While most people think of trend following when they think managed futures, the asset class has expanded to include a wider variety of strategies. We take a look at one these alternatives, spread trading, and explain several of the most common ways these trades are executed.
Category: Macro Commentary
29
Mar
2012
Hedge funds, why do we hate you? Let us count the ways…
People tend to give us a look when we scowl at the managed futures association with hedge funds. After all, if you see hoof prints, you don’t think zebras, right? The problem is that, while CTAs may leave hoof prints, their stripes are way different from their hedge fund brethren. And now there’s even more fuel for the fire…
27
Mar
2012
Have You Located the Emergency Exits?
The recent highs in the stock market have been met with a fair share of cautious optimism. Memories of the plunge of a few years back have many bracing for the eventual downturn. But talking about preparing for a storm is not quite the same as exercising your ability to do so, which leads us to ask: have you located the emergency exits?
26
Mar
2012
Corzine Dodging Bullets?
Last Friday, thousands of burned MF Global clients and industry defenders (ourselves included) seemed to let loose a victory cry when an email surfaced that seemed to implicate Jon Corzine in the plundering of MF Global segregated funds just hours before the futures titan went under.
But what a difference a few days can make.
21
Mar
2012
Apple vs Hedge Funds
It’s not hard to see why Apple has captured the attention of the financial media as thoroughly as it has. We’ve all watched Apple go up, up and up over the past 5 years, and most investors out there have probably looked in the mirror at some point and thought, “What’s the point of all this research and hard work? Why bother doing due diligence and analyzing stats until I’m blue in the face when an investment in Apple would have trounced anything else I could have gotten my hands on, including Gold?”
Since becoming the largest publicly-traded company on Earth, ways of using Apple as a yardstick have flourished. This got us wondering… how would the Apple yardstick look when applied to the hedge fund industry?
19
Mar
2012
Waterview Tower- A Leading Economic Indicator?
If you’ve strolled (or floated) down the main stem of the Chicago River in the last 4 years, you’ve probably spotted the unfinished concrete skeleton at 111 W. Wacker Drive. The building, to be called the Waterview Tower, epitomized the 2008 recession, and we can’t help but wonder whether the resumption of work on this monument to the credit crisis might be a sign that we’re nearing the top of this post-recession rally.
16
Mar
2012
Goldman Sachs Not the Only One with PR Headaches
The CFTC’s website may not be digital real estate as valuable as the New York Times, but the whistleblower letter from a JP Morgan employee, admittedly following in the footsteps of Greg Smith’s resignation letter from Goldman Sachs, is raising some eyebrows.
15
Mar
2012
If Bill Gates Were as Tall as His Money
The move in Apple’s stock over the past few years has been nothing short of unbelievable – going from $90 at the start of ’09 to near $600 today (566% gain), and from $400 just a short two and a half months ago (50% gain). The odds of a stock doing what Apple has just done would be on the order of 1 in a million or so according to standard statistical methods.
But here’s the thing – these types of outlier moves (both up and down) happen way more frequently than once every million times, highlighting one of the often forgotten aspects of the investment world, that financial matters are not normally distributed. That is, you can’t use normal statistical measures (even when using the actual outlier data…) to make observations about what may happen moving forward.
14
Mar
2012
Reminders on the Risks in Gold(man Sachs)
If you work in or care about finance, and you don’t live in the stone age, odds are you’ve seen the Goldman Sachs resignation letter. If you haven’t, read it now. And pay attention, because this is important. The letter highlights a change in culture at Goldman Sachs, from client focused to bottom line driven. This kind of change is alarming, and worth closer examination.
14
Mar
2012
UBS and Barclays to the Rescue- Maybe?
Remember that one time we said that the industry needed to rise up and make MF Global clients whole? Well, we still stand by that statement, but this isn’t exactly what we meant by it. With news of UBS and Barclays stepping up to the plate to purchase claims to MF Global money, we’re left wonder- what, exactly, is the catch here?
