(the cheesy strip is for Brigitte mainly).

Acknowledging the presence of randomness under discrete circumstances. On a long enough timeline everything and everyone is destroyed and recreated. But before we get to this ontological level, there is an infinite number of possibilities of what can happen in between. And by infinite, we mean a concept beyond current human comprehension (exceptions prevail). So what does this imply in the world of financial markets, investment and for the true connoisseurs of intellect: wealth creation ?

It implies embracing the unknown and its immense temptation to lead humans into panic, fear and irrational activity. In a market where the vast majority of players are forced to act irrationally on a discrete basis day in day out, what is your move ? Can you profit from this Chaos, the untamed beast ?

Yes you can. I have one single thought before entering into most trades, the adaptation of which can and will make you the lunatic among lunatics, a commander in the army of madness, or even better: The Prince of Chaos:

1) No matter what happens, I want to persist in my original point of view (*1).

Why do I want to do that? Because even a monkey has 50 % chance of making a winning decision under random conditions. However above 90 % of all trading accounts end up as financial losers. Why ? Fees, slippage ? No. Psychological destruction on the subliminal level that forces one to make losing decisions to get out of the discomfort of living in a state of chaos. They must be totally unaware then, that chaos is the most original and instinctive state for all life, and all survivors must learn how to harness it.

Back to our example. I want to make a trade where I won’t have to change my mind. Against a current of madmen acting in all kinds of ridiculous directions, I want to be the most deranged of them all. I want to, counterintuitively, remain unshakeable, amidst a current of constant change.

Is this possible, is there such a trade that can enable this without blowing up your account on a daily basis. Yes, in reality, this is one of the primary reasons the world of derivatives was created.

Ok then, what is the trade that will never change? The trade that will either make every ordinary counterparty win very little insignificant amounts, or earn me and my investors a fortune, either small or grand, but a fortune every single time:

I call it “The Perpetual Butterfly”.

To be continued…

(*1: Thus I’m effectively and truly neutral, to external circumstance (just to demystify the title a bit).).

Deniz Akguner
Derivatives Trader

Da Vinci Invest AG —————————————————————————

My first proposition to all clients is to view Investment as a frame of mind, kind of like being a Texan like James Dean in his legendary role in “Giant”.

A frame of mind: for a samurai duelist it is a calm disregard for human life and an animal ferocity attained through reclusive training in the wilderness for years. For an investor it can be simpler - as basic as an appreciation for randomness.

You live with the fact that a lightning strike might electrocute you during the rain. You are aware of this very small yet mostly random probability. You know that driving implies a similar, even higher degree of risk, even more random. You take some precautions; yet you still choose to drive onto traffic, or fly, or something. Life is vulnerable. Life implies risk. You acknowledge it; you live with it. Are you ready to acknowledge the same appreciation for risk and randomness in investing as well ? You must.

Does the majority of fund managers and financial institutions understand randomness ? No. Did Black and Scholes understand it ? Did Nassim Taleb who prides himself on dissecting each and every fallacy of the mainstream derivatives models understand it ? No. If they did, they would be billionaires by now. But how can humanity miss so natural a concept ? I don’t know, I don’t spend any time on why others may or may not acknowledge certain phenomena. Most ideas are even more predominantly subjective for such generalizations. But for the purposes of illustration we can dwell on an example, on the next post, Stay Tuned !!

With Warm Regards,

Deniz Akguner
Derivatives Trader

Da Vinci Invest AG    —————————————————————————

“A coward dies a thousand deaths; the valiant tastes of death but once.” William Shakespeare, Julius Caesar

State of the Inflation Address

Following a world-beating +17.91% performance in December, the fund sub-advisor returned an unremarkable +0.85% vs. +1.99% for the benchmark index, MSCI Emerging Markets Europe (MXMU) in January. In the final hours of a six month +60.45% advance, in which Eighth Continent sub-advised funds were the #1 and #2 performing of all Russia funds and Russian hedge funds tracked on Bloomberg (another 8C advised fund, not priced on Bloomberg was better still), the fund sub-advisor deleveraged the book. Over the course of the last three trading days of the year, we sold down the Christmas rally.

Emerging market equity positions were paired in keeping with our August 2010 “Two Rate World” scenario and November 2010 view, that EM inflation is a real and present threat to 2011 portfolio construction. Indeed for the YTD performance period, MSCI Emerging Markets (MXEF) was down -2.81% and EM inflows have turned markedly negative. But sub-advisor outperformance vs. all-comers expands; now +216.55% since calling the market bottom in March 2009, some 23 months ago (chart next page).

Despite broad EM geographic dispersion in some 23 countries, Eighth Continent performance fared better than negative emerging market equities for the period, as selling EM equities and debt; the fund sub-advisor packed the wagon with metals and oil at month end, with March Brent COJ1 Futures to 15.00% of gross NAV and a full 22.11% today (16-Feb-2011) on early Tunisian developments. Ensuing Egyptian contagion was of positive utility, as oil rallied from $92.30/bbl (intraday) on January 5th to above $100/bbl at month end January 31st. Commodities represented 38% of gross NAV at month end and a full 61.60% today (16-Feb-2011).

Even as the lone whistler in a dark, damp place for virtually the whole of the calendar year, it was easy to dismiss 2010 market phantoms of “currency wars”, demise of the Euro, US unemployment, end of Chinese commodity demand, Greek contagion, and other false maelstroms which never really threatened to derail the global recovery. Why? Because plain as day – it was bare bollocks. Consistently however, the 8C position is maintained that EM inflation is both real and present, the knock-on effect to DM has already started, that the rate hike trend accelerates, and the bad news is that this paradigm will likely last the whole of the economic cycle.

Markets are primarily driven by rates, monetary policy, Fx, sentiment, and most importantly, future expectations; not current valuations or current earnings which are of tertiary importance.

We remain of the mind that following a post crisis period of broad-based economic growth, coupled with extraordinarily expansive monetary policy in much of the world, capacity constraints, rising resource and raw material inputs, and a persistently weak dollar, has lead to a period of higher than anticipated inflation in many emerging markets. EM central banks are, in the main, behind the curve in addressing these material inflation threats.

Something new? Yes. The fund sub-advisor now abruptly changes its bold, brave, bullish position printed here, when the sky was black month end May 2010. From that publication, the Eighth Continent outperformed the benchmark MSCI EME by 54%, Russian stocks by 31%, and Emerging Markets by 88% (chart in addendum C-Toe).

