My Eight Themes for 2008 Are Paying Off

On Dec 31st, 2007, I set forth eight themes that I thought would make money in 2008. We divided a fictitious $1M between the eight themes. Over the last year, I have led you step by step through the moves I made in each theme. Here are the results so far...

Theme 1: Long China. (Down 44%) Hindsight is 20-20, but we obviously picked the wrong time to ride this bubble. Here's how our original $125,000 has fared:

Theme 2: Long Japanese Yen. (Up 320%) We're currently sitting in cash, waiting for a good entry price to jump back into XDN.CD:

Theme 3: Long Canadian Dollar. (Down 100%) This call never panned out for us and futile trading in the options left us with a contract that expired worthless. There is a measly $171 left in cash:

Theme 4: Short British Pound. (Up 513%) Clearly, my best call. The good news is, I believe this move in the Pound has only begun:

*Note performance value indicated is gain since last option trade. Total return stated is from Theme Inception (Dec 31, 2007)

Theme 5: Long Gold. (Down 15%) Gold has not been acting like it should in tough economic times like these. I think this is due to a few possible reasons. Prior to this call, gold had already made a substantial move higher. It's possible that we got in after the move. Also, the US Dollar is showing strength, forcing the price of gold down. Where it goes from here (like oil) is anyone's guess:

Theme 6: Short Real Estate. (Up 7%) I really expected this Theme to play out a lot sooner than it did. However, we are just now at the beginning of the credit crisis. I expect this theme to continue to do well heading into 2009.

Theme 7: Long Ag Stocks. (Down 33%) These stocks outperformed the falling market all year, and just recently started to fall with the corresponding fall in Emerging Markets. I expect this sector to continue to have problems heading into 2009:

Theme 8: Long Volatility. (Up 135%) Volatility has been up and down all year, and recently hitting all-time highs. Admittedly, my timing in the options has not been as good as it could have been, but I'll settle for this performance:

*Note performance value indicated is gain since last option trade. Total return stated is from Theme Inception (Dec 31, 2007).

Adding it all up: The fictional $1M has turned into $1.99M, for a nice 99% return in a market that is off 35% this year. Not too bad!

Stock position: None.

Comments

[PastTense:]

Of course it was too bad--since it was all fictional and not an actual profit that you made.

2008 Oct 22 03:50 PM

[Captain Obv...:]

Come back when you've put some real skin on the line.

2008 Oct 22 04:50 PM

[Urbane Gori...:]

Why don't you tell us if you "walked your talk." Did you invest your own money in the above fashion or did you pull a Bogle and sit on some funds? Enquiring minds want to know....

jegan ;-)

2008 Oct 22 05:39 PM

[Al-USA:]

It doesn't matter if he "walked the talk", in my opinion. What's important is that he seems to have the ability to ride broad trends. In my book, that's a job well done - keep it up.

2008 Oct 22 09:38 PM

[Urbane Gori...:]

My question is.. Does he believe in his own prognostication? If he doesn't, why should you. There are a million opinions out there .

jegan ;-)

2008 Oct 23 12:54 AM

[Deepfryer999:]

How do we know theme 4 is really up 513%? The only data he provides shows it being up 43.83%.

2008 Oct 23 08:23 AM

[Matt Callow_:]

Deepfryer999> Sorry for not replying sooner. The provided picture shows how much that trade has made since the last change. I have been in and out of the British Pound options all year and you can see all the calls on my blog. The original value placed in this theme was $125,000. It finished the year at $1,500,166.88 for a gain of 1100%. If you want evidence, you'll find it on my blog.


On Oct 23 08:23 AM Deepfryer999 wrote:

> How do we know theme 4 is really up 513%? The only data he provides
> shows it being up 43.83%.

Jan 02 01:09 PM