Aegis Fund Ltd
MARKET COMMENTARIES

November 24, 2008

This year, the real Thanksgiving “Turkeys” have been CEOs of major banks, followed closely behind by asset managers who make recommendations to their investors and, finally, governments that have been “behind the curve” in offering solutions to this devastating crisis. When you feast your eyes on the table spread before you, skip the second servings, and beg the host to pass the antacid instead. It’s going to take a long time to digest what we’ve just eaten.

July 1, 2008

Aegis stable in difficult times

Aegis gained in the past 2 consecutive months, against one of the worst performances in global stocks in many years. Investments in gold, and foreign currencies, along with some minor positions in stocks—the Canadian Stock Index-- helped tremendously. We wish we would have been invested in energies, but our new programs are coming on line only this summer.

May 8, 2008

Speed Bump on the Way to a Summer Rally?

Performance for the Month of April was negative, as some long held positions in the Euro Currency and Gold retreated and Aegis gave back some profits. We believe this retreat is temporary, and some of the former trends will continue once again after the markets digest recent news.

April 6, 2008

Is Sharia Compliant Investing in your Future?

March was a “give-back” month, although we remain gratified that our exit signals have kept us out of some of the high volatility in stocks for the past 2 months. Normally, in circumstances like this, markets gyrate up and down, but in no clear direction. And this is usually not a great time to be heavily invested in stocks.

February 29, 2008

To risk? Or not to risk? This is the question.

February was a volatile month, and we’re delighted we ended the month with positive returns. We performed without having any stocks in our portfolio. Aegis eliminated all stock positions in late January, near the lows, and the positive performance was due to our “alternative” portfolios.

Mini-Version
September 7, 2006

Goodbye Mr. President? (Only the Markets Know For Sure)

Our apologies for sounding like a broken record, but the markets seem to be continuing their “rotation,” from one sector to another in an attempt to locate a new base from which they can begin another move upward. And this is not only with stocks, but with many of the alternative investments like currencies, bonds, metals and energies. Just how long this rotation takes is anyone’s guess, but it’s interesting to view this question in light of the upcoming November elections in the US.

June 1, 2006

A New Day Coming for the US Dollar?

Aegis is expanding its investor base into two regions that are linked to the US Dollar—Latin America and the Middle East. Both regions have something in common: they maintain ties to important, tradable commodities that are traditionally denominated in dollars. In Latin America, it’s metals, energies, raw materials and agricultural products. In the Middle East, it’s energies.

April 22, 2006

Hedge Funds and pornography?

If you were to ask me to define the term “hedge fund,” I would probably give you the same answer a US court judge gave to an attorney who asked the judge to define the term pornography. “I don’t know how to define it,“ the judge replied, “but I know it when I see it.”

For the fun of it, let’s try to define “hedge fund” more accurately.

February 2006

Conquering the "Fear and Greed" Factors in Investing

Investors suffer from two diseases that plague them when looking to buy or sell: Fear and Greed. Right now, Aegis sees a combination of both. Some are fearful of missing out on the strong stock market rally, afraid that the money train is leaving the station without them, while others are greedy because they own stocks already, and are spending tomorrow’s dream, certainly NOT thinking about long term strategies for portfolio rebalancing, exiting or taking profits. Instead, they want their profits NOW.

December, 2005

Aegis and Mae West

Mae West was the famous sex goddess of the US Silver Screen during the 1930s and 40s. In such film classics as “My Little Chickadee” (1940), “I’m No Angel,” (1933), and “Belle of the Nineties” (1934), West played the temptress and seductress who left men powerless in her wake. One of her more famous lines in film was “Is that a pistol in your pocket, or are you just glad to see me?”

September 28, 2005

Commodities Inflation and the State of our Economy

Chicago’s Futures pits, a place noted for images of crazy traders screaming and gesticulating in obscene hand gestures, is also the place where the basic goods of life are traded. Sure, financial futures dominate the trading floors. Stock Indexes, Bonds, Currencies and exotic options instruments are traded in huge quantities each day. But what most investors may not appreciate is that Chicago’s trading floors are the home for the basic commodities of life.

August 2005

The 4 "Cs" for 2005: China, Currencies, Commodities, and Crude Oil

Just when you thought stock investing was getting easier, come the Chinese and disturb the equilibrium in currencies, commodities and oil. How investors play these markets will be crucial to overall success.

May 21, 2005

Is your Glass Half Full? Or Half Empty?

We are approaching another important point in the market cycle, with our signals ready to re-enter us into stocks, albeit at a slightly lower level than normal. Whether this trend continues depends on several important factors facing the US market, in particular. How events unfold in the US will affect the Global situation. I highlight some of these issues below:

March 15, 2005

Summer Time... and the Livin' is Crazy

Spring is upon us, and Summer is coming soon. The setup is promising for a strong summer rally in stocks, IF certain things occur. As always, there’s some good news, and some bad news.

January 18, 2005

Some New Year Resolutions

A new year brings new challenges, and Aegis is no exception. Our challenge in 2005 is to bring value to our investors, amidst what promises to be a very challenging and unpredictable market environment.

December 1, 2004

US Election will drive stocks much higher.

Now that US election worries are past, and Iraq has scheduled new elections, we should start to see some interesting trends developing in the coming months. Trends are important for most management strategies, and Aegis is no exception. Without trends, we are forced to focus on preservation of capital; WITH trends, however, the wind is at our backs, and sailing becomes easier. Such is the case now. Lesson: Trends are Good.

October 19, 2004

Election Day is Fast Approaching

My partner and I were in Chicago last week, meeting with some international, institutional investors. As normally occurs in such discussions, our guests eventually asked us the favorite question: “So, what’s your opinion of the market? Where are we headed?”

September 3, 2004

Summertime, and the markets are Choppy.

