Friday, October 12, 2007

In this fund, you will find a new definition of pain

How's your bond mutual fund doing this year? Odds are good that if it isn't a Treasury fund, its underperforming the Lehman Aggregate. 86% of funds are behind that index though 9/30 according to Morningstar.

There are basically two things that have gone wrong for managers in 2007. One is underweighting Treasuries. And as I've written before, almost all managers are underweight Treasuries, even those who are bearish on credit. Managers are much more willing to own higher quality corporates and/or MBS if they're bearish on credit.

The reason is that overweighting Treasuries will invariably result in a portfolio with a lower yield than its benchmark. If you add the manager's fee with a weaker portfolio yield, the result is that the manager is starting the relative performance game from behind. In order to wind up outperforming when you have a lower yield than your benchmark, your bets have to work out quickly.

For example, assume that you are overweight Treasuries because you expect wider credit spreads. Say a 20% overweight costs you 25bps in yield versus the index. If your portfolio duration is 5 and the Treasuries in the index is 20% (about the same as the Aggregate) then the rest of the portfolio has to widen by 25bps in one year in order for you to break even. 25bps isn't a huge move, but it isn't a small one either.

If, however, it takes two years for the credit widening to occur, then you really need 50bps of widening, because you've suffered through the 25bps of negative carry for two years.

Alternatively, bearish managers could underweight Treasuries while simultaneously underweighting Baa-rated bonds. Normally one would expect Baa's to underperform Aa bonds in a credit widening. So the manager who overweights Aa at the expense of both Treasuries and Baa probably still outperforms when spreads widen. Plus this kind of strategy probably doesn't require a give up in income. So a manager following this strategy can be mildly bearish on credit for an extended period of time without having negative carry eat away at returns.

Given that nothing has worked this year other than owning Treasuries, the second strategy proved to be a miserable failure in 2007. Hence why 90% of managers are behind the Agg. For some managers, the higher quality trade still might be of some use to us. I'd say the odds are good that as time passes, we'll move toward a more normal relationship between high quality assets and Treasuries. So many of the underperforming managers will turn into better performers in the near future.

Then there are the fund managers who got mixed up in subprime bonds.

First there are the funds that dabbled in mostly Aaa-rated subprime pools, like Western Asset Core Bond. This fund finds itself in the bottom quartile of bond funds so far in 2007 owing in part to its high-yield exposure, but more so to its small subprime position. Its trailing the Lehman Aggregate by 190bps through 9/30.

But if you think that's bad, consider the case of the Regions Morgan Keegan Select Intermediate Bond Fund. Ostensibly this is intended to be a "normal" investment-grade bond fund. And yet its somehow lost over 21% so far in 2007. And you thought the Global Alpha fund was having a bad year! At least investing in a hedge fund you knew you were taking risk. This was supposed to be an investment grade bond fund. You know, where you don't take a lot of risk? You know, the safe part of your portfolio?

And here is the thing. As far as I can tell, the portfolio manager, Jim Kelsoe, hasn't been fired yet. What are they waiting for? This guy is truly having one of the worst years in the history of investment grade bond managers. I mean ever. I have never heard of anyone doing this badly with an all investment grade, no leverage fund. Seriously. Oh maybe Jim's stellar letter to investors convinced Morgan Keegan to keep him around. Read it for yourself. See if that would make you feel any better about losing 21% on your fund.

-21%! I just can't get over it. -21% and you still have your job! Check out this picture on the Regions website. Do you think this woman just read her statement saying she's lost 21% on her bond fund? I think she kind of has that sort of "holy shit I'm completely screwed" smirk. Like you are so shocked you don't know whether to laugh or cry. That photo was a good selection by the Regions folks.

Here is the sad part. There are probably investors who don't realize they've lost this much money yet. Mutual fund statements usually come every quarter or even every 6-months if there is no activity. People would be just now getting their September 30 statements. How would you like to see that? You're bond fund is bumping along with a $10ish NAV then all of a sudden its $7. Oh and the manager? Not fired, so don't worry. The same fine team who brought you all these losses will be back in on Monday, firing up their Bloombergs, ready to work for you. Oh and we went ahead and charged our expense ratio for this year directly out of the fund. Wouldn't want to trouble you with writing a check!

19 comments:

psychodave said...

