markets both bull and bear are more like playing a game of Jenga. The bull market starts after the tower has fallen and each block is replaced building the stack up. Its then that the real game starts as you take a block out
markets both bull and bear are more like playing a game of Jenga. The bull market starts after the tower has fallen and each block is replaced building the stack up. Its then that the real game starts as you take a block out

I bet most asset managers are glad to have 2018 firmly in the rearview mirror.  Now, this is the time when the forecasters come out of the woodwork with their predictions and projections for the year ahead. I have seen forecasts anywhere from a giant melt up that takes the main stream markets like the US to stratospheric new heights all the way to Armageddon scenarios where investors lose everything and the world tumbles into a depression worse than the 1930’s.  I think the truth will be somewhere between these 2 extremes.

But as I have said in the past, I am not smart enough to know where the market is going. To me its like holding a pair of dice and rolling them. If you get a number higher than you expect then you make money and if its lower you lose. Don’t get me wrong there is nothing wrong with this kind of strategy as long as you have plenty of time to claw back any losses……in case you are wrong. Its just that I prefer the more slow and steady pace of constant small gains and the ability to sleep at night.

I had planned on comparing last year’s volatile market ride to a roller coaster with a steep climb up in January last year, rapid decent in February and a few twists and turns until reaching its peak in October before coming down at break neck speed into December.

But that’s not the best analogy. Instead I think markets both bull and bear are more like playing a game of Jenga. The bull market starts after the tower has fallen and each block is replaced building the stack up. Its then that the real game starts as you take a block out of the stack and place it on top. This keeps on going for a while as pieces are removed and placed on top of the stack.  Then eventually the whole tower comes crashing down under its own weight and you move from the bull market back to the bear.

So, if wealth creation and investing really is child’s play then perhaps that explains why colored plastic blocks were a better investment over the past 30 years than many traditional assets…….seriously, I’m not making this stuff up.

Collecting Lego — yes, the plastic toys made of interlocking bricks that become cars and castles and robots — returned more than large stocks, bonds and gold in the three decades ending in 2015, says a study by Victoria Dobrynskaya, an assistant professor at Russia’s Higher School of Economics.

It seems like our kids really were mastering the building blocks to wealth:)

As for the average hedge fund 2018 was not their best year.  The Eurekahedge Hedge Fund Index was down 3.85 per cent in 2018, outperforming the MSCI AC World Index (Local) which declined 10.18 per cent over the year and the S&P 500 which tumbled more than 9%. So, the good news is that if you were invested in the average hedge fund you lost less than the markets in general and fared way better than investing in a hedge fund that was crypto focused as that lost about 70% last year.

Once again these volatile markets illustrate why some form of non-correlated diversification is important.  Fact is that most strategies which are designed to be uncorrelated and give some form of protection tend to fail at the times you most need them. This is because many are tied in someway to the market movements.

As FTM closes in on its 9th year we have generated an 8.88% annualized return and a total return of 112.22% for FTM Class A. This has been achieved without any leverage and would have been the same irrespective of market conditions or direction.

The year end results for FTM are as follows:

FTM Class A    +9.08%

FTM Class B    +5.08%

FTM Class C   +10.66%

FTM Class D  +10.00% (Simple Interest at 2.5% per quarter)

I just wanted to take this opportunity to add some interesting statistics about FTM.

  • According to Eurekahedge only 8.6% of fund managers were able to generate double digit returns last year.
    FTM was one of them.
  • According to Barclay Hedge for the top 10 high yield hedge funds for the past 12 months.
    FTM takes out positions 1,2 and 5
  • Barclay top 10 high yield hedge funds for the past 12 months calculated by Sharpe ratio.
    FTM takes out positions 1,2 and 3
  • According to the Barclay Hedge for the top 10 high yield hedge funds for the past 36 months.
    FTM takes out positions 1,2 and 3
  • Barclay top 10 high yield hedge funds for the past 36 months calculated by Sharpe ratio.
    FTM takes out positions 1,2 and 3
  • According to HedgeCo.net of all the funds that have never had a drawdown there are only 2 in their database.
    FTM takes out position 1
  • According to HedgeCo.net of all the funds that have a Sharpe ratio of over 2
    FTM takes out position 7
  • FTM Class C is now outperforming an investment in the S&P 500

 

 

 

 

 

 

 

 

So, if you are sick of playing market Jenga and don’t have any collectable Lego laying around then perhaps its
time to take a serious look at FTM and what it can offer you and your investment portfolio.

Included is a link to our fact sheets to download the fat sheets visit https://ftm-investments.com/fact-sheet/

Article by Endre Dobozy

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