The Freedom Factory

This is the fifth consecutive week of losses for the Fund, with a 5.28% decline due to continued foreign currency and commodity declines. The bulk of our losses (~ 4%) are dirctly attributable to capital loss on our long natural gas hedge, namely ITM call options for Chesapeake Energy (CHK). The remainder of losses are comprised of adverse downward movement in the utility sector and further declines in euro. On a positive note, our hedging operations on euro prevented significant loss with uncharacteristicly severe downward price movement. Current spread ratios prevent further downward loss on that insurance bet, and even open the possibility of capital gains if prices further deteriorate.

The Fund lost 2.05% this week, closing out a terrible month with a total loss of 25% for August. Despite increased precautions in our risk management approach, we suffered severe losses driven by currency markets. Unprecedented appreciation in US dollar hit us hard on multiple euro bets, and also took a toll on our commodities positions. Overall, the Fund is down 4.59% since inception. Continue Reading

The Fund performed mainly flat this week, down 0.76%. We reallocated 85% of the portfolio over the course of the week, leaving 15% in cash to lower risk and add flexibility. Reallocation usually comes with a slight weekly loss due to illiquidity of assets, in which case they are immediately revalued from bid to ask after opening them. We temporarily lose the spread. All positions currently remain within acceptable risk parameters, with additional risk hedging applied to the most volatile assets. Continue Reading

The Fund had its two worst weeks since inception with the close of August contracts. We lost 12.87% last week, which followed a 11.44% loss the previous week. The good thing about trading one month duration contracts is that the pain is over. All bad assets have expired and are no longer on our books. VPAG is now fully invested in September contracts, with all positions well within acceptable risk parameters. Expect a slight dip this week followed by gains through expiration on 9/19. Continue Reading

The Fund took its largest one-week loss since inception, losing 11.44% last week. The reversal comes as the result of a “massive repositioning in the foreign-exchnage market,” in which the euro dropped 3.4% against the US dollar. To put this into perspective, 95% of weekly euro returns over the last 2.5 yrs have fallen within the 0.04% to 0.41% range. Consequently, commodities prices are dropping, particularly for oil, agricultural businesses, and for commodity-dependent economies, such as Brazil.

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The Fund closed out the week with a 2.57% gain,  bringing July performance up to 11.98%. Overall, the Fund is up 27% since inception in March. Higher than normal volatility across all asset classes made for a tough month, but the Fund pulled out well ahead of our benchmark. Our portfolio is currently 85% invested with a 15% cash reserve. All positions remain well within acceptable risk parameters, leaving the porftfolio in a strong position going into August options expiration on the 15th.    

The Fund’s position strengthened slightly over the course of the week, posting a 3.9% gain. Overall, the Fund is up 12.84% since inception. July options contracts expire this coming Friday, the 18th. We currently hold two positions that are in-the-money (ITM), with several others whose prices are relatively close to short strikes. This coming week should contain a high level of volatility as contracts approach expiration, but the Fund is positioned reasonbly well to capitalize on favorable to neutral price movements. Continue Reading

The Fund lost 4.39% this week amidst a global stock market meltdown.  The good news is that our risk management techniques are paying off, with our losses falling well below that of the rest of the stock market. The Fund remains more diversified than ever, with only 20% of positions continuing to remain outside our desired risk parameters. This week’s conditions were similar to those experienced in our first week of trading, where we lost 23%, whereas now we were able to contain losses to just over 4%. Continue Reading

I must humbly apologize for miscalculating last week’s (and June’s) performance figures. However, this mistake is sort of like getting a “Community Chest” card in the board game Monopoly that says “Bank error in your favor.”  VPAG actually earned 3.18% last week, rather than the previously stated 0.15%. This brings June performance up to 17.31%, rather than the previously stated 13.87%. Total portfolio return since inception is now 13.59%. Updated figures are as follows:

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June results are in, with VPAG earning 13.87% for the month. We closed out the week with a flat gain of 0.15%, while the overall Fund’s return since inception is 10.26%. Two-thirds of our portfolio is currently allocated in July ’08 contracts, written on U.S. small cap stocks, long term bonds, real estate sector stocks, oil, and natural gas. One-third of the portfolio is in cash, to be partially allocated over the next couple weeks. Continue Reading