DEAD CAT BOUNCED

Yesterday and the whole week. The recovery couldn’t succeed, so the market needs to go down further. I have to say the correction is just started and the market might stay in a volatile and bearish mood for few weeks. In the last two weeks the declining market was able to make only the „Dead Cat Bounced” pattern. That means the major falling trend was only broken by brief and short recoveries.

The chart say everything. The rebound failed yesterday and made only a bull trap in the early session of US markets and during the night Asia was falling further and the EU market openings this morning all stock markets are diving.

The bears have arrived. Welcome! After more than 400 days bullish market, we are going to see some bigger correction easily which could be wider than 10%. The DJIA was taken out the 15.750 key resistance level tonight.

The BFM Assets Team.

CARNAGE CONTINUES

Not only after the FED’s last night decision US stocks went down again. The last meeting with Bernanke reduced further the pace of monthly asset purchases to $65 billion from $75 billion. The reaction was not severe, but after Monday and Tuesday recovering the markets started to go south again.

• SP500 -1.02% closed at 1,774
• DJIA -1.19% fell to 15,738

The glory days are over? It is still early to say any positive or negative. What we only see that all sectors are diving. This could be the canary in the coal mine. It is not a good signal and technically seems to the US markets will go down further. Where and when stops the correction? Where hit the knife the ground? To confirm that we need to see some platform built in the following couple of days. This week two days recovery was weak and wasn’t sufficient.

In technical perspective the DJIA took out the 16.150 key support level and now at around 15.800, if the support of 15.750 is taken could come some serious short fall scenario. Let’s see the upcoming days.

The BFM Assets Team.

DON’T PANIC

Even taking the market last Friday the biggest decline for seven month but in the last three days the market recovered partly. This week we have been up each day, the last week massacre has gone.

I remember well this Monday, only two days back there was a doomsday sentiment in all media and investors were close to panic. Don’t do that! It is only the normal process of the market. The US markets dropped only from the tops less than 5%, Nasdaq plunged below 2%.

The size of the correction is huge? Exactly not.

 

• 5% correction is nothing. Happens at least three times a year. 
• 10% correction is more serious and has not happened since 2012, normally it occurs each year.. 
• 20% correction could mean the end of the bulls. It happens in each 2-3 years. We are still far from that. 

We have been in 2013 in a so comfortable market climate, there was not any volatility. My bet in 2014 we are going to see much wider volatility in US markets. We have been almost forgot how looks like a real correction. So, you shouldn’t panic we only need to remember the market typically behave in up and down mood. Without correction the markets could not go up again to new highs, it is imminent part of bull rallies.

The BFM Assets Team.

EMERGING MARKETS ARE POPULAR AS DENNIS RODMAN AT UN SECURITY COUNCIL MEETING

There are thousands of concerns about the emerging markets, but my bet is cheap enough to start buying.

In the periphery there are glooming fears in Turkey, China, Brazil, Indonesia, Argentina, South Africa...etc. There is some sort of panic in those countries. Emerging equities are performing badly due to the slowing industrial activity, the commodity-price downturn and fears of currency meltdown. Fundamentally they don’t look good now. But don’t forget last spring the European situation seemed disappointing too and finally they made a great stock market rally. The charts are showing selling pressure technically, but in long-term might be a good bet. Cause the valutaion is so low and they are at good bargain now.

My argument is the US markets made a great 2013 year and I am sceptical about a great rally this year. So, we are moving to other markets which mean emerging markets.

Technically the brazilian Bovespa dropped last two years more than 30% and since last August rebounded and couldn’t go down further, our expectation is easily could come up to 60.000 area which means around 25-30% profit rate.

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The BFM Assets Team.

BUY OR BYE

The markets turned south last week mostly Friday and started some big sell off across the board. The SP500 -2% suffered the worst one-week percentage decline since June 2012 and DJIA plunged -1.9% and took its worst week since November 2011.

So far this year the S&P 500 has lost 3.1% and the Dow is down 4.2%.

Is it a new “Buy the Dip” opportunity or beginning of a bigger correction and we have to say Good Bye for the bullish markets? It is too early to say yes or no. We have to see some days the correction continues or rebound the indices. These deep losses teach us again to be humble with Mr. Market. Recently everyone is scared about the big fall because we were super optimistic about the bulls and we couldn’t imagine any big correction by now has arrived.

