Things from my Newsblur: Jan-14 Edition

It’s traditional that as the calendar turns over to start a new year, folks make some resolutions.  Well, Our Man’s are to keep you a little better informed about what he’s doing and thinking in 2014 than he did in 2013.  Like all New Year’s resolutions, it’s likely that this will probably be long given up on by the time the second quarter rolls around, but in the interim…what better way to start us off than some of the things that Our Man rather enjoyed reading over the holiday period. 

- An Oral History of Trading Places

Our Man was lucky enough to get to watch Trading Places on a cross-country flight over Christmas – I say lucky, because it’s both the best Christmas movie and the best Finance movie ever made.  Here’s some timely history behind how it was made, and the way it helped launch (or relaunch) the careers of a lot of those involved.  (Rob Wile, Business Insider)

- T-Rex Calories

If a T-Rex was released in NYC, how many humans per day would it need to consume to get its needed calorie intake.  Don’t worry folks, the answer may surprise you…you don’t need to be able to run that fast!   (What if?)

- The Beatles Succeeded Through Talent, Ambition and a Lot of Arrogance

Our Man’s mentioned his skepticism for the whole 10,000hours argument (popularized by Malcolm Gladwell, amongst others); here’s a take on some other reasons why the Beatles became successful.

(Andrew Romano, Daily Beast)

- “I do not trust Politicians”

The calendar might only have just turned to 2014, but folks are already jockeying for position for the Presidential primaries of 2016.  Brian Schweitzer, the former Governor of Montana, is the media’s current favourite to challenge Hillary Clinton in the Democratic primary.  He’s also Our Man’s favourite candidate in either party.  (David Weigel, Slate)

- The Snowden Leaks and the Public

The Guardian has had a good run on the investigative journalism front, leading the charge with the Murdoch phone-hacking, the Wikileaks documents and now the Edward Snowden/NSA stories.  Alan Rushbridger, the editor of the Guardian, talks about the Snowden case, the impacts and the future.

(Alan Rushbridger, The New York Review of Books)

- The World Economy’s Shifting Challenges

You don’t have to agree with George Soros’ politics to recognize that he’s made his (vast) fortune but understanding the global economy and its impact on markets than just about anyone in recent history.  As such, when he’s offering his views on the world’s economies it’s certainly worth listening (or reading) to them even if you don’t agree with them.  Spoiler Alert: If you’re interested in, or worried about, China then it’s definitely worth you reading!  (George Soros, Project Syndicate)

- The Rise and Fall of Blackberry

Oral histories seem to be the rage at the moment and Blackberry was the thing, some 7-10years or so ago.  Thus why not combine them, and see a little about how Blackberry became the thing and then squanders it all away, to become nothing…all while seeming not to recognize and then mocking the things that replaced it.  (Felix Gillette, Diane Brady and Caroline Winter, Bloomberg Business Week)

December 2013 Review

Portfolio Update 

- Puts/Hedges:  Our Man increase his position Short Brazil, through a further purchase of out of the money Jan-15 put options on iShares Brazil Index (EWZ).  The position reflects a multitude of factors including Our Man’s negative view on China (Brazil being a large supplier of raw materials to China), the weak technical picture, the positive view on the US Dollar (the implicit short of the Brazilian real in the trade) and the potential issues surrounding and arising from (the continued) credit growth in Brazil.

Performance Review 

For the month, the portfolio was down 50bps which also left the portfolio broadly flat (+0.83%) for all of 2013.  This year saw the second broadly flat year, in a generous equity tape, and together with some new things that Our Man has been working on is likely to see some (small rather than radical) changes to the portfolio going forwards; more on that later.

The portfolio suffered from as the Absolute Return/Bond Funds (-13bps), Value Equities (-34bps) and Puts/Hedges (-47bps) moved against it.  The key drivers of these losses were the continued rise in longer-term rates & weak precious metals prices (for the Absolute Return/Bond Funds) and the rise in the equity markets (for the Puts/Hedges).  These losses were partially offset by the US Dollar showing some reasonable strength during the month, especially against the Japanese Yen and the Australian Dollar, which helped the Currencies (+12bps) and China Thesis (+18bps) books.  While this strength was not seen versus the Euro, the strong performance of European equity markets helped the Other Equities book (+17bps).  The NCAV (-1bps) and Energy Efficiency (-1bps) books are very small at this point and had limited impact on the portfolio.

Portfolio (as at 12/31 - all delta and leverage adjusted, as appropriate)  

17.7% - Other Equities (GREK, EWP and EWI) 
13.3% - Bond/Absolute Return Funds (DLTNX and HSTRX) 
7.6% - Value Idea Equities (THRX, and DRWI)
1.0% - NCAV Equities
0.2% - Energy Efficiency (AXPW, and XIDE)

-3.5% - Hedges/Put Options (premium of 68bps in EWZ Jan-15 puts, 11bps in EWJ Jan-15 puts, and less than 1bps in XLP Jan-14 puts, in XLB Jan-14 puts and in EWG Jan-14 puts respectively)

-13.1% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 

-50.0% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

22.8% - Cash

Disclaimer:  For added clarity, Our Man is invested in all of the securities mentioned.  He also holds some cash and a few other securities (of negligible value).  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.