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Thursday, August 17, 2006

NY Post started imaginary Hedge Fund

Notablecalls: The New York Post started few weeks ago imaginary hedge fund that manages imaginary $1bn. So far so good. It is a entertaining reading every morning and I would recommend it to You, dear readers, too.

Todays story is here:

August 17, 2006 -- The Make Us Rich hedge fund will place a big bet against the stock market and against the dollar at the end of this week.
Last Friday the imaginary $1 billion fund run by Wall Street veteran Bill King and me predicted that the stock market would do well this week, mainly because equities typically rise on options expiration weeks.
This is one of those weeks and stocks behaved predictably well - up about 230 points on the Dow Jones industrials since Monday. Some good news out of the Middle East and mixed results on inflation also helped.
As I said in my last column we got that prediction right but missed the trade because Bill was lying in a hammock all weekend - acting like a real hedge fund manager - and I was busy partying with Playboy models in Atlantic City.
(Hey, if this is an imaginary hedge fund then I can have an imaginary social life.)
But we aren't going to miss this one: this week's stock rally probably exhausted the buyers and we now expect the market to start worrying about all the world's woes.
So we are shorting the market by immediately buying 500 put contracts on the Standard & Poor's 500 index, with a strike price of 1,285, at $11.80. And we will buy another 500 puts tomorrow and perhaps 500 more on Monday if stocks rally.
We aren't going to hold these positions very long - probably just a few days - because we do expect the market to rally at the end of the month.
We are also buying $300 million worth of euros, which is a bet that the dollar will go down in value in the coming weeks against that currency. We bought the European currency at $1.280.
The fund believes the dollar is vulnerable because monetary policy here is at a delicate stage and the European economy is stronger. Currency problems tend to bloom after Labor Day.
But since big-shot traders like us can't be constrained by old media deadlines from now on we are going to document our moves on the Post Web site -
So far we have a profit of $3.9 million with just two trades. Moving to the Internet will give us the speed to make more trades.
Hopefully they will be good ones.