10 am - Market Outlook by Bill Wermine

Dear Traders,

With all the bad news about hedge funds going bust/ bankruptcies/ credit collapse/ world depression/ stock market collapse CPO to fall to RM 150 per ton etc Many of you are worried about your investment with Man. Man AHL has had a positive return this year although we have lost on the AUD exchange rate versus the RM.Should the AUD recover we will be well in the money.

Anthony Hall, Executive Director- Asia of Man Investments gave a briefing at Phillip last week and the reasons over 90 % of hedge funds in the world have had negative returns or gone bust this year and why Man has been able to survive and prosper.

He also gave reasons why the US Dollar will resume its downtrend and the AUD/ Commodities may recover.

World wide panic has forced investors to seek the ultimate safety of US Treasury notes. Investors need US Dollars to purchase these. This has caused panic selling of every asset class including currencies/bonds/ stocks and property to raise US Dollars.

The interest rate of the US Treasury notes is only .38 % which is much less than inflation. As credit markets and fear subsides professional investors will move back into commodities and this will weaken the dollar. Those who manage pension funds and private wealth funds must earn more than .38 % interest rates to meet the needs of their wealthy clients. Every day these managers are suffering the negative interest rates as they watch their assets lose money to inflation.

Man is anticipating the trend turn and is slowly moving to long from short in their positions including crude oil/ grains and stock futures. Remember Man has some of most succesful traders on the planet managing their funds.

Mr Hall explained that Man has very low leverage and deals in commodies/ stock futures contracts which are cash settled and guaranteed by the clearing house of the exchange. There are no credit or default issues unlike Lehman bonds/ Subprime securities.

Many hedge funds went bust because the mortgage securities they held were illiquid- no buyers and banks would not extend credit and this resulted in forced liquidation and huge losses to investors.

Man on the other hand because they only deal in liquid securities had no credit problems and London / International banks are only to happy to extend credit.

Unfortunately the new OM IP Man capital guarantee fund closed Friday and I congratulate those who subscribed. You can still participate in the AHL open ended Fund which has had an outstanding return this year and no loss on the AUD. AHL is not guaranteed and no 4 % sales rebate.

Expect a ranging whipsawing KLSE this week and keep to high quality issues. Our main course is on 13/14/15 Dec at the Sheraton/ Subang. We have only 2 seats left and am really surprised about the positive response to our event. The room we booked is full. If you are a graduate of our main course you can attend FOC ( Hotel charges apply) but we may need to squeeze you in at the back due to the good response.


Have a good week
Bill