Out Fox The $treet

Not sure what happened to the one I posted last week, but somehow the 3rd column was cut off. Unfortunately the numbers below from marketocracy.com include the extra 2 days from last week so it's slightly more then the first year. Hedged Growth had a phenomenal performance in Year 1 beating the SP500 by nearly 27% (take the annualized amount and add 1% for the smaller fee). As of 9/30, the fund was also close to a 20% gainer with the SP500 down 7%. So just being positive would've been a good year on a relative basis with a weak market in the way. Hedged Growth is a portfolio that hedges the downside of a portfolio with at least 1/3 of its portfolio either in cash or short stocks. Another 1/3 is either long Growth Portfolio stocks or like wise in cash while the last 1/3 is consistently in high Net Yield Payout stocks. This formula allows for the portfolio to excel in weak markets and maintain with the market in up trends. By preserving capital in weak market the portfolio out pe...

The Hedged Growth Portfolio has done exceptionally well. This portfolio outperformed nearly 99% of the portfolios on the marketocracy.com website thru the 6 months ending March 31st. As of June 4th, the portfolio is up 9% and over 27% better when compared to the SP500. It'll be interesting to see how it performed over the 9 months ending June 30th. Too many funds are either all long or all short and would've underperformed the market during parts of the last 9 months while Hedged Growth has consistently done better. The concept of this portfolio is to keep pace with the market on up markets as it has in the last 6 months and to outperform during downturns which it did extremely well back in Oct and Nov. As you can see from the results posted from Marketocracy, this portfolio is on pace for a 38% annualized beating of the SP500. Not to shabby for just starting this concept. RETURNS Last Week 2.50% Last Month 2.47% Las...

The Hedged Growth Fund was only started on October 1st, 2008 so being breakeven after nearly 7 months might not seem impressive, but the market is down 24% since the inception. So being breakeven means beating the market by a whopping 24%. It's not too surprising that this fund has outperformed the market during a down period since its mandate is to be 1/3 short or cash. Definitely only 2/3 long at most. The astonishing amount of the beat is surprising to us not to mention the fact that the fund is nearly flat with the SP500 during April. A month when the market is up over 8%. As of last week, the fund currently has no shorts and $333K in cash which has allowed the fund to keep up with the market with a lot less risk having so much in cash. The fund will likely keep the short portion in cash until the 900s are breached on the SPs. Over the 6 month period ending March 31st, the fund outperformed 98.6% of all funds on Marketocracy. Not too bad considering the site doesn't allow ...

The Hedged Growth Portfolio started in Oct 2008 was actually able to end the year at $1,003,451 for a gain for $3,451. Not bad considering how bad the environment was in Q4 of 2008. The S&P500 was down 22% during that period. Alot of the reason for the outperformance is that the fund is designed with up to 1/3 of the portfolio in short positions. Using the UltraShort Real Estate ETF (SRS), the portfolio was able to offset some of the losses in the 2/3s long positions. Unfortunately though, its been well documented of late that these Ultrashort ETFs aren't good for long term investments and the remaining position in SRS and the original position in the Ultrashort Oil & Gas ETF (DUG) have provided negative returns. In fact the position in DUG is now down 44% proving you can have the right thesis but the wrong vehicle and still lose money in this market. Another saving grace is that the portfolio invested in short term Bond ETFs that provided nice returns compared to likely lo...

As of 10/1, I'm officially adding the Hedged Growth portolio as an option for clients. This portfolio will be the a combination of my existing Growth and Net Payout Yield portfolios plus a combination of shorts. Ideally the portfolio will include a combination of 1/3 of each component. So 1/3 of the stable New Payout Yield stocks, 1/3 of the Growth stocks, and 1/3 Shorts. This will ideally provide a less volatile portfolio that provides more consitent returns regardless of the markets. The Net Payout Yield stocks will provide steady, market beating returns while the Growth and Short sections will provide a market neutral approach with the best of both options. While the Net Payout stocks will be fully invested, the Growth and Shorts will be tweaked depending on the markets with neither to exceed the 33% threshold. Starting today I've set up fund SFCHG at Marketocracy to start a model portfolio. The expenses on this fund at 2% will be higher then I'd charge clients, but thi...