Oristano Capital Management Blog

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Based on fundamental as well as technical factors, I’ve added an ultra short ETF to hedge our emerging market equity exposure. Whether fundamental or just psychological, the recent tightening by the Chinese authorities has cast a pall over emerging markets who are so dependent on China’s imports. While there are still no serious economic downturn worries; nevertheless, I feel it prudent to add this tactical flywheel to our portfolios until the fundamental and technical indicators take on a more positive picture.

Disclosure

Par for the course, I’m on vacation and the market has its most severe two day correction in six months. Is this a normal correction in the confines of a cyclical bull market or the start of something worse? Negative pundits are already comparing the 1989 collapse of Japan to the current state of China and forecasting the collapse of commodities. I would say let’s not go crazy. If the world economy does soften, there is no way the US stops reflating, and that is the key to the long term inflation of assets. I’ll have some more thoughts on this next week, but suffice to say, I strongly believe that we are going through a normal healthy correction in an upward trending market.

Joe

Disclosure

By doing a pretty good job of getting the macro right over the past seven years, Oristano Capital has outperformed most of the domestic large core managers in the Zephyr database*. Here are some statistics (seven year performance ending September 30, 2009) as to how we have stacked up against these domestic advisors:

• We rank #2 in overall performance out of a database consisting of 277 domestic large core advisors.
• We rank #3 in lowest risk as defined by standard deviation for this same group of advisors.
• The fact that we have  captured  79.8% of the upside performance of the S&P 500 but only 39.87% of the downside goes a long way in explaining the paradox of our high return but moderate risk performance.
• Oristano is currently 3.12% from its high water mark vs. the S&P’s 39.87%.

Please visit my December Newsletter for my preview of what we may expect to see in the New Year.

Thanks for your continued loyalty in good, bad and average return years. Happy New Year.

Joe

*Oristano does not know which specific advisers Zephyr Associates used in its performance and risk comparisons. Investors should be aware that other advisers’ portfolios may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that may affect the portfolios’ ultimate performance results. While Oristano has a reasonable belief the Zephyr’s analysis methodology is sound, it has not independently verified any of the comparison calculations and cannot confirm their accuracy.