The only strategies that made money this year are Short Bias, Volatility Arbitrage, and High Frequency Statistical Arbitrage. Other well known strategies, such as Fundamental Value, Emerging Markets, Commodities, Quantitative Equity, Fixed Income Relative Value, have suffered losses. Many managers are stopped out because of leverage and redemption.
At the end of November, Yahoo! Finance reported the results of some big name investors:
- Warren Buffett (Berkshire Hathaway): -43%
- Ken Hebner (CMG Focus Fund) -56%
- Harry Lange (Fidelity Magellan): -59%
- Bill Miller (Legg Mason Value Trust) -50%
- Ken Griffin (Citadel): -44%
- Carl Icahn (Icahn Enterprises): -81%
Comparing with them, our losses in 401K or house value is not that bad. Who is wrong? The market or us? Why even the savvy investors suffered? The answer is not simple. However, we should understand the bull market in the past decades no longer lasts. Experience, or backtest based on this period is illusionary. One either views the market movements as irrelevant like Warren Buffett, or respects the volatility in the market and admits that we do not understand everything. Be humble and safe. It is not easy to sail in the financial waves.
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