What happened so far this year? The total opposite which was agreed. Mr Market goes against the consensus:

• SP500 -3,1% - consensus was super bullish
• Gold +5,5% - everyone was bearish
• Eurostoxx -3,3% - everyone was bullish

To put in bigger perspective than last week in 2014 the US indices has been just ranging around the tops and couldn’t make any break out further. They lost the momentum. The SP500 three times tried to close above 1.850 without success this year. Finally, the correction took out the 1.810 key support level and now the price is around 1.793.

The BFM Assets Team.

DO MACROS HAVE REALLY EFFECT ON MARKETS OR NOT?

For many many years I have been in favour of André Kostolany’s quote that „The relation between stock exchange and economy is like a man walking his dog. The man walks slowly, the dog runs back and forth.” But I have to revise my thinking, because I have found some remarkable statistics about why it is not true always. Sometimes it is, but plenty of times not at all.

First that chart below looks confusing. Just look at that, there’s no correlation at all as my previous hypothesis said. It appears that slightly negative the correlation between the fundamentals and market movements.

This chart proves me again and again the markets are inefficients and driven by the mass not by the micro or macro facts and data. We are all as speculators not rational human beings at all. We are totally irrationals. We ignore the facts in most cases. We are making decisions emotionally. But as Warren Buffet says „…Returns decrease as emotion increases…”

And what is the lesson for the future from this fact? As a speculator we should always hold economic news at a bit distance when considering our investments. That is why I never care about the news itself. I don’t like to interpretate right after issued the news because in this case it would be only a red-black casino. But what I am really interested that how the market reacts upon that news. All in all I don’t care about mine of any others interpretation, I only care about the market’s interpretation.

The BFM Assets Team.

CHARTS OF THE MONTH

Don’t be scared only two charts. I love those two because most of the analysts, investment banks, broker houses rather love to forecast and in most of the cases they are wrong. So as I mentioned earlier my mantra is going against the consensus and the mob. My ABC Rule - „Always be Contrarian” is working well. Therefore I don’t care about the smart institutions or trader’s forecasts. I am only using them to see the common sentiment in the market and do the opposite of that. Statiscally proven that the massive majority of forecasts for the future market movements are worthless, hopeless and totally wrong. Never listen to anyone. I have to tell you a secret – there are no gurus.

Day before yesterday Bloomberg posted those charts about the investors sentiment for 2014. Without these data – you can check back in my blog – I recommended to you to buy and hold gold, some commodities and the Bovespa, the brasilian index. And being underpositioned in the US markets. But frankly the Nasdaq and Russell still performing well in 2014.

These chart are confirming back my hypothesis.

The assets of commodities are so unpopular. The gold seems really heated. In my perception those are good news, if something is hated it doesn’t mean automatically it is bad instrument, it only means unpopular and there is huge buying power outside which could any time get into the market and push higher the prices.

The other chart is about the different equity markets and regions. Before I saw this chart I underpositioned myself in US equities and started to buy like an idiot the Bovespa, FTSE100 and Nikkei. That chart proves me that vast majority of investors are bullish on US market, that scares me. When everyone agrees something else bound to happen. This chart confirms my preconception that I made a good decision and I understood well the investor’s sentiment.

The BFM Assets Team.

SOME OF GREAT RULES IF YOU WANNA BEAT THE 95%

There are below four some great rules which really do guide me in the couple of last year. Without them I would be in the loser majority of 95%. With these rules we can beat the market and alpha each year and make more than 40% profit consistantly on yearly basis.

We are not Wall Street guys, but we beat most of the traders in New York each year. We follow some basic rules like the followings:

• We never put our all money at one time. We are buying only small positions first and test how the market works. With this cautious system we do better than 95% of traders who start investing with the whole capital. Our highest exposure is never ever higher than 40%.
• We buy indices. They are much cheaper than stocks and not as volatile as stocks. We are not spending more than 0,2% on commissions per year. We are not able to make 10% per day, but we cannot lose 10% neither within a day. If you don’t have 4-6 hours per day to analyze your stocks, trade the indices.
• Just trade the flagship indexes like DJIA, SP500, Nasdaq, FTSE, DAX, NIKKEI. Forget the small markets, they are more pricey and they mostly follow the big indices.
• Keep cash always on your account to be ready for randomly occurred buying opportunity.

These four rules are so simple and easy to follow them but you are going to realize it helps you making better returns.

The BFM Assets Team.

