This report is for those who invested in Man Funds or might be considering to add to your positions.
There has been extreme volatility in world currency markets as panic stricken investors world wide have liquidated shares, commodities, property, mortgage and corporate bonds. Volatility and price drops such as these have not been seen since the world depression of 1929- 1931.
In this atmosphere of fear and uncertainty investors have stampeding into the ultimate safe haven- US Treasury bonds. 3 month US bill rates have dropped to 0.01 percent.The 10 year bond is at 2.5 % while the 30 year bond is at 3.005 %. These are 1930 depression levels for these instruments. Large funds are buying treasuries to ride out the storm. This is creating a bubble much like the internet bubble and the recent crude oil bubble.
Chart of the US 30 year bond tells the story. As price goes higher and higher volume gets lesser and lesser which is a signal that demand is dropping. There are fewer buyers at the top as smart money is selling to the herd of sheep who are caught up in the buying panic. All bubbles end like this.
Smart money is beginning to reason, why should I be satisfied with a 1 % return in the US Dollar as the US government bailouts of banks/ auto companies which guarantee a debasing of the US Dollar currency. Lower volume on the above chart shows smart money is beginning to withdrawOnce Obama takes power he will bailout the housing industry and Joe Public, with massive stimulus packages adding more liquidity to the system. The US Dollar on purchasing power parity is no longer cheap. The AUD is 10 % undervalued based on this PPP benchmark. Moreover US Productivity has dropped to 0 % as the recession deepens
Once the Treasury bubble pops expect the Euro/ Australian Dollar/ to gain and this will benefit us who hold Man AHL and other AUD Man Funds.. Also expect the KLSE and other world markets to gain from an inflow of funds by those who are selling their US Bonds once the panic ends.
The actual Man funds have done well this year unlike the majority of hedge funds.. Please read the attached report detailing Man performance. Man being a trend following fund profits with volatility and be sure 2009 will be a volatile year.
The AHL pure commodity/futures non guaranteed fund is open ended and you can join anytime . This could be a good investment for 2009 no matter what happens in the stock market. Let me or Martin know if you have any questions on this or if you wish to invest.
Best regards
Bill
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