Aaron Katsman
IsraelNewsletter.com
Volatile markets have impacted even the best of investors. Last week we heard that Warren Buffett had his worst first half of a year in 19 years, and news out yesterday shows that the hedge fund industry didn’t fare much better.
According to a report in Bloomberg: ” Hedge funds declined by an average 0.7 percent in June, bringing the year-to-date loss to 0.75 percent, data compiled by Hedge Fund Research Inc. show. It’s the worst start to a year since the Chicago-based firm began tracking returns in 1990.”
While hedge fund investors lamented the lack of volatility in markets for the last few years, they finally got their wish and, on average, weren’t able to deal with the high level of volatility.
But before we jump on the anti-hedge fund bandwagon, it’s important to note that the average equity hedge fund lost about 3.3% during the 1st half of the year. That thoroughly crushes the S&P 500 which dropped 19% from the October peak. This actually means that the hedge funds are doing what they are supposed to do and be a hedge against falling markets. To often recently hedge funds have become correlated to the market, exactly what they shouldn’t be.
It will be interesting to see the numbers from the mutual industry as well. If actively managed mutual funds also manage to beat the market, it may help slow down the explosive growth of the ETF industry. With investors constantly being told to simply buy and hold ETFs, double digit under-performance within traditional ETFs has burned investors. This may cause investors to revert to more actively managed accounts.
After all, how many buy and hold investors wish that they would have only lost 3.3% so far this year?
Disclosure: Author’s fund has no position in any stock mentioned as of 7/10/08.
Please see our Disclaimer HERE.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Aaron Katsman
IsraelNewsletter.com
What could a horse with a 38-1 shot of winning, and a small country with only 7 million people surrounded by enemies, have in common? The answer: They are both longshots and underdogs that have prevailed and flourished despite predictions to the contrary. For those not familiar, the horse Da’ Tara, won Saturday’s running of the Belmont Stakes, spoiling Big Brown’s attempt at winning horse racings triple crown. Big Brown was considered a lock to be the first horse to capture the elusive triple crown in 30 years. Instead, he was upstaged by a horse that no one had paid any attention to.
Likewise, the tiny country of Israel, has flourished despite predictions of destruction. In a great article in The New York Times, Thomas Friedman asks the following question: “Question: What do America’s premier investor, Warren Buffett, and Iran’s toxic president, Mahmoud Ahmadinejad, have in common? Answer: They’ve both made a bet about Israel’s future.” (Continue »)
Aaron Katsman
www.IsraelNewsletter.com
While Morgan Stanley(MS) decides whether to grant Israel ‘developed’ country status for its’ global indices, this decision will confirm what many savvy investors already know; that Israel is a very hot investment destination. Over the weekend none other than Warren Buffett spoke about his Israeli purchase. Buffett said on Saturday that the company’s acquisition last year of the Israeli firm Iscar has worked out better than expected. Buffett said that he had very high expectations when Berkshire struck the deal, and that the metal-cutting-tool maker has “exceeded that in every way.” “It’s been a dream acquisition,” he said.
We all are familiar with the stats. Israel sports the most companies traded on Nasdaq of any country except the US, the billions of venture capital money that continues to flow in, the educated workforce, and I could go on and on. Not to mention the estimated GDP growth of 3.2% for ‘08, a number that most western nations would love to have. What’s so impressive is that all of this has been accomplished in such a short time. What started out as a dream by the country’s founders, has, I am sure, exceeded their expectations.
As Israel looks forward to the next 60 years, I think it’s safe to say that we can all expect more incredible innovation, as well as Israel becoming even more mainstream as an investment destination.
Disclosure: Author’s fund has no position in any other stock mentioned as of 5/5/08.
Please see our Disclaimer HERE.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