Name 23 Months

Eighth Continent (DIAMRUS KY + GREEURU JY) 216.55%

MSCI EME Benchmark (MXMU) 167.50%

Russian Stock Index (MICEX) 160.49%

MSCI Emerging Markets (MXEF) 125.57%

MSCI World (MXWO) 73.42%

Anecdotal:

Listening to Nouriel Roubini at the recent Troika Dialog Conference in Moscow two weeks ago was a disquieting experience. Having been of the most visible and vocal bears in the entire world (and wrong as sin for the last two years), Mr. Roubini a.k.a. “Dr. Doom” seems to have gotten bullish. His “bottle is half full” speech was grandiose yet hallow, and perhaps even apologetic. Curly words which had smart-boy trigger fingers thumbing for the sell button on i-Pads across the forum, and simply gave us the creeps.

In now downgrading prior bullish outlook, once again the internal question is should advised funds be willing to accept a 20% or perhaps even greater pullback of uncertain timing, in order to reach greater heights and attain still more profitable levels? Our impression is yes. It is impossible to imagine a 217% return in less than two years without measurable risk. While current short book represents 45.43% of gross AUM, and certain of our focused hedging strategies are in place precisely to mitigate (or even profit from) inflation spikes; let us be clear: present portfolio construction represents significant unhedged risk.

Is it different now? Yes. State of the Inflation Address.

Food and energy inputs (non-core inflation) represent 71% of total consumer spending in emerging market economies vs. just 24% in developed market economies. Select EM economies are also experiencing rapid growth in core-inflation inputs in addition to food and energy; notably wage inflation in China and elsewhere in Asia. Inflation pressures originating in the EM economies are now spreading into DM economies. In America, import price inflation nears 5% and further weakness in the US dollar will accelerate this trend.

None of this seems credibly disputable, despite what embattled Ben Bernanke is selling on “the Hill.” We all have a master and his master’s priority is job creation (a responsibility not typically assigned to the Federal Reserve). The Fed Chairman’s historical charter is to maintain a delicate balance between economic expansion and inflation. In the present incarnation, politics trump inflation and we see populism over pragmatism at the highest levels of government.

The central message from the “great Bear” of the 1970’s and the unchecked inflation of that day is that there is no Chinese Wall between headline inflation and core inflation.

It is like the mythical “no smoking section” that exists in perhaps no more than five or six restaurants in the whole of Russia. Both sections are in the same room and are separated by an imaginary “air wall” between two adjacent tables. The non smoking section starts with the three little girls, while the smoking section starts just three feet away, with the three fire breathing dragons. Spill over effects are inevitable and once inflationary pressures gain traction, inflationary expectations become entrenched and become all the more difficult to subdue.

And China is not the only inflation fear on the EM horizon. What about India and … Russia? (Second from right) Russia Producer Prices +16.5% YoY, CPI +9.6% YoY, Real Wages +10.2% and Money Supply +22.4%, grease on a slippery slope

What can the Asian (or even FSU) economic powers do and what will they “give up?” Something must be sacrificed.

1. Tinkering at the margins with food price fixing, energy price fixing, adjusting loan mandatory reserve ratio requirements, and token 0.25 bps rate hikes would be a suboptimal selection. This would essentially be giving up on inflation.
2. A significant increase in real (inflation adjusted) rates would be an appropriate but improbable selection; as this is politically indigestible and would perhaps give up too much growth. And there are many other variants but the fund sub-advisor is of the view that…
3. … managed and well telegraphed currency appreciation, coupled with orderly, co-ordinated, and moderate rate hikes may constitute the best way forward. Of added benefit is that measured currency appreciation will spur domestic demand and help exporters into EM countries including America, Europe and of course Russia.

It is a certainty however, that the further central banks fall behind the curve and the steeper the inflation trajectory, the more expensive and pronounced the ensuing dislocation.

Consistent with these perceptions and in fact the market reality, China weight in the Fund was reduced from 19.9% of gross AUM month end November to just 5.6% month end January, to an anticipated 0.0% month end February. Geely Automotive 175 HK, China Shipping 1138 HK, Xinyi Glass 868 HK, and China Lumena 67 HK, will be eliminated from the portfolio. Other EM positions were cut by 50% and some by 1/3.

In an extreme EM “Inflation Trap”, portfolio construction might quickly be rotated to replicate this proprietary emerging markets “inflation food chain”. A feeding order which favours assets whose value would not deteriorate as the result of significant, above-expectation, and long-lived inflationary growth

As detailed in December, one of the greatest risks to relative performance is the Fund’s 17.96% Russia weight (up from just 12.6% in November) vs. 61.23% for the benchmark MSCI EME.

As the Russian stock market advanced an aggressive +2.10% MICEX and +5.65% RTS in January, even as MSCI Emerging Markets retreated, the Fund did not keep pace. It continues to be the fund sub-advisor’s stated objective to bring the Russia co-efficient of net assets to 40% by Q2 and will likely stand at not less than 25% by month end February.

This being said the fund sub-advisor is also very cautious about Russia. Due to pronounced inflation fears within the BRICs, there has been a risk adverse rotation out of China and Brasil. India is also feeling the business end of the inflation prick and there has been a meaningful change in sentiment regarding the domestic consumer story (some shares trading at 5-6x book). With Brent hovering around $100/bbl and with significantly lower valuations than BRIC peers (albeit deservedly so), Russia was the beneficiary of much of this dedicated BRIC capital in January.

But is this the beginning of a trend? Has anything really changed? We do not believe so. Russia is a high-beta play on both EM equities and the risk trade. As such it is improbable that any material rotation out of emerging market equities into developed market equities or other asset classes, such as we have seen YTD, would leave Russia unscathed. Russian shares will likely continue to outperform on the way up and likewise underperform on the way down. August 2010 Monthly Macro and Strategy Report: “While the following may inspire chuckles and hoots, it is the Fund’s perception that even many developed markets especially the US look very attractive right now (-31% 10 year return August 31^st 2000 to August 31^st 2010). 2008 all over again? No. The world as changed. SPX deleveraging in scope and scale never before seen; tumbling valuations, cash and cash equivalent per share breaking the piggy bank, driving M&A and share buyback. Stocks are the cheapest asset class with yields higher than bonds; the SPX trades at the 30 year low of 11.7x 2011 earnings with 34% EPS YoY growth in 2010 and 18% in 2011.”