"If your portfolio duration is 5 and the Treasuries in the index is 20% (about the same as the Aggregate) then the rest of the portfolio has to widen by 25bps in one year in order for you to break even. 25bps isn't a huge move, but it isn't a small one either."[tddg]

If prices on all a fund's bonds go down, like, say, the day after the Fed's 50bps cut, then it seems like my bond fund will be worth less, regardless of the overweight/underweight the manager implemented.

Its clear I could use some REAL bond trader stuff to understand your point.

Oh wait. You probably meant that a manager's investments "worked" if his fund beat the Lehman Aggregate, regardless of how much money it lost.

In that case, I'm not going to call the Fixed Income market a "wretched hive of scum and villainy." But I will say that its structural perfection is exceeded only by its hostility [to the index fund investor].

Lucky for me, I stumbled across a Star Wars fan's blog that convinced me a Money Market fund could use some cash injections. By August's end the Money Market, in trailing 12-month distributions, was paying only 20 or 30bps less than my Vanguard bond index fund.

Maybe us index investors should take up a collection for a new Star Wars movie, just to keep that blogger well fed and watered.

James I. Hymas said...

I, for one, don't understand your anger, psychodave.

What are you looking for? An investment in bonds, that will have the long-term risk/reward characteristics of bonds? Or an investment that will never go down?

If the former, then any positive increment to your bond portfolio returns is good. If you are looking at five year returns, outperformance by 10bp in any quarter will have the same effect - whether that quarter was up or down.

If the latter, then you are well advised to stick to money-market funds. But you should be aware that you'll be extremely lucky if returns after fees, expenses and taxes exceed inflation.

And I really, really don't understand why you feel the Fixed Income market is hostile to an index fund investor.

flow5 said...

Calyon Trader Fired for Losses Says He's No Rogue
Oct. 10 (Bloomberg) -- The Calyon trader fired last month
for alleged unauthorized trading that led to 250 million euros
($353 million)

Citigroup's Maheras Exits After Loss; Pandit Promoted
Oct. 12 (Bloomberg) -- Citigroup Inc., the biggest U.S.
bank, said its trading chief will leave after almost $6 billion
of fixed-income losses


JPMorgan to Eliminate Fixed-Income Jobs, Person Says
Oct. 11 (Bloomberg) -- JPMorgan Chase & Co., the third-
largest U.S. bank, is eliminating as much as 10 percent of the
jobs in groups that financed leveraged buyouts and packaged debt
into securities --- bloomberg

The perils of trading.

flow5 said...

A FORWARD LOOK: FAITH IN CENTRAL BANKS?

1)Ben S. Bernanke
Chairman and a member of the Board of Governors of the Federal Reserve System. Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body.

At the same time, because economic forecasting is far from a precise science, we have no choice but to regard all our forecasts as provisional and subject to revision as the facts demand. Thus, policy must be flexible and ready to adjust to changes in economic projections.

2) European Central Bank (ECB) Central Bank for the EURO

The transmission mechanism is characterised by long, variable and uncertain time lags. Thus it is difficult to predict the precise effect of monetary policy actions on the economy and price level…

3) Janet L. Yellen, President and CEO of the Federal Reserve Bank of San Francisco

You will note that I am casting my statements about the stance of policy and the outlook in very conditional terms. I do this because of the great uncertainty that surrounds these issues. Frankly, all approaches to assessing the stance of policy are inherently imprecise. Just as imprecise is our understanding of how long the lags will be between our policy actions and their impacts on the economy and inflation. This uncertainty argues, then, for policy to be responsive to the data as it emerges, especially as we get within range of the especially as we get within range of the desired policy setting.

(4) Thomas M. Hoenig
President of Federal Reserve Bank of Kansas City

Monetary policy must be forward-looking because policy influences inflation with long lags. Generally speaking a change in the Federal funds rate may take an estimated 12-18 months to affect inflation measures….But the course of monetary policy is not entirely certain. & will depend on how the economy evolves in the coming months.

(5) William Poole*
President, Federal Reserve Bank of St. Louis

However inflation is measured, economists agree that monetary policy has at most a minimal influence on the rate of change in the price level over relatively short time periods—months, quarters or perhaps even a year. Central banks are responsible for medium- and long-term inflation—such inflation, as Milton Friedman wrote, is a monetary phenomenon that depends on past, current and expected future monetary policy. As a practical matter, the medium- to long-term likely is a period of two to five years.

flow5 said...