BET ON THE EUROPEAN INDICES

Do you remember for last spring. We had only bad macro news from Europe. Cyprus bailout, spanish, greek, portuguese record level unemployment, German disappointing GDP. I remember well. Last May I met with an American floor trader from Chicago and a dutch investor. We had nice discussing about the markets and the dutch guy really believed in the European rally, I was pretty agree with him, but the American trader was totally sceptical about any rally in Europe. He was laughing at both of us, if we would invest any coin in the European markets. Finally, I made my biggest part of my 2013 profit in the German and Spanish markets.

This year all news are great from EU. We have only stock friendly updates from European macros. These good news mean good news for stocks too. One good news is the fundamental as Eurostat reported industrial production in Eurozone grown faster than expected with 1,8%. This is the biggest gain since May 2010. The fundamental recovery of European economies are continuing. The inflation is not yet imminent is at 0.8% in December, according to Eurostat.

Technically here are some charts below, the common is - except the German DAX - all European indices still lagging so there is great opportunity to buy. They are still good bargain.

Eurostoxx we had a Cup&Handle Formation and took a breakout last week:

FTSE100 had a same Cup&Handle Formation and took a breakout last week:

CAC40 had a same Cup&Handle Formation and took a breakout last week:

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The BFM Assets Team.

COMMODITIES GET READY TO REBOUND?

Everybody is bearish on commodities, included retail investors big hedge funds. The hedge fund has the lowest exposure in commodities since 2010. And, further not only flat, but they are selling most of the commodities after the bad year of 2013. The consensus is the gold would go drop further down to 1.000$ key resistance level.

Exposure of hedge funds in commodities:

In most cases what happens if everyone agrees? Something else is bound to happen.

The commodity asset is not sexy enough any more for investment bank sector. Deutsche bank released almost the whole commodity trading desk and most of the banks cut back the commodity traders staff.

Jim Rogers is still a hero of commodities and still convinced that is a good bargain, take a look at the video below by Bloomberg:

http://www.bloomberg.com/video/rogers-says-he-s-hedged-some-gold-but-not-selling-HDEhol8ARKa8P_kSor3UIQ.html

The BFM Assets Team.

FOLLOWING THE CROWD IS THE BEST WAY TO LOSE MONEY

Below I am going to refer to some templates why is one of our biggest trading mistake is the mob behavior? Don’t forget 95% of future traders are losing their all capital within a year. So the question is - you want to be in the majority of losers or be in the 5% winner’s group. That is the key question.

How you can be in the 5% profitable team? It is much easier than you think.

As my „ABC RULE” says „ALWAYS BE CONTRARIAN”. Buy different assets and stocks which the mass buys. For the stock the best investment system is the „DOGS OF THE DOW”. This investment strategy invented by Michael B. O'Higgins which says you have to buy the most hated and undervalued stocks from the DJIA 30 stocks. Don’t buy the most expensive, buy the laggings because sooner or later they will catch up. The hated stocks have the best buy opportunities because the best periods to invest are when news about that certain stock is negative or just plain boring to trade. Don’t buy the great performer hero stocks just prefer the pariah, most ignored stocks.

Best Buy
The Best Buy stock was in hype in 2013 around 237% gain in 2013. But a few weeks ago tumbled 30% and not here anymore. I love the pariahs not the heros in stocks.

Netflix
Soared in 2013 more than 300% was the biggest gainer of SP500. This year down with 10%.

Twitter
The Twitter doubled its initial public offering price in 2013, but now is down nearly 20% from the all-time high.

Tesla
Be very cautious. Made around 350% last year, this track seems so unsafe to me. So far, the price is still doing well, but I would never buy that stocks at this levels.

I like pariahs now like Coca- Cola, McDonalds and IBM.

The BFM Assets Team.

4 RED AND 2 GREEN BARS

On US markets the last two days erased the whole losing previous four days. Within two days – Tuesday, Wendesday – the markets rebounded and showed their bullish attitude again. Pushed up the SP500 on record and closed at record high again and now it is close the Xmas rally high. Made at 1.850 a new intraday high yesterday.

• SP500 +0,5%
• DJIA +0,66%
• NASDAQ +0,76%

Why is this rally? Because the US fundamentals are great, the economic outlook is absolutely positive:

• US GDP growing massively
• 2 million new job was created
• Unemployment rate is falling quarter by quarter
• US interest rates are in historical low levels

The only option for the markets is going up.

Tapering concerns? Nobody cares about tapering anymore. It is already priced in - the full tapering by 2015.

