Posted by: jhamon | July 9, 2009

Doncha Kinda Wish You Had A Plan?

From FINalternatives:

Ex-Marine-Turned-Hedgie Down 14% In June

July 9, 2009

Sometimes you just can’t win ’em all, according to Wesley Gray, operator of long/short hedge fund Empirical Search Strategies. The fund ended its seven-month wining streak in June by dropping 14.77%.

In his investor letter, Gray said it was only a matter of time before the fund posted a mark-to-market loss, adding that “only Bernie Madoff can provide a perfectly straight return graph through time.”

One of the fund’s largest positions was down some 40% last month, according to Gray, with the rest of its portfolio also generally weak.

While he is concerned with his net loss for the month, Gray said he is at “relative ease” with his current situation. “The intrinsic value propositions for all our positions still hold and we expect exit opportunities (liquidation payments, asset sales, and/or buyout offers) for most of our positions in the coming months,” he offered.

Huh?  Wesley, doncha kinda wish you had a plan?

There’s portfolio concentration and then there’s portfolio incineration.  I can’t imagine trading without a precisely engineered, tested and monitored approach.  So I have answers to questions like:

  • How many names should I hold?
  • How much should I buy?
  • How do I know when to enter? 
  • When to exit?  (When it hurts too much?  When I’ve made a lot?)

I could never be at “relative ease” with such massive uncertainty.  There  are old traders and there are bold traders but there are no old bold traders.

 

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