Interesting Reads of the Week

‘Humongous’ Treasury Future Surge Suggests Math Error – (Bloomberg)

CME Eyes London Gold Fixing – (Markets Media)

Business This Week – (The Economist)

Get Poor Quickly – (Millennial Invest)

Illinois Farmer: They Stole My Beans – (NBC News)

90 percent of Americans are poorer today than in 1987 – (RT)

Just for Fun:

NFL Week 8 Playoff Implications: If The Seahawks Lose, The NFC Gains – (Five Thirty Eight)

How Many Ebola Patients Have Been Treated Outside Africa? – (Ritholtz)

We Still Can’t Predict Earthquakes – (Five Thirty Eight)

J.K. Rowling to release new ‘Harry Potter’ story on Halloween – (NY Daily News)

How a Futures Trader Looks at Markets

If you’re already a Futures market guru, enjoy the rest of your day. Nothing to see here. But for those who might not consider themselves experts, here’s some insight into how a futures market trader, or really anyone who knows 1. There’s more than one “market” and 2. There’s more than one side to the “markets”;  looks at the markets.

First, we’ll go backwards a little bit and show you how professional traders don’t look at the market. Here’s how you’ll usually see a list of markets or other investments listed in the Wall street Journal or whatever financial source you’re used to…

Futures Market “Winners and “Losers” of 2014 YTD
(All data taken from Finviz. Performance as of 10/22/2014)

Futures Winners + LosersFutures Losers

At first glance, it appears that over half (62%) of the futures markets have negative performance on the year. Alternative investments operating in the futures markets must be getting crushed, or at least struggling, right?  Would it surprise you to know that Managed Futures is coming off of its best quarter since 2008. How can that be? Here’s one more look at the futures market performance numbers in chart format.

Up and Down Futures Charts

To a pro – this is a really weird way to look at the markets, even though they’ve trained their brains over the years to read these charts in their own manner. They understand that the majority of investors out there are likely long stocks, bonds and mutual funds; and in that world – if the price moves up, your investment in that item is making money, and if down, you’re losing money.  But for a professional trader – the concept of winning when the market rises and losing when it falls is an odd one. That happens from time to time, but they also know the feeling of winning when the market falls and losing when it rises.

So when a pro looks at how markets have done that day, or that year, or what have you – it’s completely dependent on whether they are holding that market long or short, and over what time frame. For a short term strategy, they may make or lose 15% in a year on a market that ends up the year up 0.50%.  For a longer term strategy doing typical trend following type stuff, it isn’t so much whether the market is up or down – but how much it is up or down.

For those in longer term systematic programs, like these, the YTD market chart looks something more like this:

What Market Performance Should Look Like(Disclaimer: Past performance is not necessarily indicative of future results)

.

For them – it’s about the absolute value of the move, not the direction of the move. Systematic guys are directionally agnostic (hey, that would be a great boat name). Their not betting on prices rising or falling, nor rising or falling a certain amount. They are betting on being able to ride a rise or a fall for a long enough time to offset (and some) any losses seen getting into false moves up and down.

Alternative Links: The Brothers that Cornered the Silver Market

He (almost) Cornered the Silver Market:

RIP: Nelson Bunker Hunt – (Crossing Wall Street)

Nelson Bunker Hunt, 88, Oil Tycoon With a Texas-Size Presence, Dies—(New York Times)

The Man Who Would Corner Silver – (Futures Magazine)

Trend Following:

Look Who Decided to Show Up to the Party… — (Meb Faber)

Diversification:

4 Year-end Portfolio Moves – (Huff Post Money)

Liquid Alts:

Market volatility gives liquid alts first real test – (Investment News)

Bloomberg mentions WDTI as stormy weather ETF – (Bloomberg)

Under the Hood: Wisdom  Trees Managed Futures ETF – (Attain’s Alternatives Blog)

Risk Adjusted Ratios:

Don’t Over Rely on Historical Data to Forecast Future Returns – (AAII)

LSE:

LSE to launch intra-day auction in 2015 – (Financial Times)

Would’a Could’a Should’a

Woulda Coulda Shoulda
(Disclaimer: Past performance is not necessarily indicative of future results)

Best Managed Futures Programs – September

While one month’s performance is no way to judge an investment that has 3 to 5 year cycles, a glance at who’s doing well in the different environments month to month can be a useful data point at times. Here’s the top managed futures performers (by return only) for the month gone by:

Note: These programs are not necessarily recommended by Attain. For a list with much more thought behind it – check our semi-annual rankings (updated July 2014).