European and emerging markets also did well in the last two days. Optimism is all around us.

As we forecasted yesterday the SP500 close above the support of 1.845. Now might be some correction day with a back testing of this level and tomorrow or Monday the rally goes on.

The BFM Assets Team.

PARIAH COMMODITY – THE GOLD

Recently one of the most hated and most forgiven commodity is the gold. After a decade of honeymoon, when everyone loved the gold and all the media was covered by gold related news. That was a real bubble with a great hype to own gold. The houswives and grandmas get started to own bullion.

Finally as all great rallies end by a big fall. It was the year of 2013 with a bigger drop than 30%. Last year, gold had the largest annual decline since 1981. Nobody wants to buy and own the gold anymore and nobody speaks about it. It is far not the favorite commodity of traders and investors anymore. Everyone waits for a bigger correction in the following couple of years. Honestly I don’t know where the knife hits the ground. But...

I have a theory if everyone agrees something else is bound to happen. That’s why I am always looking for forgotten and undervalued markets like now the gold market. I look at closely now at gold because since December recovered again. I guess this is a good „dip the buy” opportunity. Gold has rebounded from the six-month low of 1.182$ on 31th December.

The market could turn down again, we never know. Due this option we just started to buy after Xmas the gold with small positions just to test the market. We made nice profit, more than 1,7% on gold so far. In Q4 2013 sell off trend was violated in beginning of January, which is a clear break out signal combined with a head and shoulder pattern. My expectation the price is going to hit 1.290$ the first key resistance level.

The BFM Assets Team.

RED DAY ON US MARKETS

Yesterday on DJIA we had the biggest daily drop in the last four months, since 20th September. Dow was falling in four straight session. Was a great sell off in Europena markets too. Is it the beginning of something or another „buy the dip” option? Who knows.

My bet is only a good new option buy. Why?

I have 5 reasonable arguments:

• On the markets not yet started the public speculation
• The sentiment is still bullish but not euphoria yet
• The fundamental conditions are still good and look very promising the future – US unemployment is 6,7%
• Technically I see a break out pattern
• Before the market does a rally always need some consolidation

In my view this pullback is only part of the business because we should be aware again the cycles is behavior of the markets. But I don’t think so the market generally are stretched.

On SP500 might make a correction down to 1.811 and if taken the 1.844 gets back in the bullish track again.

Dow correction could hit the 16.125 level and is going to be bullish again if the key resistance level is taken at 16.440.

The BFM Assets Team.

WE HAVE TO FOCUS ON EUROPEAN MARKETS

Why? Because they are still undervalued compared with the US markets. Since 1st January the three mediterranean countries have made great performance. In 2014 so far Greece +7%, Spain +4%, Italy +2%.

Since last year 1st December the SP500 only made 1,6%. During this period those three indices made more than 8%. But they are still lagging and now just catching up. After the brutal correction in the last couple of years, they are still far from the historical tops. The tops are still far and I do believe they will catch up the big US indexes and they are going to close the arbitrage gaps.

The outlook is very bullish in Europe for 2014. Those stock markets are undervalued and far not pricey as US stocks.

I see great buying opportunities in 2014.

• FTSE
• IBEX
• CAC40
• Euro Stoxx 50
• SMI
• Greece index
• Italian index

Fundamentally all those economies are doing better and there is no real concerns any more by investors. After four year crisis they are getting better with improving GDP numbers and lowering unemployment rates. Big investors like Soros, Bill Gates started to invest into Spain. The crisis is over in Europe.

Technically all european charts look great and I cited here some templates. Many charts are now close to breakouts because they show some “CUP WITH HANDLE” or “REVERSAL HEAD AND SHOULDER” patterns.

IBEX:

EUROSTOXX50:

FTSE:

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

BULLS NEVER DIE?

The US market’s bullish attitude in 2013 stays with us or not in 2014? Everyone is curious about that.

It seems after this Wendesday’s FOMC meeting that the tapering in not in the focus anymore in the investor’s eye. But the markets always need something scary thing, fair. In a good bullish market there are in parallel optimism and fear about any sort of bubble. Now we can see some sort of fear about too high prices and fear about the correction, etc.

The difference in 2014, that the tapering fear has evaporated. This year the market get started to read the good macro news as good news. This is a new trend. The sentiment is still bullish and can last for few years, but don’t expect same good year as 2013 was.

