Saad - Vintage 2010 "He is our future at Hedge Fund Live"
This will be a long year. Barring an extreme exogenous event such as a major terrorist act or an all out collapse of the European union, I expect the market to end strongly this year. I expect it to be a slow steady grind all year as opposed to a gappy volatile run. I also expect a number of records to be broken, such as most consecutive days in a row up on the S&P. As such I expect to
New Years Resolution - Spend More Time With Saad
see a near 1400 close on the cash. Let me be specific about the European Union. A difficult restructuring of sovereign debt, even a loss to some senior lenders, even a bailout of Spain does not fall into exogenous events. In-fact these events are expected. The open issue, is how orderly the Union deals with the problems.
That said, the art of investing, the sport of trading and the millions of athletes that run the race, have just finished a strong season. It is time to rest a bit. Warm up, practice, and take a few lay up games. Reassess the competition and the ever-evolving landscape of the sport. While I believe the market moves higher over the first quarter, I expect it to be a modest 3% - 6%. It may seem odd to refer to this as modest, but the times they are a changing.
I am looking forward to a consistent trading environment with ample opportunity for singles and doubles and an occasional triple. The time for home runs is behind us for now. Low concentration and high diversification. 2X to 3X leverage on any extreme move.
Saad and I make new friends
On the long side of the market I am looking for 2 types of names. Names that have been beaten up in the past 6 months due to earnings, margins and business or consumer related issues. BBY, CSCO, Bank Names, YHOO, GNW, THOR to name a few. I still believe that the fundamentals of these types of companies remain intact, and that an improving economy and a grind higher market will give you the biggest bang for your buck in these names. Secondly, I will be looking for LBO related names and Merger and Acquisitions plays. Names that should be taken out, names whose independent business models can be taken no further but can be absorbed into a broader infrastructure that can reshape the companies direction. SVU, IMAX, PLCE, STX, AONE, GAIA, TTWO, GME.
On the Short side I will be looking for names that have been on a tear, where expectation far exceed the reality of the trading levels. I will be looking to sell bubbles and high short interest names. Names trading near 52-week highs that I believe fast money will shift out of. CLF, LULU, XOM, QCOM, KSS etc etc etc.
As I said in my previous blog, my plan is to take trading and things in general day by day for the next couple of months. Life, day by day. We have had a strong opening performance for the firm MTD, up over $150,000. The chemistry on the desk is evolving, and while it has taken a year to get here, the progress over the last month has been remarkable. Caroline remains my trusted right hand. Jeff Tynik and Zach Guterman, have truly come into their own as traders. They will have long productive careers ahead of them. Betty Lee has transcended both trading and business and is an integral part of the Business execution plan. The return of Mark Moskowitz, and addition of Jach Shuman have substantially added to the collective intelligence. Saad and Judah have built a foundation for our business and have proven to be
Saad wears a special brain cover when programming
one of the most unique pairings in entrepreneurial history. Kandace and Lamont have allowed me to see through my vision of merging media with a trading desk. They have added a touch of class to a previously raw process. Dean’s consistency and discipline anchor us all. His wisdom and broad perspective help us stay grounded and true to our discipline. Marc Schwartz’s trading prowess and leadership are cornerstones of our profitability. His grounding and calmness under volatile and difficult trading and business environments help us control losses and maximize gains. My intention is to add 2 to 3 more individuals to the collective, as well as fully fund 5 – 10 university desks and integrate their perspectives as well into the broader collective.
As we enter year 2, I am left with a number of business thoughts.
Without vision there is no business.
A business begins with an idea, but the vision takes time to come in to focus.
It needs experience to grow.
It needs failure to have clarity.
It needs success to have direction and focus.
My vision for the business while broadly consistent still changes on a daily basis. Each challenge causes reflection and reevaluation. I see a merger of media and finance, an intense website and an intense trading desk, transparency and real time investing, real time education and real time experience, and collective intelligence imbedded in a proprietary trading environment. Collective intelligence that is exposed to and thus strengthened by the website’s membership community.
Saad is making the mustache cool for kids of all ages
The first year has had many setbacks and expensive mistakes. I would not change a thing. All has been as it should have been. While at this nascent stage I am approaching the business day by day, I am significantly more confident with the future. I look forward to the challenges that are ahead of me.
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