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The Markets Can Even Make Gods Humble

With the recent release of the SEC Form 13F’s for all the favorite fund managers, people are doing their usual guessing dance as to what each and every move means amongst their favorite fund managers holdings.

Whether it is  Greenlight, Blue Ridge,  Tudor, Caxton, Soros or Paulson….everyone has their favorite 13F form to look at every quarter and make various guesses as to what each and every move means. It has become more and more popular over the past few years…and I addressed it about a month ago in an article entitled “The Air Is Thick With The Scent Of 13F Sluts”.

The reason why I am mentioning this particular issue today is due to the various comments and the inferences being made as a result of moves by Paulson and Soros to get long a bunch of Citigroup and in Paulson’s case, getting heavily long in the GLD etf.

It reminds me of the Superbowl a couple weeks back where the Saints stunned the Colts – and many bettors – by taking control of the game in the second half and never looking back. Prior to the Superbowl starting, there were rumors swirling about the various “wise guys” who were betting millions of dollars on the Colts. I know that many people chose to follow these “wise guys” into the Colts and ended up getting burned in a bad way.

It was later speculated that certain “wise guys” purposely leaked the incorrect information in order to influence the spread in the favor of taking the Saints so that they could get the valuable extra half or full point that often times spells the difference between victory and loss. An insurance policy if you will, that was facilitated through a program of misinformation into the all too eager fish pond that is the retail betting marketplace.

The 13F does not show derivative positions, short positions, etc. It is simply one side of the portfolio. Add to that the fact that fund managers often times change their mind on a dime. Soros is famous for using back pains as a warning sign that something is wrong in the portfolio. By the time next quarters 13F is released, these fund managers are onto not only the next idea, but the idea that comes after the next idea.

And then there is the issue of these fund managers being just plain wrong. It can happen….especially following legendary years such as the historic past few years that John Paulson has had. Just like everyone was thinking that Peyton Manning was too good to lose the Superbowl, people are now thinking that John Paulson is too good to lose a bet in the market.

I am here to tell you that the markets can even make gods humble…and John Paulson, while appearing to have long hair, a beard, white robe and walking on water…is not the second coming. Even if he was, the markets would find a way to humble him, although his amazing stretch of genius would probably be blessed for longer than if he was a mere mortal.

With that said, beware of putting faith in the 13F. While appearing to be a simple way of emulating success…it is fools gold. If you are not being manipulated, odds are you have caught onto that hot fund manager at or near his peak. And then there’s always the issue of them vaporizing the position while you are loading up.

Day 43….the ever skeptical….Dr. Kellegro.



Disclosure: Short 13F Investing