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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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Rangeley Capital on Harvest
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  • Scandal Time 28 comments
    Mar 13, 2014 4:25 PM | about stocks: GM, KMI, VRNG

    Well, not an actual scandal, just some extremely awkward news to report. While we are having a very good year in real life, I made the mistake of entering a virtual portfolio in Harvest, a new site primarily designed for hedge fund managers. My picks have done badly. Really really badly. Out of 791 participants, I am currently in the bottom 5%. I accomplished this ignominious feat by intentionally including concentrated positions of volatile investments so that I had some chance of winning. There are no options allowed, but warrants are permitted, so I included losers such as GM, KMI, and VRNG warrants (none of which I own personally or at Rangeley Capital). They have each performed terribly.

    But things get worse. One of the people I am competing against is my wife… who is in the top 2%. The ugly fact is that her portfolio is up over 18% so far this year (happily Rangeley Capital overlaps with her ideas). I take no pride in this accomplishment and am not enjoying it vicariously. I am a bad loser. But what's short for good loser? Loser.

    Extensive academic research indicates that women are, on average, better than men at investing. Statistically, this appears to be so. It also stands to reason. There is nothing wrong with being passive in the capital markets and the vast majority of people probably should be. There is nothing wrong with being active when and where you are playing with an advantage. Some people - occasionally - can be. But the way to really lose an enormous amount of money quickly is to be active without any particular advantage. None of that necessarily has anything to do with gender, but in practice, hyperactivity without advantage is more likely to be a male characteristic. In this case, the wife simply made sensible investments while I was endeavoring to play a losing hand against the game itself. I shall surrender to her the passkey to my trading terminal and retreat to the backyard with a cosmo*.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: *Someone once made a completely innocent reference to Fairfield County housewifery as “drinking cosmos in the backyard”. However, for full disclosure, she does not generally drink cosmos, there is no record of her ever drinking one in the backyard, and it was generally communicated that this image does not accurately portray the breadth of her responsibilities and obligations.

    Stocks: GM, KMI, VRNG
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Comments (28)
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  • jaginger
    , contributor
    Comments (473) | Send Message
     
    Outrageous disclosure!

     

    Naw, that's pretty funny. Nice picture too.

     

    Just for the record, are the KMI warrants getting any more interesting to you at current levels? I had found them incredibly rich vs options until the recent debacle, but now they seem much closer to fair value.
    13 Mar, 04:46 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Nope, no interest whatsoever. I received them as a result of the merger consideration for my investment in EP. However, I was lucky enough to sell them well and did not have any subsequent reason to be interested. My horrible KMI investment on Harvest was purely based on the limited access to leveraged ideas and the desire to try to actually win. The dynamics are similar to charity poker tournaments, where audacious bordering on zany behavior is necessary to reach the final table (which I've done several times, but only by betting all in on coin flips early in the evening).
    13 Mar, 04:51 PM Reply Like
  • Bram de Haas
    , contributor
    Comments (288) | Send Message
     
    Betting all-in in situations that are just barely +EV is usually pretty good practice in these type of tournaments.

     

    It isn't if your edge over the field is ginormous but usually these tournaments (with the need to finish in 1 night) have you with a pretty shallow stack quickly. That erodes your edge.

     

    In addition if you forgo small edges early this is magnified by the extra chips you would have won in the cases where your gamble worked out in later situations.
    11 Apr, 04:48 PM Reply Like
  • losbronces
    , contributor
    Comments (616) | Send Message
     
    To win these types of competitions, you usually have to go to extreme risk, high volatility stocks and hope they come through for you. And of course, if it is allowed, using options to really leverage the starting investment amount. Of course, all the orders fill if you pick a price that is hit. Not very realistic at all (especially with most options contracts).

     

    The value of this type of competition is nil in my opinion. If someone wants to do something with real money (preferable their own), then the competition is valid. You can take a lot of risk when the only downside is your pride.

     

    In the case of the funds, the results are on display every trading day (or at least monthly). That is a valid competition, although even then "past results do not guarantee future success."
    13 Mar, 04:54 PM Reply Like
  • connellybarnes
    , contributor
    Comments (306) | Send Message
     
    I agree -- and actually would argue that this is the optimal strategy. If the goal is to win, a good strategy is to maximally leverage up bets with OTM call option style payoffs, which will likely have low Kelly fraction. It's like founding Facebook or Google -- winner take all market, keep raising more VC money, and hope you win instead of go bankrupt. Of course this is exactly the opposite of a normal portfolio where you want a diversified set of very high Kelly fraction bets.
    15 Mar, 03:38 PM Reply Like
  • connellybarnes
    , contributor
    Comments (306) | Send Message
     
    Probably improved rules would be an "investment robustness contest" -- require everyone to select at least e.g. 8 positions, then rank everyone by the performance of their worst idea.
    15 Mar, 03:42 PM Reply Like
  • tuliptown
    , contributor
    Comments (775) | Send Message
     
    let me know when your better half comes up with her on Motiff. Looks like the Rangley bench has some solid depth.