Fundamentally what supports the uptrend:

• Low inflation
• Low unemployment
• Steadily increasing GDP

The odds on all three are good for 2014. The risk for 2014 and 2015 might be the higher inflation which can push the interest rate higher.

An average bull market statistically lasts for 61 months this current rally is around that average duration. But don’t be scared it means nothing some rallies could go much longer than the median 61 months. For instance between 1987 and 2000 the market was up for 50 month.

Historically the markets did the best performance if they had some major corrections as we had in 2008. Look at as a template on the “Black Monday” 1987, dot-com bubble 2000, crash of 1929.

After five years rally hard to get in the market. Believinge in the further climbing not easy, but it happened with most of us than you were not invested because waited for a good setup and perfect timing. Believe me it never comes. If you have a perfect timing and best set up point – you won’t believe it. The best periods to invest when the news is negative and when the market seems boring like in the last two weeks.

The BFM Assets Team.

WE ARE IN THE TOP OF HEDGE FUNDS’ RANKING

We did 49% in 2013.

Hedge fund industry made on average 7.4 % in 2013 against the SP500 which made 30%. The hedge funds are lagging behind SP500 by 23%. The Long-short equity funds, which bet on rising and falling stocks, rose 11 percent last year. The whole statistic includes 1264 funds out of 2257 which was reported. In 2013 we made more than 49% since March. So, we hit the market plus the hedge fund business with a wide percentage.

Last December hedge funds made only 0,1%, the SP500 gained with 2,4% we made 2,92%.

The point is the average hedge funds always underperform the SP500. Hedge funds the last time in 2008 beat U.S. stock market, when they lost only record 19 percent compared with SP500’s drop 37%.

There are some big fund templates:

• Paulson & Co., the $20 billion New York-based hedge fund run by billionaire John Paulson reached 31% last year. 
• The best performer is the Recovery Fund, its 63% 
• Elliott International rose 12 % in 2013 with $23.9 billion in assets, run by Paul Singer. 
• Bridgewater run by Ray Dalio, rose 5.3 % in 2013. 

So with our 49% we are in a very top of all hedge funds around the world. 

The BFM Assets Team.

FLAT LIKE A PANCAKE

I mean US stock markets in the last couple of days.

Mr. Market waits for the Fed minutes tonight about the tapering continues or not. My bet is no or a slight tapering further. Within few hours we are going to have ADP employment data from US and Friday the nonfarm-payrolls data. All macros are crucial about the directions. Now the SP500 is in consolidation mood and doing nothing serious, but I suppose this week we are going to see breakout, my bet is a long breakout.

The peripheral markets are doing well in these ranging market climate in the last few days. In sort of quiet trading days yesterday only the IBEX could gain significantly with more than 3%. The Spanish and Italian indices did well yesterday. My bet for this year these two indexes we have to own and buy. Why? The reason is obvious. They are both brutally underperformed in the last years. Most of indices are on historical record levels and Madrid and Milan still massively lagging. This rally could continue in longer term in quarterly or yearly basis.

Fundamentally Spain is doing well and macros are better and better from Iberia. The unemployment is declining, the GDP grows steadily and revised in each quarter to higher levels. So I don’t see recently any huge risk on the buying side.

Ibex chart:

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The BFM Assets Team.

COFFEE ARABICA BREAKOUT

Generally I like that instruments what nobody speaks about. The commodity asset class now is not so attractive for the great public, which is good and now I see some good buying opportunities in coffee arabica.

Monday the coffe arabica jumped more than 4,60% and made a great rally which was supported by the weak dollar. Made the price the biggest daily gain since 2013 September. The price now is 1,21$ per pound that is the highest price since middle of last August. Fundamental news might be the weak brazilian forecast for 2014/15.

Technically the price taken out a massive resistance level yesterday at 1,16$. Last year the coffee tumbled until last October, lost its value of more than 30%. Since last October rebounded the price from level 1,00$. The price was in 2011 April at 3,00$.

The air is widely opened for bullish run, the first target might be 1,35$ and then we will see.

The BFM Assets Team.

5 BASIC RULES TO BE BETTER INVESTOR

I have tens of rules, but I found these five rules very basics how being better trader. Those are all fascinating and easy and worth to consider them. The investment is not a rocket science or brain surgery, we only have to bear in mind some key rules, being stick with them and that’s it. Only goal is being disciplined mentally and intellectually.

