August and September 2008 Portfolio Review
Posted on 2008 Oct 13 by Teresa Lo in Investment Portfolio | 2 Comments | Print
We all know what happened in August and September after the commodity bubble burst in July 2008.
The only important thing is that all members were alerted to impending doom on September 24 after having been shown how to hedge their exposure with inverse funds on September 21.
Without further ado, these are the stats. The numbers for our risk-oriented satellite portfolios (Strategic Performance and Ex-U.S.) reflect moving to 100% cash at the close on September 25, 2008. All core portfolios (USD/CAD Conservative and TSP) remain FULLY DEPLOYED according to our usual allocation process.
Portfolio Performance
Results for June and July 2008 were REVISED UPWARD significantly due to undercounting that originated with stock splits in June and July of several exchange traded funds (IEV, EEM, VXF) that are part of the Strategic Performance and Ex-U.S. satellite portfolios.
CLICK IMAGE TO VIEW PERFORMANCE
The errors were corrected by a reporting system recently implemented for our advisory services. Allocation numbers were not affected as they were always reconciled separately.
NOTE: We took this opportunity to calculate UNLEVERAGED returns for the Strategic Performance model portfolio, and will report this figure from now on.
Even though the upward revision is good news, I apologize for the inconvenience. It’s just like the lyrics from The Gambler: “You never count your money when you’re sittin’ at the table. There’ll be time enough for countin’, when the dealin’ is done.” In our case, when the game was over, the pile in front of us was BIGGER than we thought. And that’s a good thing.
Many thanks to Ben for sending in his actual portfolio results. His numbers looked so good that it tipped me off…
Reference
I am sure that volumes will be written about this market, but in case you are interested, we harvested some of the best stories that chronicled difficulties during this time. The lesson learned here is to keep it simple, use low leverage and ensure diversification across asset classes to maximize survival.
- Wealthy Investors Stage Revolt Against Advisors
- Overcoming clients’ puny nest eggs
- Americans working past retirement
- ETFs a threat to mutual funds, Cerulli says
- HSBC says super-rich clients moving into cash
- Harvard’s Endowment Offers An Education in Asset Allocation
- Tiger Cubs Meow During September
- Hedge Funds Fell 4.68% in September, Biggest Drop in 10 Years
- Ainslie, Einhorn, Stock Hedge Funds Post Record Drops
- More Hedge Funds Feel the September Effect
- Hedge fund blocks client withdrawals
- Hedge-Fund Managers Doing Deals to Keep Investors
- Hedge Hell-Fire-Redemption Rush Threatens Former Freewheelers
- Lehman Hedge-Fund Clients Left Cold as Assets Frozen
- A Squeeze on Leading Fund Chiefs
- Hedge Fund Report
- Endowment rises, barely
- Hedge Fund Glory Days Fading Fast
- Getting Harder to Hedge
- RAB Tries to Halt Redemptions as Hedge Fund Drops 48%
- Quant funds tested by tough market
- Volatility Hedge Funds Outperform Industry First Time Since ‘03
- Hedge Funds’ Capital Idea: Fee Cuts
- Hedge Hogs Hunker
- Hedge Funds Get Rattled As Investors Seek Exits
- How Soon We Forget
- Dry times for hedge funds
- Ospraie Will Close Hedge Fund After 38 Percent Loss
- Hedge fund Tuesday
- Hedge Funds Are Caught in a Tight Spot
- Retail investors in US equities hits low
- Running a hedge fund loses its allure
- Russell Led Hedge Investors to Losses
- Hedge fund Andor to shut down
2 Responses to “August and September 2008 Portfolio Review”
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Steve
13. Oct, 2008
Teresa:
Love your service; some of the best advice I’ve come across. That being said, if you are going to tout the awesomeness of the LEVERAGED strategic performance portfolio as recently as a couple of months ago, why would you be taking this “opportunity” (i.e. shitty market) to start touting the UNLEVERAGED stats? Strikes me as the type of marketing you usually despise.
Teresa
13. Oct, 2008
The complaints are running 10:1 the other way. People thought it was deceptive marketing to use the *leveraged* version because they did not bother to read the long description of the Strategic Performance that disclosed the fact. The other thing is that it is technically impossible for those not eligible for portfolio margin to be levered at exactly 1:1 since if there is a dip below 50% equity, the brokerage firm would sell out a portion of your portfolio.
By providing the cash return, each member can evaluate the performance on an apples to apples basis with the other models. They can also gross up the performance according to the leverage employed. For example, if the ratio is 50:50 own/margin, then multiply the cash return by 2. If the ratio is 60:40 own/margin, then multiply the cash return by 1.667. If the ratio is 75:25 own/margin, then multiply the cash return by 1.333.