Anyways here is our performance year to date.  We are up as of tonight 7.59% with a worst drawdown of -2.29%.  This compares very well against the HFRXM Hedge Fund Research Macro Index which is down -1.56% and has a worst drawdown of -4.76%.  Of course if we are beating any benchmark then we are also beating the SP500.  Why people continue to believe in buy and hold is beyond us but if you are a believer then you are down -6.09% for the year and are currently down -13.97% from the high for the year.  Yes, that means that we are ahead of the SP500 by almost 14% and with far less risk.

YTD Perfomance vs Benchmarks

To get a better picture of how we are doing and how our returns have been far less volatile than the SP500 here is a chart showing $1,000 invested in our model portfolio, SP500, and the HFRXM.  As you can see we have been fairly consistent with low drawdowns and little volatility.

YTD $1,000 Investment

We have never been really big fans of the buy and hold as it always leaves the door for devastating losses that you may or may not ever come back from.  Many people fail to realize that a 50% loss requires not a 50% gain but a 100% gain just to get back to breakeven.  Think about it if you have $100 and lose $50, the remaining $50 needs to double to get back to $100.  Looking at the past 10 years we have had two instances where the SP500 tanked by 50%.  The 2000-02 crash took it down 47% and the 2008 crash took it down 57% from the high to the low.  Despite the monster rally of 2009 that took the SP500 up 67.45% from its lows investors were still down -29% from the 2007 highs.

We bring all of this up in our update to highlight one thing that we do, and do quite well.  That thing is risk management.  We are only right a little more than 55% of the time but our losses are far smaller than our gains.  We strive to never risk so much on a trade that if we are wrong we cant climb back out of the hole.  We do this by using tools like stop losses on both a position and portfolio level, position sizing on both a position and asset class level, correlation studies to see if we are too concentrated, diversification across asset classes, by going long and short, by hedging, etc.  Basically we cut our losses short and try to let our winners run.

We have found that in any business and even in life that risk management is one of the things that really separates the winners from the losers.  If you do everything in your power to control your downside then you will be in a lot better position to capture the upside in any endeavor.  The Scouting motto was not just for camping “Be Prepared” is the correct way to invest as well.

Happy Trading,

Dave@DavidTaggart.com

Take a $1 trial of The Macro Trader to receive unbiased actionable research.

Reading over my last post I can see that everything has progressed in the last five months at least a little and in some cases a lot.  If only there were 48 hours in a day instead of just 24.

The Macro Trader continues to go well.  Traffic is still growing well and our number of subscriptions continue to increase.  Just as important is that our performance for the year has been solid beating the SP500 and providing absolute returns with very low drawdowns.  It is sad that the SP500 is “the” benchmark since it is far too volatile for its meager returns.   I still spend 90% of my waking hours on this site and love it like 90% of the time.

Tags Kitchen continues to grow with more and more recipes going online.  Most of these are family recipes or recipes that have been modified by family.  What this means of course is that everything has been eaten by at least one, and likely several family members.  This is important because whereas most families plan their vacations around sights and stuff, our family plans the sights around the food.  We are all eaters and mot of us are pretty good cooks as well.  I grew up thinking that all moms, aunts, grandmas, and even most dads and uncles were great cooks.  It wasn’t until around 5th grade when I went to a friends grandmas house and ate food and thought some version of what the hell was this?  Anyways while I can’t guarantee that every recipe is great I can say that most of them are great and the rest are at least good.  BTW my sister Becca has done most of the work on the site as of late.

Personal Refuge has been a PITA as Buddy Press was beyond what I needed.  Instead we resorted back to regular Word Press and have recently re-installed a storefront that is better than what was there before.  In addition we are going to have articles dealing with self sufficiency such as how to make a home made generator and other useful stuff like that.  We will also be reviewing a number of products that have been designed for the outdoors, self reliance, etc.

Dating life is unchanged which of course equals non-existent.

Weight/Fitness- I didn’t really jump on the bandwagon until the start of 2010 when we started making bets again.  I lose weight when there is money on the line.  I have dropped 20 so far this year and now need to drop 30 by the end of April.  As much as that sucks it is a fitting punishment for being somewhat of a fatass.

