The 10 Most Intriguing Attain Alternatives Posts of 2014

We wanted to go back through and reflect on our posts that you found the most interesting this year. Without Further Ado, The Top 10 Posts in 2014 based off of how many of you read it.

  1. What a Hedge Fund Failure Looks Like
    This year, social media cannot get enough of the news that hedge fund legend Paul Tudor Jones is shutting down one of his eponymous funds, the Tudor Tensor Fund. But just how bad was the Tensor performance that they are deciding to shut the fund down?  What does a hedge fund ‘failure’ actually look like? The answer is, not that bad…
  2. A Big List of Alternative Investment Folks on Twitter
    We couldn’t find a list of alternative investment folks, and specifically those focused on commodities, managed futures, and global macro strategies on Twitter. So we went out and did it ourselves. Here’s our compilation of people and firms currently out there on twitter (in no particular order, despite the numbering) providing the latest insight, humor, debate, and news on investments – especially the alternative kind.
  3. CNBC Didn’t Screw up their Interview with David Harding
    CNBC made another attempt at interviewing Winton’s David Harding and this time around they managed to ask questions actually dealing with the Managed Futures industry. Here are our takeaways from the interview:
  4. 23 Commodity, Equity, and Currency Markets since the 2009 Low
    March 2014 officially marked 5 years since we had 700 point down moves in the Dow, Lehman going bankrupt, and new market lows dragging down commodities. We all know where the equity markets have gone since then, but what about 23 other markets since the March 9th, 2009 low? Plus, asset class performance 5 years before and 5 years after March 2009.
  5. A Brief History of Man AHL, Winton, & Aspect
    It’s hard to believe, but three of the biggest managed futures programs in the world, Man AHL, Winton, and Aspect Capital; all trace their roots back to three 20 something Brits at Oxford and Cambridge in the 80’s. Here’s a brief history.
  6. Why Hedge Funds Don’t Care if They’re Underperforming the S&P
    The problem with saying hedge funds are underperforming the S&P 500 is that the grand majority of them aren’t even trying to beat the S&P 500 in returns, for any set period. They are trying to deliver better risk adjusted returns than the stock market, but that doesn’t make for as good of a headline.
  7. Our Interview With Winton’s David Harding
    Since Winton CEO David Harding was in Chicago this summer receiving his pinnacle award, we thought we’d put some questions directly to him on the industry, how they trade, and so forth… enjoy:
  8. Complacency Everywhere” 
    Here’s the thing that was driving those who do more than just stocks — CRAZY. This spring, It wasn’t just the stock market that was seeing record low volatility. Complacency was everywhere. It was for sure in stocks, but it was also in…
  9. Rise of the Robo-Advisors?
    What are Robo Advisors? Why the sudden attention from the financial media? Some believe they threaten to shift the way the financial advisor business model works. More importantly, what would this mean for alternative investments.
  10. Under the Hood: Wisdom Tree’s Managed Futures ETF
    You got to hand it to the marketing folks over at Wisdom Tree…. No sooner had the ink dried on Managed Futures good 3rd quarter and the Dow hit new 8 month lows we started to see Wisdom Tree advertising their Managed Futures ETF ($WDTI) on CNBC. Marketing 101 = strike while the iron’s hot. But how much “managed futures” exposure are you really getting with this product? Let’s take a look under the hood, shall we?

This Year’s Santa Claus Rally

It’s the most wonderful time of year for those heavily weighted in the stock index ETFs… At least if you’re a believer of the famous “Santa Claus Rally,” which simply means that in the past, December has been historically kind to stock market returns. You know how we feel about past performance… it is not indicative to future results.

Santa Claus Rally

But we can’t deny if said past performance has been good for stocks. We talked about the Santa Claus Rally last year, and there is a lot of debate of whether the Santa Claus rally is a myth, or if there is some basis in fact.

Here’s this year’s observation from Stock Trader’s Almanac:

“According to the 2015 Stock Trader’s Almanac, since 1969 the Santa Claus rally has yielded positive returns in 34 of the past 44 holiday seasons—the last five trading days of the year and the first two trading days after New Year’s. The average cumulative return over these days is 1.6%, and returns are positive in each of the nine days of the rally, on average. Nevertheless, each year there is at least one day of declines.

Alternative research over a longer period confirms the persistence of these trends: According to historical data going back to 1896, the Dow Jones Industrial Average has gained an average of 1.7% during this seven-day trading period, rising 77% of the time.”

No one can really pinpoint the cause of such a rally, but this year’s run can be attributed to better than expected economic growth, via NBC news:

“The wind in the stock market’s sails lately has been the pledge by the Federal Reserve last week to be cautious about raising borrowing costs amid signs that the economy is picking up steam. Investors got another signal of the economy’s emerging strength on Tuesday when the government revised upward its final estimate of third quarter economic growth to the fastest pace in 11 years — 5.0 percent from 3.9 percent reported last month.”

Just today, stocks reached new all time highs off of this news but it hasn’t been slow small gains. Just days ago (5 trading days), the Dow Jones Industrial Average was down -4.3% on the month, and is now past 18,000. By our estimation, historically, there’s only been a 17% chance that the index finishes the month positive after a down move like that, let alone only 5 days {past performance is not necessarily indicative of future results).

