding how, why and if you should invest in managed futures is important. To be entirely fair, we’ll give the author props for addressing the opportunity in a more intelligent manner than most. Let’s break it down…
MF Global Madness Catches Fire All Over Again
Riddle us this…
Let’s say you’re an insurance claims investigator. You’re looking into a case where a man’s home burnt down. Not only do you smell accelerant at the site of the fire, but you find out that the man took out a massive insurance policy on the residence just a few days before it burnt down. What’s your gut going to tell you?
On our side of it, we tend to believe that where there’s smoke, there’s fire, and since the futures industry watched Corzine torch the confidence of investors everywhere amidst scandalous claims of illegal-tasting (if not actually against the law) rehypothecation, we’ve been smelling gasoline. Turns out, it may have been with good reason.
Nasdaq 10,000
It has been a truly amazing start to 2012 in the stock market. Exhibit A? The Nasdaq, which has taken on the 45 degree up angle chart pattern more typically seen in a curve fit hypothetical track record than in an actual stock market.
Attain Capital’s Semi-Annual CTA Rankings
It’s that time of year again, when we have the data for all of the CTAs we track through the end of 2011, allowing us to try and answer the question we get on a daily basis: What’s your BEST managed futures program? That question is always a tricky one, as depending on who is asking it, they may want to know any one of several variations on who is best. Best last year? Best for all time? Best risk adjusted return? Best in terms of lowest drawdowns?
This time around, we’re mixing things up- with an exciting new ranking algorithm, and a breakdown designed to be more useful to investors attempting to gain insight into the industry.
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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