If you have not purchased your name.com then you are missing out, or will eventually miss out.  Miss out on what you ask?  Well here is a great article by Fred Wilson AVC.com that discusses the value of owning your online brand.  I can say that I rank number one in Google for the term David Taggart and would like to eventually have a authority ranking like my good friend Courtney Tuttle.    Aside from the rankings however is the fact that a domain name costs like $8 a year or so from sellers like Proud Domains and once someone buys it they can keep it forever. Like the article suggests owning your online brand can do a lot more for you than just make you feel cool.  By “owning your space” you can ensure that people that search for your name see what you want them to see.  In case you were wondering everyone Googles everyone so this does actually matter. Even if all you do is build an online business card this is better than doing nothing.

I cant think of much else to say right now.  I will end with a suggestion that you try out my newsletter The Macro Trader using our new subscription options where you can try us out for 1-month/4-weeks for only $1.  The best risk to reward out there.

Happy Living,

Dave@DavidTaggart.com

P.S. If you have your own site or blog feel free to link to this site at http://DavidTaggart.com

Tigers lost to the Twins yesterday in a playoff for the playoffs.  Yes, we melted in the last month but come on isn’t having Brett Favre and going 4-0  good enough for one town?

The Macro Trader is going well.  We have increased traffic 6 fold from the June to September and are now being syndicated on SeekingAlpha and Newstex which distributes to Reuters, the Kindle, and several other outlets.  performance of the newsletter has been solid and while we are lagging the SP500 for 2009 we are killing it by over 30% still over the last two years. I spend 90%+ of my working hours, which are most of my hours, on this site and researching for the newsletter.  I love this business.

TagsKitchen.com my old cooking site will be back up this week and is going to be using Buddypress instead of regular WordPress.  This will enable us to build a cooking community and do a lot of other cool things.  Buddypress is basically a blogging Facebook/members site software.  You can blog, have a message board, allow members to have their own blogs, and a bunch of other stuff.  Most of the recipes that were on the old TagsKitchen will be on this one as well as tons of new stuff.  Not 100% sure how to best monetize it so initially we will have some Amazon and Google love. My sister Becca will be doing a lot on the site.

PersonalRefuge.com Another project that I am working on is that of a self sufficiency website.  Anyone that has known me for more than a week or so knows that I have always been interested in what will happen, or more accurately what does happen when society goes to crap.  New Orleans is a good and real example while Somalia is an extreme example.  There is a lot of information that can be useful if, more like when this happens.  Our main monetization of this site will be selling Mountain House Food Storage.   They make the best products and we are able to sell at the best prices.  Initially we will not be doing the typical shopping cart but instead will be doing over the phone and/or Skype assessments of what you need and what we offer.  We have a few standard packages but they are easily customized for each customer.  Over time we may branch out and sell other items as well but food storage will be our primary product.  And PersonalRefuge.com will also be on Buddypress which will allow us to have several different sections, a message board, and member blogs.

Dating life-Mostly non-existent…..Ok maybe totally non-existant but whatev.

BYU Football-We are 4-1 and the season is going fine.  Actually the season is going great but after the win against Oklahoma at the beginning of the season I think I set my expectations too high.  Because of this I feel a bit down on the whole thing even though we are ranked 18th.  Our next big test is TCU in a few weeks and if we can win that game I will be back on and will go to whatever bowl game we get.  If sports are this emotional for fans I can’t believe how they must be for the athletes.

Shooting-I have been so busy with work this summer that I have barely gone shooting at all.  This after 3+ years of 2 times a week.  I can still consistently do sub 1.5 second shots but on my current lack of a practice schedule I will never get to a sub 1 second shot.  Hopefully by spring time my schedule is a bit more open.

Weight/Fitness-I am a strong fat man.  Not like huge fat but still overweight.  At least I am strong right?  Well it is little consolation and this winter I will be dropping 30+.  I have a big frame and have decent height so I don’t look like a lardass but I am nowhere near where I would like to be hence the posting of my goal on a public website with my name on it. If you see me in a month ask me if I have lost weight and if I answer no then kick me in the face, I deserve it

Reading-I love books and love to read.  Lucky for me I love my work so 90% of my reading the past 10+ years have been related to investing, business, etc.  Right now I am re-reading Alchemy of Finance by George Soros. Politically homeboy is nuts but as a trader he is one of the best ever.  Two other books I am reading are Global Convertible Investing by Hart Woodson and Portable Alpha Theory and Practice by Sabrina Callan.  Convertible bonds have not been my strong point so I am building that up and with all the success that Bridgewater has had with portable alpha I figured I should do more research in the part of the alternative investment world.