Standing all alone in August 2010 with the lonely view that US equities were a most attractive asset; the S&P rallied 37% (chart left), and now in 2011, this macro call is increasingly becoming a crowded trade. US traded assets 21% of AUM now constitute largest country weight in sub-advised funds While the fund sub-advisor does not run a US dedicated equity strategy, it is good to see that our then heretical August call that US capital markets were in excellent shape, that US equities were a most attractive asset, that “Ma and Pa Kettle” (the US consumer) were alive and well come shopping season, and that Q4 GDP would be closer to 4% than the 2% widely espoused, has now become global consensus. The S&P 500 has rallied 37.43% since that publication and US traded assets at 21.00% of AUM now represent the Fund’s single largest country exposure (even ahead of Russia at 19.39%). Performance Attribution

Equities: 89.09% of gross AUM; top stocks for January: 1. Mirland Development (MLD LN) Russia – Real-estate +26.05% 2. Bank of Cyprus (BOC GA) Cyprus – Financials +23.72% 3. OTP Bank (OTP HB) Hungary – Financials +15.47% 4. MHP (MHPC LI) Ukraine – Agriculture +12.80% 5. Swedbank (SWEDA SS) Sweden – Financials +12.62% 6. Dragon Oil (DGO LN) Turkmenistan – E&P +10.49% 7. Evraz (EVR LI) Russia – Metals & Mining +10.43% Commodities: 37.18% of gross AUM; Fund largest line items March ICE Brent Crude COH1 representing 15.00% of gross AUM. Also March COMEX Copper HGH1 10.86%, April Platinum PLJ1 5.22%, and March Palladium PAH1 6.09%

Credit Markets: short (-21.45% of gross AUM); Short Australian 10Y bond futures XMH1 (6.01%), Canadian 10Y bond futures CNH1 (7.04%) and US 10Y bond futures TYH1 (8.41%)

FX: short (-17.44% of gross AUM); Short US Dollar, Swiss Franc, and GB Pound via Fx derivatives and Long Australian Dollar, Korean Won, Thai Baht, and Singapore Dollar in X-rate trades. Long Kazakh Tenge, Russian Rouble, Norwegian Krone, Swedish Krona, Georgian Lari, Turkish Lira, and Hungarian Forint via securities held

Outlook

Consistent with its global agriculture theme, the fund sub-advisor plans to add to soft commodity exposure via CBOT Futures at 6-8% gross AUM, SB K1, C H1, SK1, and W K1 and will hold onto underperforming Charoen Pokphand (CPF TB) Thailand down -14.07% for the month and MHP Group (MHP LI) Ukraine +12.80% for the month. Eighth Continent continues to favour its Chinese race for African resource themes. Following Riversdale (RIV AU) Mozambique takeout by Rio Tinto (RIO AU) at consequential +30% profit (+75% since first tranche) and selling Sundance Resources (SDL AU) Cameroon at astounding +123% profit (+140% since first tranche), the Fund has added to Bellzone Mining (Guinea), which now represents the third largest equity line item in the portfolio at 5.33% gross AUM (2.92% net). The Fund continues to raise Russia country weight vs. R.O.W. (like the macro ex-government, but not the micro) from all-time low 12.60% Nov 2010 to a targeted 40.00% Q2 2011.

The fund sub-advisor maintains that the confluence of urbanisation, EM population growth, resurgent demand, rising extraction costs and scarcity of resources indicate that commodities have entered into a period of a “super-cycle”: a decades-long period of higher prices driven by the emerging middle classes, rising living standards, and eventually American-style individual consumption levels, in a one directional shift in power, prestige, and demand moving from West to East.

Unwavering in its perception since March 2009, we are of the view that the world is in the midst of a post-crisis global recovery, which is largely consistent with historical post-crisis recoveries. The investment climate for “Russia” may be fairly characterised by world-wide growth, inventory restocking, industrialisation, and associated demand for raw materials. Eighth Continent remains long and leveraged to Russia-related assets, the risk trade, natural resources, and emerging market equities. The Fund is short select equities Frontline Norway (FRO NO) and Mail.ru (MAIL LI), short long-dated bond futures AUD, CAN, UST; G7 and short safe haven Fx. Largest long holdings include April Brent ICE futures, May COMEX Copper, April Platinum, and May Palladium futures. Favoured stock sectors remain metals, financials, industrials, coal, construction, real-estate, and agriculture. As such funds sub-advised have zero exposure to defensive sectors of healthcare, consumer staples, telecommunications, food retail or electrical utilities.

Addendum One: asset allocation tables

Addendum B Deux: investment sub-advisor performance 2005 – 2011 as CIO/PM Diamond Age and Lead Fund Partner Greater Europe.

Addendum C-Toe: Eighth Continent 54% outperformance vs. benchmark since month end May 2010 bullish repositioning

In measured departure from October 2009 cautionary stance, the investment advisor re-aligned portfolio construction back in favour of the “June Moon Boon” month end May 2010 when hope seemed lost; and subsequently outperformed the benchmark by 54% and Russian stocks by 31% over the next eight months. Eighth Continent now abruptly downgrades this outlook.

Da Vinci December Macro and Strategy Report (Russia)

“To cripple an embryonic civil society, the mighty need only foster an environment where good people: see no evil, hear no evil, speak no evil. Power structures of the State from Prime Minister Putin to Patriarch Kirill are complicit.” Mizaru, Kikazaru, and Iwazaru – Three Wise Monkeys

In December, “Das Boot” came in, all our Christmas wishes came true and Eighth Continent delivered a +17.06% sugar plum pudding, just in time for the New Year’s goose. Exceptional yearend performance more than doubled the benchmark MSCI Emerging Markets Europe which advanced +8.44% for the period.

Crisis, what crisis? Here in 2011, the 2007 credit crunch, the 2008 collapse of global financial markets, and ensuing Russian financial crisis, seem just like yesterday. Memories are fresh in the minds of foreign portfolio investors and asset allocators alike. But performance has rarely been better as the sub-advisor generated a +34.63% YTD return, more than double the benchmark +14.51% and +54% higher than the Russian RTS +22.54%.

As it relates to portfolio construction, the MSCI EME benchmark is sub-optimal and truly any index is imperfect. With a unique long/short, multi-asset class, global investment mandate geared to commodities, credit markets, equities and Fx derivatives, it is remote to rank and contrast Eighth Continent against a long-only, stock-only, Russia-only benchmark. The investment sub-advisor has historically allocated less than 20% to long Russian RTS stock exposure.

It is perhaps more revealing to measure Eighth Continent advised funds by gauging sub-advisor performance stacked against the universe of all publically priced Russia funds and Russian hedge fund peers. The first time we ran these calculations sourcing all publicly available information one year ago, it was discovered that at least 10 funds were either closed or were permanently impaired in the 2008 crisis. 12 months later in repeating the same study, a further five on Bloomberg and at least eight more in total are “road kill”: acquired, closed, or re-organised.

Of the only current 40 surviving funds, Eighth Continent had the top two best performing funds of the last six months on Bloomberg, and Tano Capital Russia (not priced on Bloomberg) was even better: 1 – 2 – 3  “Das Boot” has come in.

“You are what your record says you are.” Bill Parcels

Recent out performance vs. peer group has been pronounced (chart below) beating all competitors with the top two spots (blue left) while Tano Greater Russia Fund, not priced on Bloomberg would have taken the top spot at +63.81% for the period.