This is the kicker. Foreign purchases of dollar denominated assets directly affect U.S. interest rates. But no one knows how these relationships work:

William Poole -- President of the St. Louis Federal Reserve Bank

The depreciation of the dollar is something that is not explicable. And the way I like to phrase this – I like to put my academic hat back on. If you look at academic studies of forecasts of the exchange rates across the major currencies, you find that the forecasts are simply not worth a damn.

Your best forecast of where the dollar is going to be a year from now is where it is now. There is no model that will beat that simple model. And people have dug into this over and over again. Obviously, you can make a ton of money if you were able to have accurate forecasts.

No one has been able to come up with a forecasting methodology that will make you a lot of money. And you can’t make money under the forecast that the dollar is the same as it is right now a year from now. I can go a step beyond that though – and this is what I think is really interesting.

The academic literature is also full of papers trying to explain exchange rate fluctuations after the fact – after you have all the data that you can put your hands on – data that you can’t accurately forecast, but data that after you get your hands on it might logically explain the fluctuations of currency values. And those models aren’t worth a damn either.

We cannot explain the fluctuations of currencies after they have occurred even with all the data that we can dig out. And therefore, to me, it’s completely unsupported idle speculation not only to make the forecast but to talk about why the dollar has behaved as it has.

I know the financial pages and the traders love to talk about that, but I would challenge any of them to construct a model that would stand up to a peer review journal in economics or finance. The models just aren’t that good.”

A post-event question from a Bloomberg reporter: “I was hoping you could elaborate a little bit on the implications of the weakness in the dollar right now… whether implications on inflation or just the economy in general.”

Dr. Poole: “I don’t see any implications for inflation, at least with the magnitude of the depreciation that we’ve seen so far. The evidence is that – there’s a literature that looks at what’s called “pass through” – pass through of changes in domestic prices. And the evidence is that the pass through coefficient has gotten small and smaller.”

psychodave said...

Thanks very much for responding James.

"I, for one, don't understand your anger, psychodave."
Its a fair cop. But Accrued Interest does offer me a place I can learn more and demonize less.

For example:
"What are you looking for? An investment in bonds, that will have the long-term risk/reward characteristics of bonds? Or an investment that will never go down?"
I never thought of it like this. Wish I'd been that smart. You've helped get me onto the same page. Your "any positive increment to your bond portfolio returns is good" elaboration drove it home.

I find "you'll be extremely lucky if returns after fees, expenses and taxes exceed inflation." to be optimistic. Unfortunately, I told the wife that, as near as I could tell, the negative return, net of fees/inflation, that I expect is, as near as I could tell, less negative than what I expect in any other fixed income vehicle. I hate having to do this by guesswork. Please comment if you would be good enough.

"And I really, really don't understand why you feel the Fixed Income market is hostile to an index fund investor."
I'll try to develop a more appropriate response than fear and paranoia, here's how you can help:

I want to understand what has been supporting the 10-year and 30-year Treasury prices in the face of our chronic trade deficit alone, much less when you add in U.S. government deficit spending. The world was far less tolerant of our excesses when I was a lad.

Since 2003 I've failed to find a fixed income index fund that was ex Government, Agency, GSE-backed MBS, but was still AA-, or better, average credit rating. Notice, I was not attracted by the superior yields of Ginnie Mae, F. Mac or F.Mae well before the subprime crisis.

It would also help when the paid professionals stop lending money in situations where they know the borrower can never pay off the debt. I'm old enough to remember Chrysler and Mexico paying off their debt...eventually, and was pleased when our government institutions took the action they did then. In sharp contrast, recent real estate finance lending policies have just taken my breath away.

Until then, I'll be reallocating between stock index funds and money-market (or CDs at the local credit union) and take my lumps. If you're a Fixed Income investor, even index fund, sooner or later you'll have to learn the difference between a Discount Window and the Open Market Desk. Be able to distinguish between boat loans, pier loans, and bridge loans. I never had to worry what the Fed Funds rate was when I had the time to do individual stocks. Fixed Income investing is way too much work.

Now, lets both enjoy the Flow5 tomes. Like tddg he always starts from well-grounded Fed foundation. And isn't it just wonderful how he has significantly reduced his typographical errors (tho' "non-blank public" will always have a special place in my heart).

gramps said...

Once more, Joe and Jane Public learn the emperor has no clothes. The reason that fund is down 21% is because the manager really didnt understand the risk he was taking and/or his compensation structure made him not want to know what risks he was taking.