1. Create wealth is not horse race it takes times
Plan for a long term and forget the 1, 5, 15, 30, 1 hour charts. There is no way you cannot make real money in short terms. Short term is much more casino than real investment. Just look at W. Buffett, J. Livermore or G. Soros neither of them are day traders. The only secret is the time. Honestly I made my nicest profits when I was patience and waiting long enough time. My biggest mistakes was when I cut my winning positions too early.

2. The debt/credit is the biggest financial problem
Live like a monk when you start investing, being focused and not wasting your money for idiotic gadgets and staffs. If you do you will act in same way on the markets too. Don’t do that. Keep your money tight and think twice when you start to buy something. Your capital is your insurance. If you lose your capital you lose your change to make more money. Be cautious.

3. Forecasting is close to impossible and dangerous.
If you start to forecast the market, that makes you overconfident and blind. You will ignore the risk side of trading and take too much risk because you are confident about your prediction and you cannot imagine you could be wrong.

4. Simple can be better than smart.
Make it simple. Don’t make the trading overcomplicated and don’t get in and get out to often. Just buy and hold it tight. In the last 10 years you could make more than 90% on SP500 but 96% of hedge fund they massively underperformed the SP500. Cause they wanted to be smarter than the market does. The easiest and simplest trading tactics are working. Good trades run by good traders purchased at good prices held for as long as possible. That's it.

5. The volatility is part of the business
Most of investors think if the market is volatile it is abnormal. No, and again no. This is the part of the business. You have to be prepared for that and use it as an advantage. That is normal pace of the markets. In the last century the yearly volatility of SP500 was 23%. It is severe, but general gain was 6% per year. The market was bullish but with thousands of corrections, don’t be scared about the corrections.

Everything in all these five rules is only part of my rules, but some of them protected me from big losses and some of them helped me making nice profit. What is the one word conclusion? Invest and wait. That is the wisdom.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.

RED START OF 2014

All markets tumbled yesterday on the first trading day of 2014. US indices ended the first day of the year with the biggest loss since 2008 and SP500 made the biggest daily downswing in over three weeks, with -0,89%. Since 2000 have been seven years with a negative first trading day.

What does that mean?

Nothing at all. One day means nothing, but five days means nothing neither. There are many smart statistical oriented analyst who think it is possible to predict from the first five days of the year. But that is crap.

There is not any correlation between the first day and the full year performance – it is only 50%. Better if you flip the coin. The first five days of trading cannot tell you anything neither. Remember 2013 January, only one day was out first five good day and the year did the best annual return since 1986. Consider that, no sense what happens in the first five days of January. There are 65% chance that the market will rise through year if the first five days are positive.

The whole month – January – shows something and indicate better a bit. How goes January 73% of the time goes the whole year. January is better predictive.

What we might be sure about the market recently is strongly bullish and the era of super low cheap money and super low interest rates are making the markets pretty attractive.

The BFM Assets Team.

BUY & HOLD STRATEGY OR ACTIVELY MANAGED PORTFOLIO?

Which is the best. That great debate has been with us for many decades. I don’t believe is a black and white dilemma. Mr. Market is more complete that one system could work forever. So my bet is sometimes we have to use buy&hold strategy, sometimes use active management. But when and which. That is the one million dollar question.

Basically we have harder life with actively managed portfolio, we have to work, analyze, think and trade much. If you are buy&hold strategist, you have to only sit and wait and as W. Buffett recommends unplug your computer, internet and TV.

The key question is that. Are we better to pick individual stocks or we have to buy only indexes. Honestly I am skeptical that we can be smarter than the market, but I have some informations about that so many hedge funds and managers beat the market in long term. But for a general investor is almost impossible mission to beat the indexes. We are – including me – very bad market timers. We are jumping into positions too early or too late. Perfect timing I guess doesn’t exist. It is only question of luck.

In 2013 the buy & hold strategy worked perfectly, SP500 gained with 30%. If you bought that index you made more than a reasonable profit. But I wouldn’t say the active management is dead, I just mark here it fits only for pro traders. And, in this bullish rally the active management might not be the best strategy. But the point is that we never know when is trend in the market like this year or just moving sideways.

In 2013 the hedge fund industry massively underperforms, their 7,1% gain is against the SP500 30%. That is a huge number and honestly so disappointing about the quality of most money manager’s job and expertise. This year our company made more than 49%, so we overperformed the market.

All in all there is a majority of funds who underperform, but some like us overperform the market with active management. The active management strategy is not dead at all.

The BFM Assets Team.