Eighth Continent advised funds were the top performing Russia fund vs. all peers for the period of Russia dedicated and Russia related funds priced on Bloomberg for the six month period ending December 31st, 2010. Performance differential vs. all indices expanded in the Q3 and Q4, generating an inspired +59.34% in the last six months ending December 31st, 2010; +82.58% higher than the benchmark +32.50%

Powerful finish, what happened in Q4 2010?

Q4 ‘Das Boot scenario delivered per heightened expectations

From October Macro and Strategy Report 2010: Year end “Boat” scenario plays out like this: Bearish pessimism at highest level since trough crisis throughout the summer, as both institutions and private investors saw stocks climb the “Wall of Worry,” and watched from the safety of the bond market. One after another, the will ‘o the wisps of 2010 misplaced market panic are banished to the bog: Greek contagion, global deflation, demise of the Euro, end of Chinese commodity demand, double dip in the United States derails world-wide recovery, and “currency wars” recede into memory. While walking a lonely road for much of the year and standing friendless on the high side of the boat since April 15th, the sense is that we are now no longer alone. 

Das Boot: the markets remain supportive in November and year end, money managers and retail investors alike try to play catch up. Portfolio managers cannot show year-end cash in a rising market or lose their mandates. Having been underweight the market for most of the year, these managers may be forced to chase return, throwing money at the market by Christmas day, so as not to be seen sitting on their hands while the world trades higher. Greed will trump fear driving retail flows and history tells us that memories are short. One by one the tepid have been jumping to the other side of the boat, and we anticipate the market consensus will join us on the starboard side just in time for the Santa Claus Rally; … a rally which the Fund will likely be selling.

And that is exactly what we did. On the last three trading days of the year we executed the below listed portfolio rotation representing a full 50% of AUM. We sold the yearend rally.

 Outlook and Strategy for Q1 2011

• 100% avoidance of all defensive sectors; maintain zero weight since March 2009 in: telecoms, electrical utilities, consumer, food retail and healthcare
• We broadly sold down 40% of long equity exposure while doubling equity short exposure
• Short positions on the long end of the bond market increased from 15.90% to 23.41% of gross AUM. Anticipate up to 40% of gross exposure in this trade by Q3 2011
• Commodity exposure to benefit from anticipated inflationary concerns in 2011. Net long 36.95% maintained in (HGH1) Copper, (PLJ1) Platinum, (PAH1) Palladium, and (TYH1) ICE Brent crude futures, and expected to rise to 40% of gross by Q2
• Fx derivative shorts (23.41%) gross AUM will remain slow growth, low rate, DM, safe haven: USD, GBp, EUR, and CHF vs. long X-rate trades in fast growth, high rate, inflationary, EM and commodity centric Fx: KRW, THB, SGD, AUD
• Continue to raise the Russia country weight vs. R.O.W. (like the macro ex government, but not the micro) from an all-time low of 13.21% net exposure in November 2010 to 18.53% net exposure yearend. Anticipate up to 40% net long Russia exposure by Q3
• Single largest stock position is a short on Mail.ru (MAIL LI) representing a full 6.19% of gross AUM. (See Mail.ru investment rationale below)
• Third largest position 5.72% gross AUM of Riversdale (RIV AU) Mozambique +32.62% MTD is in process of take out Rio Tinto (Rio AU) Australia, world’s third largest miner (although they may draw another buck or two (thanks to Tata Steel TATA IN) out of the dance before it is over), so this position will disappear
• We still favour metallurgical coal, thermal coal, and anthracite (total coal exposure is 10.70% gross AUM) and are currently working to find suitable replacement to complement Mechel (MTL US)
• Concurrently we continue to build out our African “race for raw materials” themes. The Sub-advised Fund currently has meaningful African positions in Riversdale (RIV AU) Mozambique, Bellzone (BZM LN) Guinea, and Sundance Resources (SDL AU) Cameroon constituting 13.52% of gross AUM (7.80% after Riversdale exit)
• Consistent with longstanding investment theme that EM discretionary income rise leads to higher co-efficient of caloric intake from protein consumption, the Sub-advised Fund bought back 5.12% gross AUM position in Charoen Pokphand (CPF TB) Thailand after taking a profit of more than 100% in the name Q3 2010
• The Sub-advised Fund exited the underperforming Dry Bulk theme before month end and finished selling all of Jin Hui (JIN NO) Norway, DS Norden (DNORD DC) Denmark and Golden Ocean (GOGL NO) Norway to zero. Tanker exposure via China Shipping (1138 HK) Hang Seng was cut by 50%
• The sub-advisor has lost some conviction in EE bank theme as EU shenanigans are boring, unending, consume too many precious human hours required to monitor all the convoluted micro-plots and politicians. The sub-advisor never buys on valuation anyway and there are better uses for investor capital elsewhere. As such the investment advisor cut by 30%, weights in OTP Bank (OTP HB) Hungary,  Swedbank (SWEDA SS) Sweden, and 50% weights in Bank of Cyprus (BOC GA) Cyprus while holding big rollers in Bank of Georgia (BGEO LI) Georgia 6.33% (first largest stock position) and Sberbank Pref (SBER03 RX) Russia 6.25% (second largest stock position)

Biggest risks to Q1 2011 strategy

• A sudden, unanticipated USD dollar appreciation would be a KOD (kiss of death) to current asset allocation
• A powerful rally in the Russian stock market would be detrimental to “relative” performance as the Fund is underweight at only 18.53% Russian equities vs. 61.23% for benchmark index (MSCI Emerging Markets Europe)
• A significant and unexpected rate of job creation in the United States would hammer EM equities, commodities, and the risk-trade. Short book specifically designed to mitigate some of the downside, in this particular element of risk in present portfolio construction
• Facebook IPO announcement, broad monetising event, or other “value defining mechanism” would likely lead to aggressive share price appreciation on MAIL LI and could trigger a short squeeze
• Greater than expected Asian central bank (primarily) but also DM other ROW central bank tightening to thwart above market inflation fears
• Note: 45.83% gross short exposure is engineered to harness profits and while moderating some of the performance risk, which would be associated with precisely this actualisation

RUSAL and Mail.ru

About this time last year, the sub-advisor broke down the sell rationale case against RUSAL (486 HK), in advance of the Hong Kong IPO for our readers. Investors then watched it trade lower by about 38% over the course of the next 6 months. January Macro and Strategy Report 2010: what else did DA focus on: RUSAL 2010? …get smeltered! 