About 70-80 years ago, the question was asked "Well, where are all the customers' yachts?". And since I am spouting cliches, "plus ca change, plus ca meme chose" (French for the more things change, the more they stay the same).

John Bogle pointed out many decades ago that the average fund manager does not add any value, and a simple index fund beats 85% or so of managers over the medium term.

Then we have about 6,000 hedge fund managers (in the US alone) who all claim they can "beat the market". No doubt, a few traders really do analyse better than everyone else. But Warren Buffet is famous precisely because his skills are unusual. There aren't 6000 Warren Buffets-- you would have a tough time naming more than 1-2 dozen truely exceptional managers. Hedge fund investors should really wake up to that fact.

Why can Wall Street fool Joe and Jane Public over and over again? Well, consider that 70% of drivers think they are above average. How many people do you know who think Congress is a bunch of morons, "but my representative is good".

So is Wall Street just pulling a fast one on Joe Public? I don't think so. Consider how many trading desks have lost money this year -- and consider that desk managers usually get paid some percentage of profits. First of all, the "trader's call" (they get a percent of upside, but not of downside) encourages them to take risk. But think about what sorts of traders get hired? Managers tend to hire people who think like them. Its not cronyism, its human nature to hang around with similar people. Hence, most trading desks are not very well diversified intellectually or philosophically. Everyone tends to go into basically the same trade (or heavily correlated trades). If you are a true contrarian to the head of your desk -- you aren't likely to last very long. Jim Rogers, George Soros, Paul Tuder Jones, Julian Robertson (and many others) -- they all had to go on their own in order to follow their instincts instead of the bulge bracket trading desk.

At the end of the day, bulge bracket firms, both buyside and sell side, are very poorly diversified. They are all in pretty much the same trade. And if they are all in the same trade with heavy leverage -- the proverbial theater fire door isn't going to let everyone unwind their trade at the same time.

So when you buy your investments, don't think you are diversified just because you have 4-5 different funds. If you want true diversification, you pretty much have to manage your own money and be contrarian. Anyone who has tried this will tell you its very very easy to say -- and very very difficult to do.

gramps said...

BTW -- if you want to know the inevitable result of Wall Street group thinking, make yourself a list of the "Top Wall Street Firms" a few decades ago.

Names like: Shearson, Loeb, Whitehead, Brown Brothers, Dillon Read, First Boston, Jay Cooke, Kidder Peabody, Bankers Trust, Cabot & Co, Paine Webber, J.S. Bache & Co, E.F. Hutton, etc etc etc.

Many of these merged into something else, sometimes voluntarily but often because they effectively collapsed.

Wall Street has always been boom and bust, feast and famine. When group think becomes really prevalent (as it tends to after a long bull market) -- its time for some famine. Plus ca change, plus ca meme chose

Vivek Vish said...

This was a very good post. If you want to bet on a short-term contraction in the investment grade credit spread, are there some good near-maturity AA or AAA bonds you can pick up (and some Treasuries that you can short, but that's much easier to find)? Or is this not a very sound play?

Thanks!

As far as psychodave's post, I'm not sure how you can say the bond market is "hostile" to index investors. It's simply that unlike in equities, many bond fund managers in general beat their indices (recently apparently being an exception) and do so consistently enough that the value of index investing is reduced significantly.

James I. Hymas said...

psychodave - I want to understand what has been supporting the 10-year and 30-year Treasury prices in the face of our chronic trade deficit alone, much less when you add in U.S. government deficit spending.

You, me, Greenspan and everybody else.

Since 2003 I've failed to find a fixed income index fund that was ex Government, Agency, GSE-backed MBS, but was still AA-, or better, average credit rating.

So basically, you're looking for an ultra-high quality corporate index? Such indices will exist, but will probably not have created their own ETF / mutual fund niche industry.

Why such high quality? That's the kind of quality I'd recommend for somebody who insisted on holding bonds directly, but only had the portfolio size available to buy five or fewer names. Given the benefits of diversification, I suggest that single A quality is quite good enough, provided the vehicle is well diversified.

Unfortunately, I told the wife that, as near as I could tell, the negative return, net of fees/inflation, that I expect is, as near as I could tell, less negative than what I expect in any other fixed income vehicle. I hate having to do this by guesswork. Please comment if you would be good enough.

