Matt Callow's 2008 Investment Themes: So Far, So Good

Did you follow the abysmal market performance this week and watch your hard earned capital slowly (or rapidly) melt away? It amazes me how many professional analysts and money managers acknowledge the rapidly approaching U.S recession, then offer "defensive" tips to preserve as much capital as possible. Why play defense in this market when you can use this bad beat market to your advantage. I'm not trying to pat myself on the back after just one week (okay, maybe a little) but the Aggressive Trader Portfolio that I suggested last week laid out 8 themes that are doing pretty well so far.

As a benchmark, here are the one week (12/31/07 - 01/04/08) performances of the major US indices:

• DJIA -4.23%
• S&P 500 -4.52%
• Nasdaq -6.35%
• Russel 2000 -6.50%

Here's how each of the eight themes fared this week:

• Theme 1 (Long China stocks) -1.18%
• Theme 2 (Long Yen Options) +107.50%
• Theme 3 (Long Canadian Dollar Options) -36.67%
• Theme 4 (Short British Pound Options) +43.52%
• Theme 5 (Long Gold Futures) +0.00% (although gold surged this week, I did not take a position as I was awaiting a pullback)
• Theme 6 (Short REITs) +7.09%
• Theme 7 (Long Ag Stocks) -2.53%
• Theme 8 (Long VIX Futures) +0.00% (VIX was up 23% this week, but I did not take a position.)

Starting dollar value was $1,000,000. Cumulative one week performance was a gain of 14.7%. Had I actively been in Themes 5 and 8, my returns would have been crazy.

As I mentioned in the original article laying out these themes, this portfolio is not for the faint of heart. But using basic fundamental analysis and applying it to your trading will enable you to PROFIT from this downturn, instead of merely accepting the "preservation of capital."

As always, trade at your own risk.

Disclosure: Actively trading Themes 2, 3, and 4 through options and futures.

Comments

[zb:]

Thanks Matt. I am trying to educate myself on being proactive in a bear market.

2008 Jan 06 10:17 AM

[kkin365:]

Your themes 2, 3, and 4 are currency vehicles -- I find I would not be able to compete with professionals on FX dealings. Ditto for 8, which, I was told, was (when I tried to do, 2 or 3 months ago) open only to professionals. Thus, one is left with only themes 1, 5, 6, and 7 -- and your gain for the week would be rather modest: -1.18% + 7.9% - 2.53% = 4.19% or 1.4% on average for the 3 themes (excluding gold, since you took no position). Still, my congratulations.
4

2008 Jan 06 09:12 PM

[Solution:]

Did you put your own money in ?

2008 Jan 07 08:31 PM

[Matt Callow_:]

See my disclosure above.

2008 Jan 07 09:17 PM