But it hasn’t just been this rebound, or the last rebound. It’s that it only took the DJIA six months to go from 17,000 to 18,000. Before that, it only took seven months to go from 16,000 to 17,000 {past performance is not necessarily indicative of future results}. Will it take six months to reach 19,000? A year from now, will it be at 20,000? We’ll let others do the speculating.  Enjoy the ride while it lasts, and happy holidays.

P.S – Stocks aren’t the only thing at new all time highs. Managed Futures hit new all time highs in November {Past performance is not necessarily indicative of future results}.

6 Takeaways from the Performance of 8 Asset Classes YTD

Our takeaways:

[Read more…]

11 things you should know about the Crude Oil Drop

Christmas came a month early for those short Crude Oil over the past couple of months, specifically last week, and even more specifically – Friday.  Since July, WTI crude has dropped more than 30%, with 10% of that coming the day after Thanksgiving. And just about everyone and their mom (mom’s who have a blog about commodities?) have written something about the Crude Oil move.  Here’s 11 insights into what might make this drop more than just this week’s headline.

[Read more…]

Would’a Could’a Should’a

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

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)



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)



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)

5 Thoughts on the Stock Market’s -7.5% Correction

  1. Why is ANYONE surprised?

This has been the most hated rally of all time, as quoted by Barry Ritholtz, The Wall Street Journal, and CNBC; with seemingly many more people doubting its ability to survive than actually participating. What’s more, this thing was getting very long in the tooth – 68 months and 197% off the March 2009 lows as The middle of September, and 17 months since the credit crisis losses were erased with a new all time high in March 2013.  Compare that with an average bull market move of 103% and 30 months off the lows, and 18% and 14 months from new highs to the eventual peak, and you can see we were due. It’s also worth noting we’re basically flat on the year after this “correction”… no gains, no losses. While hard to believe after the past few years – the stock market does have losing years. Let’s repeat that:  In distant times (like ancient 2011), there were entire 12 month periods where stocks didn’t end higher than they started a whole year ago… Quelle Horreur!

S&P Bull Run 1 (Disclaimer: Past performance is not necessarily indicative of future results)
Data of S&p 500

  1. Short Bonds if you dare…

We’ve also been due for interest rates to rise, and a lot of smart people have bet a lot of money on that happening (including one Bill Gross, whose wrongness there no doubt led to his eventual exit from Pimco). But this is the new widowmaker trade. They are carrying people out in bodybags from this one, as every head fake lower in bonds results in violent upswings.  Despite us being 6 years past the credit crisis – when everyone though rates would be going back up by now, 30 yr US Bonds have dropped from around 4% to nearly 3% this year, with bond futures prices shooting up about 7.5% in the past 20 trading sessions. There’s some programs killing it on this trade, but there’s also a lot of pain and debris left over from bonds once again moving higher (rates lower).

  1. Managed Futures have been waiting for this…

September was great for managed futures, and we’ve been cheering stocks to zero so far in October, because this type of environment is what managed futures lives for. It’s been a quiet few years of waiting for a volatility expansion like this for managed futures strategies, most of which essentially bet on outlier moves like this one happening, not just in stocks, but in bonds and currencies, and the rest. The ability to be able to go long and short – combined with the ability to be in markets like bonds, wheat, and even stock indices – means these types of moves can be captured. Now, there are likely to be whipsaws and the potential for lower volatility ahead… just like the stock market, volatility can’t keep rising day after day; but every manager we talk to is very excited about this new market environment.

  1. This is why you diversify

If this type of market move scares you – remember this is why you diversify; even when that strategy has been getting it’s ass kicked the last 5 years. Those who are diverisified and missed out getting the full return delivered by stocks the past few years realized that diversification isn’t in place for what is going on today, but for what may come tomorrow (tomorrow is here). They realized that the choice to diversify can mean accepting smaller positive returns today in return for smaller negative returns tomorrow.  At the end of the day – this isn’t just about the final return – it is about the journey as well. It’s about avoiding the swamps… as the Abraham Lincoln quote in the movie Lincoln illustrates:

“A compass, I learnt when I was surveying, it’ll… it’ll point you True North from where you’re standing, but it’s got no advice about the swamps and dessert and chasm that you’ll encounter along the way. If in pursuit of your destination, you plunge ahead, heedless of obstacles, and achieve nothing more than to sink in a swamp… What’s the use of knowing True North?”

Just owning stocks and hoping the market goes up indefinitely is akin to just plowing straight ahead with your Compass pointing North. We’ve landed in stock market swamp… You going to go through it, or diversify your way around it?

  1. This is proving time for Liquid Alts

There’s been a huge influx of mutual funds offering hedge fund like strategies such as long/short equity and market neutral, as well as managed futures mutual funds and ETFs that have come to market since 2008. This is the first real proving ground for those products, and the volatility and stock market losses should really start to separate the proverbial wheat from the chaff. It will be quite interesting to see who delivered on their glossy brochure promises and who didn’t when the dust settles.