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Tuesday, September 18

Things from my Google Reader: Sep-12 Edition

With summer ending, and Autumn beginning, here’s some things that Our Man read over the last couple of months.  As per normal, the articles become more serious the further you manage to get through this post!  With that in mind, why not start off with some Sports News!

Sports News 
- The London Chronicles: Great Britain Lives Up to its Name! 
The Olympics were held in Our Man’s home town this year, and after a slow start Team GB exploded into life on "Super Saturday".  Even American uber-sports writer Bill Simmons was impressed. (Bill Simmons, Grantland)

- RA Dickey Has Straightened-out His Life and Crooked-out His Pitches 
The most interesting man in baseball, and one of the (very few) bright spots on a very mediocre (and apologies to the word mediocre, for the insult!) Mets team!  Bizarrely, it’s not hyperbole to ask if the only man in the world currently capable of throwing a knuckleball at a Major League-level is about to be declared the best pitcher in the National League this season!  (Dave Sheinim, Washington Post)

- Cosell Talks: Eli’s Arrived 
Finally, with Football season kicking off, what better time to reminisce in the happy ending to last year’s season and Super Bowl  XVLI.  (Greg Cosell, NFL Films)  

And In the Real World 
- How Apple & Amazon Security Flaws Led to my Epic Hacking 
If (for some unbeknownst reason) you don’t have a two-step verification process for your email, then this article will inspire you to get one…quickly!  A look at how simple it is for someone to take over your online life and all of your accounts, while knowing minimal data about you.  It also says rather a lot about the poor controls at Amazon & Apple (amongst others), and how little they value your data.  The author, who’s technologically far more savvy than Our Man, did manage to get his digital life back!  (Matt Honan, Wired)

- A Critic's Manifesto: The Intersection of Expertise & Taste
A critic's view of what a critic should do, or least aim to do. (Daniel Medelsohn, The New Yorker) 

- The Weasel, Twelve Monkeys And The Shrub
Since it's election season, and Our Man doesn't talk politics, here's some political reading for those of you that need your election fix.  A David Foster Wallace's article from his time on John McCain's campaign bus, back in 2000!  A more interesting and far better read, than anything you're likely to see that's a little more 2012-relevant!  (David Foster Wallace, Rolling Stone...though since I couldn't find a copy on their website, this one is from Txt Post)

- The NSA is Building the Country’s Biggest Spy Center 
Now Our Man and Mrs. OM are fans of the CBS show “Person of Interest”, which is based around a government program that tracks all of our communications, which a former CIA agent & a computer genius-type guy use the information from to try and help prevent crimes.  Who knew that it’s all rather closer to the reality than fiction!  (James Bamford, Wired) 

- China: Shadow Bankers Vanishing Leave China Victims seeing Scams 
Yup, China, again!  Our Man may seem like Chicken Little, but it is stories like this, and their ever increasing prevalence, that should be worrying to folks!   Credit is (unfortunately) the key building block of modern-day economies, and there ever increasing signs that the underlying collateral is either over-valued or doesn’t exist (i.e. Ponzi finance)!  You saw what happened in the US, when supposedly good collateral (housing) was significantly over-valued…now imagine vast reams of it not existing!  (Bloomberg News)

- Roberts Switched Views to Uphold Healthcare Law 
I don’t much care if you think the Healthcare Law is good, bad or indifferent, I just thought this was the best reporting of the Supreme Court’s decision and what went on behind the scenes.  Given the paucity of actual reporting (as opposed to opinion masquerading as such) in the press these days, it’s worth acknowledging.  (Jan Crawford, CBS News)

Sunday, September 9

August 2012 Review

Portfolio Update
- As noted in the recent “After Half-Term Ponderings” it seems that we’re set for QE Everywhere.  With the portfolio positioned poorly for this, Our Man added a position in Gold (GLD) for a 6-12month ‘trade’.

Performance Review
Despite August proving a positive month for the markets, the portfolio fell by 64bps during the month once again leaving the portfolio around flat (+0.15% YTD) for the year.

The fund spent the entire month in the red with the losses being fairly broadly spread across the portfolio.  The Puts/Hedges (-21bps) and China Thesis (-11bps) books both suffered as markets across the globe rallied, with both now representing very limited exposure.  The Currencies book (-29bps) gave back most of July’s gains, with almost the entirety of the loss coming after ECB President Mario Draghi pledged to do everything to support the bond markets (especially those in Spain/Italy) and keep the Euro together.  The Treasuries book (-7bps) also gave back part of its recent gains.  Finally, despite the general rise in equities, the Value Equity book (-32bps) was also a negative contributor.  This was due to the fall in THRX, which saw some profit-taking following its 25%+ rally during July, and despite a positive contribution from DRWI.

The positive contributions were all relatively small.  The Absolute Return/Bond Funds (+13bps), NCAV (+5bps) and Energy Efficiency (+8bps) books both benefited from the rise in risk appetite and asset markets.  The addition of the GLD position, meant that the Precious Metals book (+10bps) proved to be well-timed with expectations for QE3 rising after Fed Chairman Ben Bernanke’s speech at Jackson Hole

Portfolio (as at 8/31 - all delta and leverage adjusted, as appropriate)
19.1% - Bond/Absolute Return Funds (DLTNX and HSTRX)

7.3% - Precious Metals (GLD)
6.8% - Value Idea Equities (THRX, and DRWI)
5.2% - Treasury Bonds (TLT)
2.5% - Energy Efficiency (AXPW, and XIDE)
0.6% - NCAV Equities
0.0% - Other Equities (none)

-1.0% - China-Related Thesis (34bps premium in EWZ Jan-13 puts)
-0.1% - Hedges/Put Options (8bps in IWM Jan-13 puts, 7bps in SPY Jan-13 puts and 4bps XLY Jan-13 puts)

-12.4% - Currencies (EUO – Short Euro)

51.8% - Cash

Disclaimer:  For added clarity, Our Man is invested in all of the securities mentioned (TLT, DLTNX, HSTRX, GLD, THRX, DRWI, AXPW, XIDE, , EWZ puts, IWM puts, SPY puts, XLY puts, and EUO).  He also holds some cash.  You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you.