After detailing company financials and pouring through the offering memorandum on an aero plane from Moscow to New York, it was immediately apparent that 8C advised capital would not be committed to Mr. Deripaska’s debt imbroglio

This year we take a reasoned and deliberate shot at Mail.ru (MAIL LI); a recent hot hot hot IPO in the Russian media space. Having built a large position in six tranches over the course of the last four weeks, the short now represents a full 6.19% of gross AUM, and is the single largest equity position in the portfolio. To capsulate, it is our perception that Mail.ru is a collection of second place “me too” and third place “also ran” internet media properties billed as the “facebook of Russia” and valued on assumptions akin to the sugar-glazed 1999 .com bubble. At short initiation, the shares were trading at >$8B USD m-Cap on revenues of $199MM. Mail.ru is now one of the largest publicly traded companies in Russia and perhaps of the most poorly understood (if not by the market then perhaps by us)? … always a risk.

The “Street” values the name on a specious international comp blueprint, taking assumptions from Baidu (BAIDUZ CH) China, and Facebook (private) America which are more than a stretch and simply not applicable. Facebook is preeminent social networking brand, the highest growth global destination of greater 500MM unique users around the world, and 180MM new visitors in just October 2010 alone. From March 2010 Facebook was the most visited website (surpassing Google) and had the highest advertising spend of any site on the planet. Facebook is the third largest web company by implied private market m-cap after Google and Amazon. There are only a total of 142MM Russians and Mail.ru is not even “the facebook of Russia.” Odnoklassniki, Mail.ru’s social networking site, has just 17MM users, a 30% share of Russian market that is dropping. Any likeness to Baidu, Inc., with its $38B m-cap model is also erroneous. Baidu is the dominant player in >1.3B Chinese market. More of a Google than Facebook with search engine and broad range of web based services. By April 2010, Baidu ranked 7th overall world-wide in Alexa’s internet rankings. Mail.ru is not even “the Baidu of Russia.”  

Our methodology was designed to split up the tangible business units by revenue contribution to group performance. Financial analysis then determined NPV (net present value) of group operations with focus on sales + growth with the assumption that earnings are N/M (not meaningful). Starting with real 2009 revenues and then out 10 years to estimated 2019 revenues, we derived a 10Y CAGR revenue valuation model instead of inflated SOTP valuations using Facebook as the template.

Keep it simple:

2009                                     2019 E                   10Y CAGR          

Odnoklassniki SN           $49MM               $268MM             18.5%                  

18.5% is a glass pipe dream. Odnoklassniki social networking also ran / share loser may likely not exist in 10 years

Online games MMO      $65MM                               $360MM             18.8%                   

18.8% is dirty bong water. $47/m ARPU for online gaming addicts is maximum and they are already all online. There are no more. DM ARPU at $8/m, drops to $10

Headhunter.ru                $17MM                               $36MM                  7.8%                  

Real business but will be face increased competition from multiple domestic comps and international such as Monster.com, but 7-8% is believable

Mail.ru banner ads        $61MM                               $514MM                23.7%                

Just don’t see it. Already have 60% of market in the area. Free e-mail address ad model is specious and vs. Google’s Gmail? Where +++ growth?

Other                                   $13MM                               $163MM                28.7%                

May or may not fly eggs in the hatchery – okay credit full value, does not matter

Revenues                           $199MM                             $1.34B                      21.1%                  

Even if we credit the full 20% 10Y rev CAGR all the way to $1.34B (we don’t), what NPV to justify $8B M-cap in 2010?

At short position inception, M-Cap of $8B on about $250MM in sales and real L.T. growth rate of maybe 15%? Priced at $27.70, we think the stock might be worth about $10/share or $2B M-Cap based on $1B revenues in 10 years plus 2.38% of Facebook, 1.47% of Zynga and 5.13% Groupon

After initiating initial tranche of short at $42.09 (top-tick yes) lucky this time, the Sub-advised Fund waited until end of quiet period and then set out to speak with the underwriters. Following a quiet period, it is unusual to see the sell side come in with six different numbers: CS a sell, BAML a sell, GS neutral i.e. hold (underwriter), MS market weight i.e. hold (underwriter), VTB and JPM big buys with $50+ price targets.

In our meeting, the Moscow-based joint book runner offered an animated defence for about 45 minutes and then finally capitulated. Point blank 1: how do you justify $8B? “We don’t really know, no one knows … foreign buyers just gave us money (AmeriKa) without asking.” Only “smart” Russians who bought were flippers and kicked it back to the desk. Point blank 2: Are there more of these buyers: “Yes, but they are really confused as to how to value the stock.” Point blank 3: At $50 per share price target, you value the company at >$11B in market cap. Based on all we discussed today, where do you come up with that? “I am Russian, we are a Russian firm, and I have to like the story.”

Insider lock up ends early February … if insiders were happy to sell shares on an all-you-can-eat basis at $27.50, I suspect there will be more happy sellers next month at $36.00 so we will keep shorting more until proven wrong.

Original investment rationale November: “the key risk to the position would be any announcement a regarding Facebook IPO or other $60B whisper valuation.”

This risk just realised last week. Goldman Sach’s $450MM investment gave an implied $50B M-Cap (less than $60B) and the company discussed 2012 possible IPO. Mail.ru rallied for three days and then … not much follow through and as of yet, little conviction. In fact Goldman Sachs is not making “an investment” in Facebook but rather creating an equity-linked derivative structured product which they will sell to high net worth investors. It was disclosed that Goldman Sachs “might hedge or sell its own investment without warning clients,” meaning that the firm may bet against the long side of the $1.7B is shadow Facebook shares it puts on client books. In any case Mail.ru is not Facebook and ironically, it may be Facebook’s ultimate success (in penetrating the Russian market where it was +376% 1H 2010 YoY), which may definitively illustrate the Mail.ru short investment rationale.

At the time of this distribution, the investment sub-advisor covered this position at a large loss on January 12th. Although the macro and strategy was written in the week leading up to January 7th, we don’t strip out the bad news or try to restate the past. This trade remains part of the written record to learn from or even revisit in the future. We send this to investors and potential investors and remain credible with no edits, revisions or spin.

Why don’t you like any “Russian” stocks?

Well we like at least one Rouble-denominated Russian large cap stock in Sberbank Preferred (SBERP03 RX). Sberbank Preferred is in fact the only one of 63 line items that trades locally in Russia as all other securities are either commodities, foreign listed ADR’s, Fx X-rate NDFs, credit market futures or CDF equity-linked derivatives (except at Wermuth).

While the Russian macro is both compelling and attractive, Eighth Continent is oft-challenged to find enterprise-specific “Russian” line items which do not raise one or more deal-breaking red flags; thus it has been difficult to raise the Russian country weight for equities to the desired level. Sberbank is the single best proxy for the Russian market (ex Oil and Gas sectors which constitute +/- 50% of the indices). The shares have historically been able to outperform (or sometimes underperform) when index heavy-weights such as Rosneft (ROSN LI), Gazprom (OGZD LI), Lukoil (LKOD LI), Surgutneftegaz (SGGD LI), Novatek (NVTK LI), TNK-BP (TNBP RU) and others have moved in a different direction. As the Sub-advised Fund has no position in these aforementioned names, we are thus significantly underweight “the market.”