Book Links
The Alchemy of Finance (Wiley Investment Classics)

Portable Alpha Theory and Practice: What Investors Really Need to Know (Wiley Finance)

Global Convertible Investing: The Gabelli Way

Thats it for now.

Happy Living,

Dave@DavidTaggart.com

Here is the site

What Will The Market Do Today.com

Happy Trading,

Dave Taggart

“An unarmed man can only flee from evil, and evil is not overcome by fleeing from it.”
-Colonel Jeff Cooper

All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.
-T.E. Lawrence

“‘The good part is that no matter whether our clients make money or lose money Duke & Duke get the commissions.’
‘Well, what do you think, Valentine?’
‘Sounds to me like you guys are a couple of bookies.’”
-Trading Places (1983 movie about the commodities market)

“The one thing every trader fears more than death itself is another crash like the one in ‘29. They say it could never happen again because of all the safe guards that have been set up… but in our heart of hearts no trader believes it.”
-Martin Schwartz, 1998 “Pit Bull: Lessons from Wall Street’s Champion Trader”

“Don’t make the mistake of assuming that you and I share any of the same value systems”
-Lightfighter

“who cares if the cVAR 97.5 sig level is 50 bips higher than the long term 50 day average when bench marked against the number of times the words “that’s for sure” are heard on cnn news?
-FinTag

“Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes.The dead rising from the grave! Human sacrifice, dogs and cats living together… mass hysteria!”
-Ghostbusters

“I think the secret is cutting down the number of trades you make. The best trades are the ones in which you have all three things going for you: Fundamentals, Technicals, and Market Tone. If you can restrict your activity to only those types of trades, you have to make money, in any market, under any circumstances.”
-Michael Marcus

“Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you’re being had.

Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus.”
-Michael Crichton on Global Warming

I don’t consider myself a home-run hitter. But when I’m seeing the ball and hitting it hard, it will go out of the park.
-Ken Griffey Jr.

Insanity in individuals is something rare – but in groups, parties, nations and epochs, it is the rule.
-Friedrich Nietzsche

Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before. He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way.
-Kurt Vonnegut
There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.
-Milton Friedman

People who decry the fact that businesses are in business “just to make money” seldom understand the implications of what they are saying. You make money by doing what other people want, not what you want.
-Thomas Sowell

When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.
-P.J. O’Rourke

Even if you’re on the right track, you’ll get run over if you just sit there.
-Will Rogers

Any word you have to hunt for in a thesaurus is the wrong word. There are no exceptions to this rule.
-Mike Shea

The upshot is that the points where defensive or aggressive investment positions are most effective are also typically the points where one will, at least briefly, look like an idiot for taking them.
-John Hussman

The job of a Russian man is to plant:
His house in the ground (sic).
His seed in a woman.
His neighbour in jail.
-From Ruminations on Russia

A loss never bothers me after I take it. I forget it overnight. But being wrong, not taking the loss, that is what does damage to the pocketbook and the soul.
-Jesse Livermore

The Greatest Happiness is to scatter your enemy and drive him before you. To see his cities reduced to ashes. To see those who love him shrouded and in tears. And to gather to your bosom his wives and daughters.
-Genghis Khan

No matter how good our kung-fu is, it will never defeat guns.
-Iron Robe Yim

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
-George Washington

“The only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing, but burn, burn, burn, like fabulous yellow Roman candles exploding like spiders across the stars, and in the middle, you see the blue center-light pop, and everybody goes ahh…”
-Jack Kerouac, from On the Road

“I’m a hustler baby I just want you to know it ain’t where I’ve been but where I’m about to go.”
-Jay-Z

“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”
- Lau-Tzu

“The best traders aren’t those who can take risk, but those who know how to mitigate it.”
- Jonathan Hoenig

You know, the usual: supreme power, undue influence over others, world domination.
-David Harding of Winton Capital Management when asked about what drives him in Traderdaily