     

    :*)
    13 Mar, 05:05 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » I would tell you (and would invest in it myself) but her ideas are super bearish and Motif is not yet able to process shorts.
    13 Mar, 05:10 PM Reply Like
  • MIaffal33
    , contributor
    Comments (70) | Send Message
     
    What's your wife's username on SA? haha
    13 Mar, 05:13 PM Reply Like
  • Dr. Kris
    , contributor
    Comments (319) | Send Message
     
    I love her "I told you so" look.

     

    Priceless.
    13 Mar, 11:18 PM Reply Like
  • Alexander DeCamp
    , contributor
    Comments (12) | Send Message
     
    Well Chris it could be worse. You could have half your (unfunded) 2014 ideas do well in cyberspace and get a decent ranking on some obscure internet website (Harvest). And then it could be better and one could name their newborn son Sebastian - our little man just hit 6 months . . .
    13 Mar, 11:43 PM Reply Like
  • Mongoose7916
    , contributor
    Comments (215) | Send Message
     
    Don't give up yet! Think of it like halftime and you need to adjust your game plan. Don't focus on winning anymore just try to close the gap so going into the final leg you have a chance! You can do this Chris!
    13 Mar, 11:45 PM Reply Like
  • grendelbane
    , contributor
    Comments (194) | Send Message
     
    Chris, I understand. I followed you to Harvest. It is a fun game, but it is a game. I don't sweat too much over games.

     

    I have noticed that my relative performance on Harvest is quite volatile. I haven't kept good records, of course. Still, it is obvious that I am better on defense than I am on offense.

     

    I don't understand this, but it shows up both on Harvest and in real life. If nothing else, I worry less about market drops than most do.

     

    Maybe I am overthinking this.
    14 Mar, 08:42 PM Reply Like
  • aretailguy
    , contributor
    Comments (1017) | Send Message
     
    Chris, I would not sweat being a "good loser" to your wife in the harvest game. I am regularly humiliated by my vastly better half every time we golf together and she kicks my *ss. Fortunately there are side benefits afterward....
    15 Mar, 11:20 PM Reply Like
  • KJP712
    , contributor
    Comments (437) | Send Message
     
    The Wife and Daughter are part of my Investment team.Searching Job titles for both....
    17 Mar, 01:10 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Um... Chris... Is your wife that bearish?

     

    She has so much shorts on ORMP! haha!
    11 Apr, 05:44 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Yeah, she doesn't like that one at all...
    11 Apr, 06:15 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    I will research it. I'm guessing it's one of those bump and dump schemes.
    11 Apr, 06:23 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Update (short version: still getting crushed) --

     

    Chris +>20%, Performance Rank: #26 of 970: http://bit.ly/1hzuULR

     

    Elizabeth +>40%, Performance Rank: #9 of 970: http://bit.ly/1nUizEa
    16 Jun, 03:29 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Harvest 2014 Investing Competition YTD

     

    #1 of 974
    David Hoff - Private Investor / Consultant / Author
    Investor in IP-Centric investments.
    +624% • AUM $8,686,156

     

    #2 of 974
    Bledsoe Research
    Analyst at Finance Research Group
    +105% • AUM $2,092,346

     

    #3 of 974
    David Hegedus
    +107% • AUM $3,445,051

     

    #4 of 974
    Chris DeMuth Jr - Rangeley Capital
    I am just a fellow looking for an edge.
    +80% • AUM $2,517,104

     

    #5 of 974
    Elizabeth DeMuth
    Rangeley Capital
    +78% • AUM $2,139,738
    19 Jun, 11:16 AM Reply Like
  • kadison
    , contributor
    Comments (143) | Send Message
     
    AMAZING
    27 Jun, 09:48 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    TVIX did magic for you.
    27 Jun, 10:26 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » It has been a rough year/life for (TVIX) so far.
    30 Jun, 09:26 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » Chris DeMuth Jr: +294.58% YTD
    Performance Rank: #3 of 1,066

     

    Elizabeth DeMuth: +215.20% YTD
    Performance Rank: #7 of 1,066
    29 Jul, 04:13 PM Reply Like
  • BigBlue
    , contributor
    Comments (94) | Send Message
     
    Chris,

     

    Stop gloating! You will pay for it!

     

    BB
    30 Jul, 08:15 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4037) | Send Message
     
    Author’s reply » It is practically a certainty.
    30 Jul, 08:19 AM Reply Like
  • grendelbane
    , contributor
    Comments (194) | Send Message
     
    Since I am not married, I will just have to advertise my own success in fantasyland.

     

    +72.38% YTD

     

    Performance Rank: #14 of 1,066

     

    Lots of fun. I bet the entire Harvest community shorted enough CYNK to fill 3 of Uncle Scrooge's money bins.
    29 Jul, 04:42 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Shucks. A little behind you guys.

     

    +41.94% YTD

     

    Performance Rank: #21 of 1066

     

    I did short more CYNK shares than I can get my hands on. Thank god they don't calculate the sharpe... I was second to last... haha!
    29 Jul, 04:46 PM Reply Like
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