 (Disclaimer: past performance is not necessarily indicative of future results. Programs listed consist of those with at least a 3 year track record tracked by Attain Capital Management for investment by clients via managed accounts and do not represent all available programs in the managed futures universe.  The Max DD represents the worst drawdown of all time for the listed programs).

Top 10 CTA's of September
September ROR
Max DD
Min. Invst.
Purple Valley Capital - Diversified30.68%-49.34%1,000,000
Paramount Capital (QEP)28.14%-57.77%100,000
Hawksbill Capital - Global Diversified (QEP)20.81%-62.98%5,000,000
Southwest - Global Diversified 20.12%-32.79%200,000
Mulvaney Capital - Global Markets (QEP)17.69%-45.02%10,000,000
Westphal Trading - Diversified 16.53%-26.10%500,000
Tactical Investment Management -- Instl. Comm. (QEP)16.30%-41.51%10,000,000
Revolution Capital - Mosaic (QEP)16.05%-53.34%10,000,000
Covenant Capital - Aggressive 15.59%-20.41%50,000
Kelly Angle - Genesis (QEP)14.49%-45.59%2,000,000

900% Increase in Oil Production, Gas Below $3, and Oil to Zero?

Crude Oil is once again making moves that could finally break out of it’s 80-120 range. Gas Prices are below 3 dollars a gallon on average in at least a dozen states.

Today's AverageChart Courtesy: Triple AAA

Crude Oil Futures are down more than 21% since July, now hovering around the 80 point mark {past performance is not necessarily indicative of futures results).

[Read more...]

Weekend Reads: A Roller Coaster Ride

This was quite an exciting week, where at one point the S&P erased it’s gains for the year but ended this week up finishing  up +1.68%. Will these +/-2% daily moves continue, and pick a direction? Are people keeping their positions, or reallocating? Stay Tuned.

Stock Market Commentary:

It is TOO Late to Sell and It’s NEVER Too Later to Sell…and ROBO Advisor Advice – The Market Panic of 2014. – (Howard Lindzon)

Omaha, Process, & Skin in the Game – (Meb Faber)

When To Pay Attention To The Stock Market (And When To Ignore It) – (Five Thirty Eight)

5 Thoughts on the Stock Market’s -7.5% Correction – (Attain Alternatives Blog)

 

Chicago and the Market Movement:

CBOE Futures Exchange sees Busiest week in History – (HedgeWeek)

Why the stock market’s scary ride is a win for Chicago exchanges – (Crains Chicago)

 

Alts:

Cliff Asness says market volatility is a good reason to diversify – (Investments News)

Under the Hood: Wisdom Tree’s Managed Futures ETF – (Attain’s Alternatives Blog)

 

Crude Oil:

Countries that suffer when the oil price plummets – (The Economist)

 

Hedge Funds:

Preqin Quarterly Update Q3 – (Preqin)

 

Ebola:

Want to feel better about Ebola? This (massive) chart should do the trick. – (The Washington Post)

 

Just for Fun:

Hawk attacks drone: Video captures red-tailed hawk attacking drone – (NBC)

Photos: 50 Chicago sports teams that no longer exist – (The Chicago Tribune)

Does Chicago need express train service to O’Hare? – (Redeye)

Guy In Alaska Skips Rocks On A Frozen Lake, Has Mind Blown By ‘Coolest Sound Ever’ – (Huffington Post)

Think the Kansas City Royals Are Named for Kings? That’s a Bunch of Bull – (The Wall Street Journal)

The Playoff Implications Of Every Game For Every NFL Team – (Five Thirty Eight)