9/8/14 Howl> Running Out The Clock

I see the best traders of my generation destroyed by hubris, starving hysterical naked.

That's a 'send up' of the opening line to Ginsberg's 'Howl,' of course.  The truth is that fund managers generate fees managing other people's money, regardless of fund performance.  Investors in those funds are the only ones at risk of ending up starving hysterical naked.

The Hussman Strategic Growth Fund (HSFGX) trails all peers, yet still manages $1 billion in assets.  It essentially charges investors 1.14% for wealth destruction!  Prior to investing in ATACX last winter, I spoke with CIO Ed Dempsey about their trading strategy.  ATACX had racked up a +6% gain in January (by rotating into bonds), and I was interested in learning how they planned to preserve that gain.  He wasn't interested in rotating into cash ('Cash has no volatility, and we can't make money if there's no volatility').  When I pointed out that ATACX would also avoid losing money with cash, he brushed it off.  I opted out of the fund in March.  Fund managers aren't paid to hold cash!  They're paid to take risk.  It's dangerous to be following strategists like Hussman and Dempsey.  They're smart guys, but unlike us they're not playing with their own money.  That's a salient point.

I spent a great deal of time this weekend going over my game plan.  Play to win?  As John Mayall used to say when fans kept requesting the same old stuff, 'That's all way in the past.'  My portfolio is in the final stretch of the fourth quarter, and it's now prudent to cut back on risk.  I'm happy with 5% a year.  What's the point in running up the score?  I should be running out the clock.  Avoiding a turnover (worse, a financial concussion) is the goal.

I'll be researching fixed-income strategies over the next few weeks.