Sberbank Preferred has historically traded at a 9% to 38% discount to the common stock at 30-32% represents an attractive spread

The last of the “blue chips” without one; when Sberbank eventually succeeds in listing a USD denominated foreign ADR – anticipate Q3 2011, it is possible that the Preferreds will be eliminated entirely as with the other large caps. While the swap ratio is unknown, the Prefs will likely be converted at a +/- 5 to 10% discount to ordinaries and not 30%. Therefore investors “sell” worthless (to us) voting rights for a 30% discount plus increased distribution of free-cash-flow potential as according to Russian law (although not always enforced) preferreds must pay out 10% of RAS profits in dividends or be converted 1-to-1 with voting common stock.

While the sub-advisor cut EM equity weight by 40%, long commodity weight was untouched. In the face of real and present EM inflationary risks, hard assets will likely benefit. Eighth Continent maintains that the confluence of industrialisation, urbanisation, EM population growth, resurgent demand, rising extraction costs and scarcity of resources indicate that commodities have entered into a period of a “super-cycle”: a decades-long period of higher prices driven by the emerging middle classes, rising living standards, and eventually American-style individual consumption levels in a one directional shift in power, prestige, and demand moves from West to East.

Unwavering in our perception since March 2009, our perception remains that we are in the midst of a post-crisis global recovery which is largely consistent with historical post-crisis recoveries. Investment climate for “Russia” maybe fairly characterised by world-wide growth, inventory restocking, urbanisation, industrialisation, and associated demand for raw materials.

Top performing stocks for the December reporting period:

Eighth Continent remains long and not-so-leveraged to Russia-related assets, the risk trade, basic materials, and emerging market equities.  Advised funds are short long dated bond futures (Aussie, Canadian, US); G7 and safe haven Fx. Largest long holdings include March Brent ICE futures, April Comex Platinum, March Palladium and March Copper futures. Favoured stock sectors remain metals, financials, industrials, coal, construction, real-estate, and agriculture. As such we have zero exposure to defensive sectors of healthcare, consumer staples, telecommunications, food retail or electrical utilities.

Addendum I

“You are what your record says you are.” Bill Parcels
The sub-advisor is now +214.97% from market trough 22 months ago. Eighth Continent advises one of only three Russia funds* to have taken back the prior November 2007 high water mark, while the benchmark index MSCI Emerging Markets Europe is still needs an additional +59.46% advance, and the Russian Stock market MICEX would require a gain of +50.12% to reach their pre-crisis highs.
Importantly, the great swath of the Russia fund peer group is still mired in the thick of it. * Russia dedicated and Russia related funds priced on Bloomberg through December 31st, 2010.

Eighth Continent advised funds: 1, 2, and 3 top performing of all Russia funds six months; #2 best performing of all Russia funds three years and one of only three Russia funds to have taken back the prior high water mark (November 2007) …

… while the benchmark index which would still require an additional 60% retracement to summit old high (December 2007)

Not only the top performer in the up market and during the recovery; Eighth Continent managed fund is the second best performing of all Russia dedicated and Russia-related funds priced on Bloomberg for the three year 2008 crisis to present December 31, 2010.

Eighth Continent advised fund #2 of all “Russia” funds 56 original constituents, crisis to yearend (2008, 2009, and 2010)

And for investors, our best ever returns have come in the last 22 months. +215% since calling the bottom March 2009; the Sub-advised Fund is 32.89% better than the index (MSCI EME); 40.11% vs. the Russian stock index (MICEX), 64.60% vs. MSCI Emerging Markets, and 205.01%% higher than MSCI World for the period (chart below).

Addendum II
Eighth Continent performance track record Diamond Age February 2005 to May 2010, Greater Europe Fund (Wermuth) June 2010 to present. Manager was out of the market in cash 2008, all comps are like-for-like periods

Addendum III
The World’s Largest Dying Power

28 December 2010

By Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007

As 2010 and the first decade of the 21st century wind to a close, the dominant social, political and economic trends of the year raise serious doubts about Russia’s future survival as a sovereign country. Chinese analysts, who have been closely observing Russia for the past 20 years, perhaps put it best: Russia is the world’s largest dying power.

If Russia continues down its current path of autocracy, monopolization, corruption and overall economic, political, cultural and technological degradation, it may prove the Chinese correct in their terminal diagnosis.

To be sure, the country’s degradation began before Vladimir Putin’s rise to power, but the nature and causes of this degradation are much different than under Putin’s degradation. During the 1990s, Russia found itself in complete political and economic ruins after the collapse of the Soviet Union and was hampered even further by low world oil prices throughout the decade. But  during the 2000s, Russia enjoyed record-high oil prices. Nonetheless, the oil windfall was not used to modernize, diversify or reform political and economic institutions. Instead, the lion’s share of oil revenue was stolen or wasted on huge pork-barrel projects.

There are four main areas that made 2010 a record year for Russia’s degradation:

The country declined on the 2010 United Nations Human Development Index 1. from 57th place five years ago to 65th place this year. This was because of the gap between the rich and poor widened and because the middle class has remained at only 10 percent to 12 percent of the population for the past decade. In addition, education dropped nine positions in the index to 41st place among 60 countries at a time when Russia plans to reduce its investment in education and human capital. The share of gross domestic product spending on science, education and health care will continue to decline, while spending for the military, police, intelligence services and other siloviki structures will increase.

The state has become more corrupt and criminalized. The most striking 2. example was the Kushchyovskaya massacre in early November that unmasked the complete fusion of organized crime and the local government, including the regional legislature, the court system and law enforcement agencies. It is no surprise that Russia fell 12 places in the most current World Economic Forum’s Global Competitiveness Report from 51st to 63rd place among 134 countries. Russia’s state institutions were ranked among the very worst in the world at 118th place. While the Kremlin pronounces empty words and slogans about “modernization” and “nanotechnology,” Russia has fallen to 80th place in the ranking for innovation, 126th place in terms of protection of property rights, 125th place for development of the financial market and 128th place for the high burden of state regulation on business. As a result, Russia again had the worst economic performance among the BRIC countries in 2010, including indexes for direct investment and economic growth, with capital flight from the country reaching $29 billion over 11 months.

The economy has become more state-controlled and ineffective. The share of 3. the raw materials sector in the economy continued to grow in addition to its already oversized share in the country’s export budget revenues. With the state’s share in the economy now at 50 percent according to government sources — and even higher if you count businesses owned or controlled by state officials — and with state workers now accounting for every second employee, the level of economic competition is woefully low, which means a rise in prices and overall inflation and a drop in quality, productivity and quality of goods.

