On January 21, 2010 we initiated our short position in gold via the Proshares Ultrashort Gold Fund (NYSE: GLL). We are now closing this position, as GLL hit our pre-specified stop of $37.95 (split adjusted). Our loss on this position was limited to 25%, or 2.5% of the total portfolio.
This is a difficult move for us, but we consider it the right move. We continue to believe that gold is in an irrational speculative bubble driven by a potent combination of fear, angst, and political ideology. But as John Maynard Keynes noted, “The market can stay irrational longer than you can stay solvent.” And as we wrote when we initiated this trade, “The problem with making a contrarian call is that you can be ‘right’ but still lose a lot of money if you are too early. Just ask anyone who tried to short the Nasdaq during the 1990s bubble.”
Monday, June 21, 2010
Friday, June 11, 2010
Sizemore Capital Management Analysis of the Luxury Goods Sector
EXECUTIVE SUMMARY
Given the host of issues facing the global economy—and the European sovereign debt crisis in particular—we have decided to do a periodic review of Sizemore Capital Management’s allocation to the luxury sector in its actively-managed Tactical Portfolio. We find that at current valuations, the luxury sector remains an attractive holding due primarily to its exposure to the emerging market consumer. Weakness in the euro should translate to higher earnings, as the majority of revenues for the European brands that dominate the industry comes from outside of Europe.
Given the host of issues facing the global economy—and the European sovereign debt crisis in particular—we have decided to do a periodic review of Sizemore Capital Management’s allocation to the luxury sector in its actively-managed Tactical Portfolio. We find that at current valuations, the luxury sector remains an attractive holding due primarily to its exposure to the emerging market consumer. Weakness in the euro should translate to higher earnings, as the majority of revenues for the European brands that dominate the industry comes from outside of Europe.