I think you're starting from the wrong end of the stick. It's nice to get a good return from bonds, but that's not what bonds are for. Bonds are for being liquid and immunizing relatively near term cash needs of relatively well defined size.

As an exercise, try this: determine how much money is going to come out of your total portfolio in the next 10-, 15- and 20-years. This is the amount of money that's in your bond portfolio. Everything else, you put in equities. Set the duration of your bond portfolio to be equal to the duration of the cash flows that determined its size. Rebalance annually.

The choice between the different time horizons will depend on your comfort with volatility, which will depend both on how much cushion you have in your portfolio to meet your minimum needs and your own comfort with volatility.

Also, have you considered preferred shares? S&P has a US Pref Index. The rules in the US are a bit different from the ones I'm used to in Canada (I think there's a holding period requirement and I believe it can sometimes be difficult to determine unambiguously whether a particular issue is actually eligible for special tax treatment) - but I'm sure there's no shortage of US-centric material.

The basic idea is that prefs pay a high fixed dividend, eligible for classification as a dividend on your tax return. They're junior to bonds, but senior to common equity.

In Canada, for instance, I might be able to buy a corporate long bond yielding 5.75%. I could also buy a perpetual preferred share from the same issuer yield 5.30%. However - assuming the investment is held in a fully taxable account - I can multiply dividends by 1.4 to determine the amount of interest required to provide the same after tax return, so my 5.3% preferred is equivalent (in terms of after tax income) to a bond paying 7.4%.

flow5 said...

Oct 23 -- represents the last day, of the last reserve maintenance cycle, in Oct. Subsequently, the next reserve maintenance cycle is the beginning of the seasonally mal-adjusted cycles (holiday accommodations).

The FOMC’s policy of seasonal accommodation has its roots in the fallacious “Real Bills Doctrine” (i.e., the injection of new bank credit for financing inventories or any other phase of merchandising or processing is obviously inflationary when the theory applied under the assumption that labor and facilities are fully employed).

The wild gyrations of this policy will be responsible for the resurgence of inflation and an increase in inflationary expectations in the 4qtr of 2007. Thus will be the basis for increased money flows, higher prices and larger inflation premiums.

In other words, the Fed’s technical staff, by adhering to the false Keynesian theory – that the money supply could be properly controlled through the manipulation of interest rates, specifically the federal funds ”bracket racket” – will lose control of monetary flows (MVt).

Inflation is a monetary phenomenon. Inflation occurs when there is a chronic across-the-board increase in prices. Inflation is not a temporary increase in the price level, nor a long-term increase in any particular prices. Inflation simply results from a long-term excessive flow of money relative to the volume of real output of goods and services offered in the markets.

At the culmination of this seasonal period, the Manager of the Open Market Account may reverse their operations, by selling securities, thereby reducing the volume of legal reserves added during the holidays, but they now have started another price spiral, from a higher plateau.

The Fed has always been motivated by an overwhelming desire to accommodate bankers, their constituents, and borrowing customers. We have "elastic legislators" and an "elastic currency".

Unfortunately we live in an excessively permissive society, and this permissiveness extends into the area of central bank administration. Inflation in this country will never be brought under control until the Fed assumes the full money management responsibilities of a central bank.

"The great German poet and playwright Bertolt Brecht would have agreed and once said it was "easier to rob by setting up a bank than by holding up (one)."

psychodave said...

@flow5:
"The great German poet and playwright Bertolt Brecht"
Excellent! When tddg posted his More Leverage! post I nearly quoted Brecht's "The bitch that bore him [any credit crisis] is in heat again [getting more leveraged]"
I've always loved that quote's gritty pith.

I must say, in that blogpost, Mr. T. did set me straight on how long it would take for non-leveraged actors to normalize the credit markets.

By the way, Pritchard is turning out to be every bit as literary as you promised the lads on itulip.com

@james "Why such high quality?"
1) Its not that high, its what HWP was before Miss Carleton hit the credit market for enough money to pay 4 times what Compaq was worth, dropping HWP's issuer credit rating down and paying 9% coupon on a whole lot of debt. They haven't increased their dividend since '97 or '98. I suspect a correlation.
2) A combination of risk tolerance, risk/reward ratio, and the esthetic desire to lend money to the entities paying taxes, as opposed to buying Treasuries. I mean, why not get rid of the middle man? (viz. Treasuries).

