Getting Juicy Out There

With the Dow under 12,500, the S&P under 1400, and the NASDAQ under 2400, things may be looking grim. Unless you have hedges in place, that is. Our market-neutral stance has worked well in this environment. However, our hedges roll off on Friday and we are busy planning the next round of investments. It helps that a bunch of money came in in the last week or so; we have more to put to work.

The Vix is at 24 right now. Since it's that high, there is an opportunity to do very well in the next month or so. We are carefully studying potential ranges on a number of securities before making our final decisions. We will not be short-biased this month; we will either stay perfectly market-neutral or go slightly long in certain areas. That decision isn't going to matter too much in the end, but the decisions on the hedges will.

The S&P is down 6.50% in the first two weeks of the year. So much for January being a good month. I used to try and outperform the S&P by 7% over the course of a year in my old job (and succeeded). We are that far ahead in the first two weeks.