Most Russians are overcome by cynicism and anger over their declining 4. standard of living and the fact that the ruling elite abuse their power and continue to embezzle money and assets from the people and businesses with impunity. In short, Russians have lost all hope for the future under the current leadership. This is reflected in rising crime, xenophobia and violence. The most striking evidence of the people’s growing anger and intolerance and the disintegration of Russian society was the riot by ultranationalists on Manezh Square in early December.

To make matters worse, Moscow’s practice of appointing Kremlin-friendly yet highly unpopular governors from outside the regions only intensifies the provinces’ sense of alienation from the federal center. The Kremlin has taken an imperial approach to governing the regions, laying the foundation for an increase in separatist sentiments, particularly in the North Caucasus, Kaliningrad and in the Far East.

Putin’s desire to remain in power for another 12 years after the 2012 presidential election spells disaster for Russia. In the best case scenario, we can expect long-term economic stagnation and social decline. This will be coupled with a continued rise in corruption, drop in foreign investment and the flight from Russia of both capital and millions of its best and most talented citizens. In the worst case scenario, the continued degradation caused by corruption, monopolization and lawlessness could result in a total collapse and disintegration of the country, and if the country’s leadership doesn’t change this happen in the next decade.

Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy radio.

Da Vinci December Macro and Strategy Report (Russia)

• Cyclical Equity Bull market in midst of western secular equity bear market
• Commodities further strength expected. China´s energy usage doubles in decade. Real estate demand is strong in Switzerland, China, Australia, Canada
• Emerging (BRIC i.e.) to continue to outperform developed
• Demise of US$, rise of Gold, Yuan, TWD and MYR
• recovery UK / Euro zone, no double dip or crash likely

Cash rich companies saved a lot on costs and worked on net cash flows. The big next bubble could be developed countries government bonds.

The confusing economic indicators puzzle the most sophisticated investors. The pundits keep on changing their market forecasts and earnings forecast. The slow down in the west is clearly reflected in lower consumer confidence , companies hoarding lots of cash on their balance sheets. A typical investor is confused. Absence of market trends makes it more challenging for directional strategies. Market Neutral, Relative Value, Fixed Income strategies have done well in the past seven months on a risk adjusted basis. The strategies that are immune to market direction will be able to make investors smiling in my view .

Overnight Gaps – An overnight gap is where the market opens significantly above or below the closing price of the previous day. This can suggest significant volatility lies ahead, and Strategic looks to play this setup by either going in line with the gap (if smaller) or fading the gap in expectation of it reversing course (if larger).

Continuation Patterns – Strategic attempts to identify low risk entry points that can get the system into the market in the direction of a strong trend, by looking for continuation patterns.  A simple example of a continuation pattern would be a market, which is making higher highs and lower lows.

Range Expansions – Most long volatility systems operate using range breakout logic.  This logic brackets the market when it enters a lower volatility consolidation pattern, and the Strategic system includes this logic as well – looking to identify periods where the market has been quiet for a specific period, in hopes of anticipating when and where the market is getting set for some short term explosive moves.

Seasonality – This is one of the main parameters which sets Strategic apart from many other trading systems. The system uses seasonal analysis such as going long on the first trading day of the month and the Monday before options expiry. In addition, a seasonality filter is applied across all other trading parameters, requiring that they occur in the same direction as the current favorable seasonal period in order to trigger a trade.

Overbought/Oversold – This is another component which sets Strategic apart. Most trading systems either look for a breakout from a move higher or lower, or fade the move in hopes of prices reverting to the mean – not both. Strategic has components which do both, and the overbought/oversold component looks for opportunities when the market overextends itself in either direction, putting in orders to fade the crowd and to trade a snap back in the opposite direction.

Reversals – Similar to the oversold component, the reversal logic within Strategic looks to identify periods where the market has over-extended itself on a specific day, in anticipation of a move in the opposite direction on the following day.

Volatility Entries – this parameter is in stark contrast to the preceding two, but they somehow co-exist in the Strategic logic.  This logic looks for trade entries x% above and below the opening price of each time period throughout the day, looking to get in line with a big move in one direction or the other once the market has moved significantly outside of the normal “noise” level.

Exits – no model would be completes without considering the exits, and Strategic’s exits are again based on the market moving x% above or below the opening price of the time period immediately following a set amount of time (Mr. Gibbs is keeping what exactly that time frame is to himself) the system has been in the existing position.  The system also incorporates several other exits, which trail the stop and exit the trade early should the market reverse against the original position. [Disclaimer: stop orders cannot guarantee an order is filled at the desired price]

 High Frequency Trading – Consistent Upside – Sharp Ratio 6

The benefits of algorithmic trading include consistent returns, low risk profile and a diversified portfolio. Steffen says he likes working with Da Vinci in high frequency trading because it is a very competitive space. He says “you can’t sleep” because you have to constantly develop new strategies. But he likes the fact he can verify if he has done a good job on a daily basis through his portfolio’s performance.

BACKGROUND

Steffen is from Germany. He graduated with a degree in mechanical engineering from the University of Aachen, a famous engineering school in Germany. For the next eight years, Steffen worked with Formula One racing as an engineer for two teams, British American Racing and Toyota F1. In addition to formulating race strategies, his job was to analyze every aspect of the cars and make them go faster. Steffen started trading his own portfolio in 2000 and after spending up to 140 days on the road per year with the race teams, he decided to try something else so went back to school at the International University in Monaco and obtained a degree in finance. He met Hendrik, the Da Vinci CEO, at a conference when Hendrik was speaking at the University. As an early adopter of the algorithmic technology, Hendrik was looking for someone to run the algorithmic trading models and with Steffen’s background in programming, there was a fit. Steffen started work at Da Vinci in February 2009.

ROLE

• Generate ideas and develop new trading strategies
• Write the code for each idea/strategy
• Testing, backtesting, calibrating the strategy
• Monitoring the programs during the day
• Always looking for further improvement opportunities

Steffen trades liquid future contracts on the Eurostoxx and German interest rate curve. He trades options on the Eurostoxx, DAX, Bund, Bobl and Schatz. A smaller part of his trading volume involves futures and options on the Swiss SMI which is also traded on the Eurex.

Steffen started from scratch and implemented the program a year ago. He says for the first couple of months, it was challenging to get up and running. He had to “get to know” the program, the hardware and figure out how to make money using technology to outsmart the markets. In May 2009, he launched algorithmic trading for Da Vinci with his first successful trades. With a few minor down months, he has generated positive monthly performance and the returns are gradually increasing every month. Steffen is constantly developing new strategies to complement other strategies because he says after some time, old strategies might not work anymore. He is better able to generate consistent returns by implementing more and diversified strategies.