"The choice between the different time horizons will depend on your comfort with volatility, which will depend both on how much cushion you have in your portfolio to meet your minimum needs and your own comfort with volatility."
Its a lot easier just to short the longer term Treasuries in times of increasing inflation. I had a lot of fun doing that in the late '70s, while others bought gold futures.

"Also, have you considered preferred shares?" I think Buffett's great with those. I'm not Buffett, I'm (now) an index investor, so I can have time to enjoy life. But, after looking at your website, I do think you know what you're doing.

"the same after tax return"
Excellent point. But, not only do I doubt that the preferential tax treatment is sustainable in the U.S., I personally don't want it to be. Look, if I wanted to make big bucks I'd sell dope, thats why they made it illegal. Even the prophet Pritchard, in 1964, was confident that the more equally distributed income was across the population, the stronger and bigger the economy would be. That's the goal for me. The return is just a way to quantify how badly I've misallocated capital. I'm voting for tax increases because the numbers show it'll be better for all of us in the end.

"Bonds are for being liquid and immunizing relatively near term cash needs of relatively well defined size."
You've been too generous with your time for me to express my opinion of this. I do want you to know that, in the late 1990s, facing yet another take-over, my company announced (yet another) blackout of our 401K plan, of indefinite extent. Knowing stocks were overvalued, I put everything into the bond fund before blackout started. For the next 3 years, while many were losing big double digits, I made 9% annual total return, despite the eggregious fees. Thats what bonds are for to me. Just an alternative asset class that can, in certain conditions, perform better than common stocks.

"determine how much money is going to come out of your total portfolio in the next 10-, 15- and 20-years."
I'd use zero-coupon Treasuries for this.

"I suggest that single A quality is quite good enough, provided the vehicle is well diversified."
Thanks very much. I'll take another look at them and try to be more receptive about them.

By the way, "Its structural perfection is exceeded only by its hostility." is my favorite line from the movie ALIEN. If I was genuinely angry at Fixed Income then, in deference to our gracious host, I'd've quoted the immortal "You have failed me for the last time" from Star Wars.

I'm curious if he'll ever use it on this blog.

TDDG said...

What blog gets better comments than this one? Seriously.

Just a few comments myself. First, on vs. index investing, I wrote about this here: http://tinyurl.com/2sa56u

Vs. Index investing isn't as bad as a lot of people make it out to be.

Gramps: You can either think he didn't understand the risks or he willfully ignored them. My money is on the later. I've written time and time again that the whole market knew there was a correlation issue with residential ABS. So for a high-grade PM to really load up on this stuff, especially to the extent this guy obviously did, its inexcusable.

It really is no different than a manager putting 50% of his portfolio in auto bonds or mortgage lenders or even brokerage bonds! You can claim to your clients that you have diversification because you've don't own more than 1 or 2% in a single name, but you either don't understand diversification or you are willfully ignoring the implications of your strategy.

And there are lots of nice, safe Aa-rated stuff with good spreads. In the 10 year area... ABT(which I own) is around +95. AZN and MRK are similar. LLY a little tighter. BAC '16 are in the 90's. WFC is the same. GS and MER (also own) are a little wider. GE is in the 80's.

I know some people will take exception to me calling GS and MER safe, but to each their own.

James I. Hymas said...

Why were you so excited about a loss of a mere 21% in a "normal, investment-grade bond fund".

Down 21%? Hell, 21% is for WUSSIES! A loss of 21% is a ROUNDING ERROR.

Have a look at it now. The press release is a masterpiece.

Accrued Interest said...

There is no end in sight, in my opinion. Some of the lower-rated mortgage ABS may wind up producing good returns from here, but only because it might be priced at $10 and you wind up getting $13 worth of coupon payments. That's not going to allow someone like Kelsoe to make up ground.

Every time I have a bad year for the rest of my career, I'll remember Kelsoe.

James I. Hymas said...

I will admit to a certain sick fascination with this fund.

I now find myself making notional bets with myself as to whether it will crack the "lost half" barrier this year. What's more, I snickered when I looked at this page.

Does this make me a Bad Person?

James I. Hymas said...

He made it!

Down 50.3% in 2007.

Accrued Interest said...

The sad thing is... who knows what his stuff is really worth. Could he be down another 50% in '08?

James I. Hymas said...

Could he be down another 50% in '08?

Yes.

He has been temporarily deposed. Unitholders vote on July 11 regarding whether to make it permanent.