For 2012 I managed to beat the S & P 500 on a cash basis but slightly under perform it including dividends. For 2012 the S & P 500 returned 13.41% on a cash basis and 16% over all. To say that 16% total return in the S & P 500 is good is an understatement - 16% is stellar given the uncertainties that remain in the economy and world generally. Of course, when the dollar’s value is being undermined by all the printing…
On my front, I was able to close the year @ 14.4% net (so minus commissions, etc.). Here’s the equity curve:
The good news is I ended on a high-note without any significant draw downs in the second half of the year. And just to keep us all on the same page here, this was accomplished purely from being short and most often over-night so the return correlation is very low to the over-all market.
For the year, according to this nice write-up by ZeroHedge, “88% Of Hedge Funds and 65% Of Mutual Funds Underperform Market In 2012”. So, to say it wasn’t easy to hang with the benchmark index in 2012 is also an understatement.
2013 is looking like more of the same, but one of these days things will change. This sort of reminds me of 2005 to early 2008. Everyone knew real estate was screwed but everything kept going up anyway. This can go on a long time, but lets not kid ourselves here, nothing has really been solved. The Fed has just shifted the debt problem from the banks to the tax payers. When this breaks, and it will at some point, it will be just like 2008 where the shit hits the fan and everyone seems all surprised (e.g. Bear Stearns went from ~$80 / share at the beginning of 2008 to being basically bankrupt and purchased by JPM for $2 / share by March - and that was down from ~$160 / share in March of 2007!).
In my experience the market does very little discounting, but it does know how to sell once the forced selling starts. I’m buying long-dated calls on inverse gov bond ETFs. I suggest you figure out how to make some money off of the gov debt bubble as well. Good luck.