EDGE

• Speed of the trades – Da Vinci has a server located next to the Eurex Exchange in Frankfurt. Steffen says the faster you get your orders through to the Exchange, the better because invariably there are traders placing orders in the same direction.
• Ability to cover costs – Steffen says the system has very high running costs and he has to make money in order to cover those costs which include the connection to the Exchange, hardware hosted in Frankfurt, connection in Zurich, software and subscriptions to the various data feeds used in the programs.
• Diversification of strategies – strategies other people don’t have and don’t exploit – Auto-Eye, Order Book Strategies, News Trading
• Controlled risk – in algorithmic trading; typically, Da Vinci’s algorithmic strategies hold a position from less than a second to approximately two to three minutes. They do not hold positions overnight. A single trade generates only a small profit, however losses are cut quickly and the trade frequency is high. The edge is the potential upside compared to the potential loss. Steffen’s program only trades if there is a clear edge

Da Vinci manages $42M across two funds – the Da Vinci Arbitrage Fund and the corresponding UCITS III vehicle. Target capacity for the strategy is $500M and we intend to reach $100M in 2010. We have a dollar, euro, sterling and Swiss Franc share class. Da Vinci is open for new subscriptions weekly for Da Vinci Arbitrage Fund and daily for the UCITS III. Please contact me for further information and subscription documents.

Da Vinci System Selector
Geplanter Ausbau des Algorithmic Trading / Der Da Vinci System Selector:

• Unabhängigkeit von Portfoliomanagern
• Sehr geringe Korrelation zu bestehenden Handelsstrategien
• Konstante Erträge durch die Skalierbarkeit der Strategien über Märkte und Produkte
• Auto-Eye Optionspreis Arbitrage bei Marktungleichgewichten
• Orderbuch Strategien Analyse der Orderbuchstruktur
• News Trading Schnelle Reaktion bei der Publikation von Wirtschaftszahlen

Zusammenarbeit mit starken Partnern:

• Proximity-Lösung bei der Deutschen Börse in Frankfurt
  (Equinix / Fixnetix) Software-Lösung von Sol-3

Die Allokation in die Systeme erfolgt nach einem internen Sortino Ratio jeden Monatsanfang neu. Das Risikomanagement ist auch komplett automatisiert.

Technische Infrastruktur
Mit unserer Handelssoftware hat Da Vinci Invest AG für die Entwicklung komplexer automatisierter Handelsstrategien eine nicht nur innovative sondern auch eine zuverlässige Lösung gefunden. Die im Algo-Trading unersetzlichen Kriterien werden hier intelligent gebündelt: Die hochtechnologische Serverstruktur garantiert eine schnelle Anbindung an die wichtigsten Börsen der Welt und entscheidet im Algorithmic Trading zwischen Gewinn und Verlust.

Viele Leute sagten in letzer Zeit zu mir:”Nirgends ist das Geld mehr sicher. Da lege ich doch lieber mein Geld unter das Kopfkissen.” Ich halte dies für keine gute Idee. Das Geld könnte gestohlen werden. Man befürchtet ständig, ausgeraubt zu werden. Weitere Gefahren sind Wohnungs- oder Hausbrand, einfach das Versteck nicht mehr wiederzufinden oder eine Währungsreform terminlich zu verpassen. Das ist also keine gute Alternative zur Bank. In der Schweiz ist jedes Konto von Spar- und Festgeldern nur bis 30 000 CH versichert. In anderen Ländern ist diese Summe noch geringer.

Anleihen
Investiert man das Geld in Anleihen, zählen diese Wertpapiere nicht zum Vermögen der Bank, sondern, genau wie Fonds, als Sondervermögen. D.h. der Insolvenzverwalter darf diese Wertpapiere im Konkursfall der Bank nicht zur Insolvenzmasse rechnen, und man reiht sich nicht in die Gläubigerliste mit quotaler Auszahlung ein. Stattdessen werden die Wertpapiere sofort an den Anleger zurück übertragen. Damit wäre man gegen den Bankkonkurs gefeit. Eine Hyperinflation würde aber festverzinsliche Wertpapiere auch entwerten. Sowie die internationalen Regierungen derzeit Schulden aufnehmen und Geld drucken, ist dieses Risiko nicht unrealistisch.

Aktien und Immobilien
Aktien dürften generell auch nicht so gut rentieren in den nächsten Jahren im Zuge einer weltweiten Finanz- und Wirtschaftskrise. Die USA werden fast alle Länder in eine Rezession reissen. Die Kaufkraft sinkt, es wird weniger konsumiert. Nur sehr wenige Unternehmen können sich diesem Abwärtstrend entziehen. Vielen Anlegern gelingt es schon in guten Zeiten nicht, die Benchmark zu schlagen und die besten Aktien auszuwählen. In Krisenzeiten halte ich dies für nahezu unmöglich. Aktieninvestments sind riskant. Das gleiche gilt für Immobilien. Zwar gab es in der Schweiz keinen Immobilienpreisboom und keine Preisblase, aber bei sinkender Kaufkraft werden Immobilien in der Regel nicht teurer. Immobilien und Aktien bieten aber einen Schutz vor Hyperinflation, nicht aber vor gierigen und schlechten Vorständen.

Sachwerte
Sachwerte sind eine gute Anlagemöglichkeit im Moment. Man sollte Sachwerte auswählen, die einen praktischen Nutzen im Konsum oder der Industrieanwendung erfüllen (abgesehen von Schmuck, kein Gold!) und deren Preise im Zuge der Kreditauflösung von Hedge-Fonds und Banken ungerechtfertigt gefallen sind. Dazu zählt auch Gas, Mais und Öl kurzfristig. Wenn Sie nebenbei noch etwas Gutes tun wollen, investieren Sie in Waldfonds! Um Bäume zu pflanzen, müssen diese Fonds Ackerland oder Regenwaldboden erwerben. Der Holzpreis wird in den nächsten Jahren aufgrund verstärkter Nachfrage der BRIC-Staaten nicht sinken und Ackerlandpreise sind zurzeit tief. Hier kann eigentlich nur eine Preiserhöhung folgen, falls es zu Bauland erklärt wird. Die Bäume wachsen jedes Jahr, und Ihr Investment wächst somit stetig an. Zusätzlich bekommen Sie C02-Zertifikate gutgeschrieben, die auch zur positiven Rendite beitragen. Dem stehen politische Risiken in bestimmten Ländern entgegen. Zudem könnte natürlich schlechte Arbeit des Forstbetriebs vor Ort die Rendite schmälern.

Fazit
Grundsätzlich halte ich in der Finanzkrise direkte Investitionen in Sachwerte durch Wald- und Sachwertefonds (EFTs) von seriösen Anbietern für die beste Anlage.