“What do you do when your competitor is drowning? Get a live hose – and stick it in his mouth.”
-Doug Ivester

Don’t you realize? The next time you see sky, it’ll be over another town. The next time you take a test, it’ll be in some other school. Our parents, they want the best of stuff for us. But right now, they got to do what’s right for them. Because it’s their time. Their time! Up there! Down here, it’s our time. It’s our time down here. That’s all over the second we ride up Troy’s bucket.
- Mikey from Goonies

LGOP: a small group of “pissed-off American paratroopers” who are well trained, armed to the teeth, and lack serious supervision. They collectively remember the commander’s intent as, “March to the sound of guns, and kill anyone who isn’t dressed like you …”

Happy Life,

David Taggart

If you aren’t an idiot then you would see that if your current location is so bad and another location is so much better all you need to do is go to the new location and you will reach the pinnacle of happiness.

The thing is that by and large happiness is a state of mind and if you are alwasy selling on the negative you will rarely fell good about yourself, your frineds, or your current geographic location.

So next time you almost say “I hate this place” realize that by saying that you are also admitting that you are an idiot as you could easily go to the more desired location.  Plane tickets are pretty cheap these days and you can go to half the world for the price of two pairs of designer jeans.

Happy Life,

Dave Taggart

P.S.  100% of pedophiles don’t link to my site. If you don’t link to my site with your blog then what does that make you?  Yeah the easy choice is to just link to me in your blogroll

Anyways I still read a lot both offline and online and due to my Twitter posts, and therefore my Facebook updates, I get questions as to where do I find the news I read.  Most of it not surprisingly is financial in nature but I also throw out the super random stuff as well.  Anyways I figured I would go through my RSS reader and point out a few highlights.

In the order that they appear in my RSS reader

Abnormal Returns

If you like the financial markets and you don’t read abnormal returns daily then you are missing out.  Hand down the best daily link fest you will find.  These guys/girls/I don’t know who they are, do an excellent job at collecting their online readings and providing us with useful articles.  It is a daily staple for me and should likely be for everyone.

CXO Group

CXO backtests just about everything to see if it has any predictive power.  They post just about every day and at least once every week or two I get something very useful out of reading it.  Mind you I read it every day and while virtually every post is interesting I only get “aha” moments every few weeks.  I think they do a better job of testing potential market anamolies then almost every academic paper I have ever read.

Macro Man

Macro man is not only really entertaining but also really smart.  A long time macro trader he posts almost every day and is a must read.  Since I write a weekly global macro trader newsletter each week you may wonder why I would mention another site.  Well first of all he is not a competitor as he doesn’t sell a service but the main thing is that he is a good writer and if you are into macro you should be reading him every day.

Quantifiable Edges

Rob Hanna, the writer of Quantifiable Edges post virtually everyday and does an excellent job at uncovering market anomalies and sharing them with us.  I get his daily letter and it is very well done and is extremely useful for the short term trader.  Again he does not compete in the same space as I do and even if he did he’s a good guy and I think most traders would be well served by adding this site to your reading list.

The Big Picture

Barry is one of the longest standing and most visible financial bloggers out there.  While I dont always agree with him, and his site has gotten a bit unwieldy, he still posts very useful insights and now has some really good guest posters.

The Kirk Report

Charles Kirk is one of the better known bloggers out there.  This is for two reasons: one is that his posts are well done and insightful, and two because he comes across as a good dude.  One interesting thing is that he lives relatively close to me down in Cedar City as his wife is now teaching at SUU.

Across The Curve

One of the few good bond blogs, John Jansen is a wonderful resource into the day to day workings of the bond market.  A long time institutional trader he now trades his own account and posts several times each day with insights that can only be gleamed by talking to several years of experience and daily contact with bond desks.

Andy Swan

Andy is a successful trader as well as entrepreneur  who I follow on Twitter.  He has built a few trading related businesses and sold a few as well.  His posts are usually fairly short but I find them interesting and useful.

Crossing Wall Street

Eddie has been posting for a few years now and usually has insightful and fun posts.  Not much else to say other then that I read just about everything he posts.

