Bookkeeping: Increasing Hedges in Energy and Basic Materials - Trader Mark

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Bookkeeping: Increasing Hedges in Energy and Basic Materials
Jun 19, 2008 03:59 PM UTC

Trader Mark

Return	Risk
-7.03%	MID

Analyst

Profile & Performance

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Symbol	Sentiment	Start	Return	Closed
SMN		06/19/08	-66.68%	--
DUG		06/19/08	-55.23%	--

Via Fund my Mutual Fund:

Taking Ultrashort Basic Materials (SMN) up to 4.1% of fund
Taking Ultrashort Oil - Gas (DUG) up to 4.3% of fund

The China news might finally be the catalyst to break the trend - we'll see. This is a market (energy) trading more on emotion and momentum, rather than the underlying fundamentals at this stage of the move in my opinion. And when 1 commodity sells off the hedge funds sell off everything no matter the fundamentals. So I'll just increase these insurance policies (hedges).

So far the "insurance" policy in the Basic Materials has been a big loser for us

(ouch)

....but the Oil - Gas position has actually worked very well, since we entered at an opportune time. [May 21: Oil Looking Toppy to Me - Starting Ultrashort Oil & Gas]

(not bad from late May)

Politicians meddling might hurt near term psychology as well - parabolic markets are generally built on psychology first and foremost. [Danger - Politicians Ahead]

If a sell off would ensue from here, this means that our rotational correction thesis has played out... yet again - about the 5th time in a row since last summer. Still up for debate if that is indeed how it plays out as freight trains like this are a dangerous thing to stand in front of. If we're wrong, we'll ratchet down these positions quickly.

Long both positions in fund and personal account

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Locationh

61%

1 point commented 443 days ago reply

I can do better then a 2.25% dividend investing on my own which is what this MF stock does with your money.

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Dow Jones U.S. Basic Materials index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.

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