NetNet's (Almost) Totally Passive, Faux Hedge Fund
You may have noticed that there are a few people who publicly run phony investment portfolios as a way of showing off their investment prowess.
Here at NetNet we claim almost no investment expertise at all. We've made a few good calls in our time, almost all on the short side . Short Vonage , short Heelys , short Tiffany & Co. Those all worked out very well. Tiffany is one of our favorites at NetNet, since we called its downturn twice, once in 2008 and once in 2011. Since we first started challenging Wall Street's rosy views of Tiffany last June, the stock is down about 10 percent.
So what would happen if we turned our attention to the long side of the market? Well, we took a look at about two dozen potential stock investments over the Christmas holidays and discovered we didn't really like any of them.
But we're modified bulls right now. Why? Call it simply contrarianism.
When you have the mainstream newswires printing articles about Tiffany's exposureto a slowdown outside the U.S., which we pointed out last summer, the short play might be done. Time to cover. There may be more downside to come but why get greedy?
But we did come upon a strategy we liked. We're going to try to beat out the markets by only buying stocks at the close of the last trading day of the month and selling at the close of the first trading day of the month. The idea is to try to capture the monthly window-dressing by institutional investors that has been documented in many academic studies. What we hope to do is capture any gains from the first trading day of the month, giving up all opportunities the rest of the year.
Of course, as financial journalists working for CNBC, we cannot actually trade like this. It's against the rules. So we're just running a mock-portfolio.
Other than the timing, we're going to be completely passive about this. All we'll do is (pretend to) invest in the entire S&P 500 index.
So our gains will just be the gains in the S&P 500 for the first trading day.
We'll keep you posted regularly about how the fake NetNet hedge fundperforms, and we're open to suggestions about ways we should modify this to better reflect reality, capture gains, or avoid losses.
Incidentally, it looks like we're off to a pretty good start. At pixel time, we're up around 1.81 percent.
Questions? Comments? Email us atNetNet@cnbc.com
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