Maoxian

The Chairman lives in China and trades.  He is one of the Godfathers of the blog world and is likely THE Godfather of financial blogs.  His site is filled with really useful as well as a few way random things.  Smart guy and seems to know what he is doing.

Aleph Blog

David Merkel is a very smart and a very good guy.  While he has written for The Street.com he is a very low key guy that knows the insurance industry as good as anyone.  Actually it is more accurate to say he knows it better then just about anyone.  He also posts regularly about other market related items.

The Oil Drum

For all things energy the Oil Drum is a wonderful resource.  While I don’t agree with everything they say, I learn a ton every time I read them.  By and large this site is great if you are a peak oil believer, but even if you aren’t it is a useful site to learn about energy.

Mebane Faber

Mebane is a good dude and shares a lot with his blog readers. His paper is on the top 10 all time downloaded posts on SSRN and he is big on market anamolies.  He has built a new software product as well as written a book.  He is smart and totally worth reading.

Long or Short

Long or Short is one of the funniest financial blogs in existence.  From going long hookers to believing in the rise of the Cephalopods these guys are hilarious.

The Keyword Academy

One of my best friends as well as one of the best SEO guys in existence, Courtney Tuttle does an excellent job explaining, teaching, and doing SEO.  He can rank for any keyword faster then you and finds anamolies in the GOOG better then anyone I have seen.  If you want to learn to rank for a certain term he can teach you.  Now that he has a membership site he offers several videos and tutorials on different aspects of SEO and is adding new content all the time.  If you are an avid blogger you might be interested in knowing that some people really do make a lot of money blogging and in most cases no one has ever heard of them.  Felix Salmon can say what he wants but some people make a lot of money via blogging.

Generation Y

Gen Y is written by a Cuban in Cuba.  It details the everyday life of a Cuban named Yoani Sanchez.  She lives there due to family but she can’t even post to her blog due to the fact that Cuba is a communist nation and Castro is a total bastard POS.  With a mother who was born in Cuba that left when she was 13 I am half Cuban and am definitely of the vehemently Anti-Castro Cubans.  If you are interested in Cuba this site is worth reading.

Wages of Wins

Wages of Wins, written by the authors of a book by the same name is a great site for the sports enthusiast.  In the spirit of Moneyball this site goes over a lot of different stats and other predictive events in sports.  As an added bonus David Berri now teaches at SUU down in Cedar City teaching Applied Economics.  If you are in Cedar then you need to read his stuff and take his classes.

I read about 100 or so more sites on a regular basis but these are some of my favorites and most often visited.  if any of them sound interesting then give them a visit.  You will not be disappointed.

Happy Reading,

David Taggart

P.S. If you like any of this feel free to link to this post, or to my site with your site or blog.

Here’s a little about me.  I was born in the late seventies and was raised primarily in Cody, Wyoming and Provo, Utah with an eventful stop in East Lansing, Michigan and stops in Laramie, Wyoming and Park City, Utah as well.  I also served a LDS mission to Puerto Rico so I guess you could say I lived there for two years as well.

As it says in the sidebar I have been in the investment business full time since 2000 and have loved almost every minute of it.  A little over a year ago I went out on my own and currently own and operate The Macro Trader, a weekly global macro publication with frequent intra-week updates for time-critical analysis and actionable trade ideas.  In addition to The Macro Trader I am a partner in Attitrade.com a site that provides traders with a lot of useful scans, volatility charts, and other tools for traders as well as several education programs for the beginner all the way to the  advanced trader.  Aside from trading related businesses I am also an investor in a few other web sites.  Over time I will go into each business that I am involved with and how they are doing.

Throughout the day I am on Twitter with the handle @dctag I also have @DavidTaggart and am considering changing over but for now if you want to find me use @dctag. I am usually pretty active but occasionally am absent from Twitteronia so if you don’t see a post one day I am probably not dead but instead too busy.

I am hoping to post fairly regularly to this blog as it reflects on me and therefore I can speak my mind.  I don’t recall ever being accused of not having an opinion on something so now and then expect a full fledged rant.  I will try not to swear very often on the blog as I am trying (not hard enough and with little success) not to swear in my offline life but there will no doubt be the occasional word or twenty.

Anyways that is enough about me for now.

Happy Life,

David Taggart

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