STI Hedge Fund November Performance

I will begin this performance report with something I picked up today from a website I frequent....

 

"The only way to get rich trading."

 

"Traders drawn to the allure of quick riches are virtually certain to ignore proven methods and risk parameters, destroying their accounts as a result. The only path to trading riches is via consistent profits over the long run.
Many novice market timers (traders and investors) have difficulty facing a cold, hard fact about the stock market: You can’t get rich overnight.
Experienced timers know this. They expect to make big profits in the long run, but they focus on making as many reasonably profitable trades as possible. They do not focus on a single, life-changing trade.
Many timers also realize this, but it is hard to accept. And some are initially drawn to market timing with the hopes of making big profits quickly; the kind of money that can be used to finance a luxurious, exciting lifestyle, or money that can be used to show family and friends that one is deserving of envy or respect.
However, it is dangerous to approach trading in the financial markets from this perspective. It directly contradicts the fact that it’s going to take some time before one makes enough money to support a new lifestyle or impress others." 

 

That pretty sums up my approach to trading, consistent profits over the long run, lots of singles and doubles, but few home runs. I opine to my CPA regularly that if I so decided I could make 12% easy with my experience and the structure of the hedge fund.  Yes, most people would be thrilled with such a regular return.  My CPA knows however I am a very competitive person and my trading is really not work, but more an outlet for my competitive streak.  Since my early days I like to compete and I do not like to lose. I find trading against people of equal or superior skill and experience the zenith of competition and winning in this atmosphere just more fun than I can allow to go unchallenged. So some years my return will be less than what would be easy because that competing means I lose some too. My annual goal is 18%. As we near the end of 2011 this year is one of those years where losses taken at year end will take some of the earlier positive cash flow away. But offset that with a year like 2009 when the return was 36% and you can see why I trade like I do. 

 

November was the first month this year where I began taking capital losses in preparation for what I see to be a serious opportunity for profit in 2012 as noted in my October report. My annualized November net return of 14.8% reflects that as just under 5% of my monthly cash flow was taken off due to capital loss year end house cleaning. I would expect December to reflect a negative cash flow since there will be a good bit more taken by the end of the year. Nevertheless we should finish above market averages again and move into 2012 fully cocked and loaded. 

 

November trading continued a recent trend of tobacco option trading that gave us almost 40% of November's positive cash flow. Real estate also continued trend with another good month. We did experience some less than desirable trades in several stocks due to being underwater price wise on the securities.  But even being underwater these trades continue to produce positive cash flow.

 

We are fully prepared to exit as many as 7 positions currently held by the end of December and expect to enter 2012 with no more than 15 trading stocks.  

The December report will reflect our full year end performance and will not note exited positions and costs due to our preference not to disclose everything about our trading techniques. However we will post all our trading positions going into 2012 as usual.