Not quite what George Gershwin would say, but the best thing we can say about the month of August is, “Thank God it’s over.”

August 3, 2004

"Going nowhere fast..."

These were the words of a song I enjoyed during my University days (late 1970s, early 1980s). The song was written and performed by one of those counter-cultural rock guitar singers with long blond hair, who the girls used to dream about. But his words describe a phenomenon even more prevalent in modern society than it was 20 years ago—everyone is moving fast, but really going nowhere.

June 15, 2004

I saw the news today, Oh Boy...
(But get ready for a Big Summer Rally)

As evidence of the stupidity of professional investors, I recently overheard someone insisting that higher interest rates would soon bring down the stock markets. He explained, as if trying to prove his point, “A rise in rates from 1% to 2% is an increase of 100%!”

April 20, 2004

Down and Out in Paris and Frankfurt

“Down and Out in Paris and London” was one of George Orwell’s earlier classics, written somewhat autobiographically, and composed during a time when workers’ conditions were intolerable, wages low, jobs scarce and the economy weak. The book reads like Charles Dickens, with workers slaving for long hours and laboring under horrible conditions. It’s certainly NOT a book you take to the beach on holiday.

March 24, 2004

Timing the Markets, and the “Triggering Effect”

As we like to tell investors, there are two ways to make money. The first way is to buy low and sell high. The second way is to stay away from the markets, and NOT invest. The theory goes, if you don’t invest anything, you can’t lose.

February 12, 2004

What's going on?

We take our title from the famous song by soul singer, Marvin Gaye. And, just like Marvin, we are looking for some answers to the dilemma that faces us. Just what’s going on in the markets?

January 20, 2004

2004. Year of the Monkey? Or Year of Too Much Noise?

Many readers of our market commentary have complained that we don’t “update our comments often enough.” To quote former US President Bill Clinton, “I feel your pain.” However, our policy--which Bill Clinton should have adopted also--is, “If you don’t have anything new, interesting, important or constructive to say, it’s better to shut up.”

November 23, 2003

The Inflation Train is Approaching the Station

You heard it here. Inflation is coming back, and as Aegis has suggested before, it may be the only solution to an even more frightening prospect of Deflation. It's an orchestrated effort by the major economies to kick-start the world's financial engine into high gear, and it will cause plenty of "fireworks" in the future.

October 3, 2003

Poker, Blackjack, Casinos and the Game of Investing

Good poker players understand reality. They have to play the hand they’re dealt, and must try to optimize the opportunities available to them. The same can be said of smart investors, who understand how to use all the “cards” (investments) to their greatest advantage, and know when to play which card. But if stocks are your only asset (card), you’re stuck with the “ups” and “downs” that market swings can bring.

August 22, 2003

(Human Nature is) Looking for a Big Rally

In order to gauge the progress of stocks, you have to see the "big picture," or what Aegis calls the "macro" view, and tie it into a good understanding of human nature. For example, take a look at how bonds are performing, then try to anticipate how much potential trouble those "big bond investors" (institutions and funds) face when the long term bullish bond play starts to fade….like NOW!

May 28, 2003

Don't Let Bush Fool You.... (he's smarter than you think)

Global investors looking for change have found it in President Bush. Yes, that's right. While many of Europe's "Old" politicians sit and try to figure out the important existential questions of life, Bush is taking action--and quickly. This is the great advantage of US politics and government, and for investors it means we have better days ahead.

April 4, 2003.

Pre-Election Year Cycles

The war in Iraq is teaching us many things, not the least of which is "don't trust the experts." For Aegis, this has become our mantra. With the war, they thought we were entering another Vietnam. They thought the US was in it "only for the oil," and that Weapons of mass destruction were a joke. They told us the war would last for months or years, not days. Finally, they told us stocks would suffer terribly, oil would rise, and the world economy would be in for "dark days." Well, forget about what you've heard. Instead, listen to this: If you are going to invest in the stock markets at any time in history, it should be the year before a US election—which means 2003--NOW!

March 7, 2003

War and the Art of Investing

The clock is counting down to war like a bad dream, and so is the portfolio of the average investor. This time, the “experts” say that war will bring stability, and this will be good for stock investments. Don’t count on it. Perhaps we’ll get a small uptick—and maybe a big uptick—but the driving force for stocks is the long term fundamentals, and they aren’t pretty. Earnings remain weak, corporate scandals are in the news each week, and deflation is the dirty word on Alan Greenspan’s lips.

January 19, 2003

Rules for 2003:

1) Diversify, Diversify, Diversify!
2) Don't Lose Money!
3) Stocks are NOT the only game in town.

November 7, 2002

What a Week!

It’s days like these that traders look forward to, and investors fear. Days filled with action, decision and portend. Decisions made these past few days will have far-reaching effects, and there’s a good chance the history books will remark upon them for future generations. For investors, recent actions could have enormous impact, for years to come.

September 27, 2002

Cowboys and the world of Reasonable Expectations.

The markets are in a rapid sell-off, and international tensions are rising. Not a great omen for the future, right? Well, please excuse my black humor, but it seems that a good old fashioned "War" may be just what the doctor ordered. War-or the treat of War--may be a quick way to reach that elusive market bottom, and send us-at least temporarily--back on the path toward stability. Certainly, a quick War would be an efficient way to deflate the last air remaining in bubble, and help close an ugly chapter called the "Internet - Telecom Disaster of the late 1990s."

August 13, 2002

A Disaster in the Making

Investors should expect the possibility-the strong possibility--that the worst of times may not yet have occurred. Indicators suggest that investors will likely lose yet more money before the "bottom"-that infamous bottom that the experts predicted had arrived several months ago, but which keeps arriving anew, each month or so.

June 27, 2002

Waiting for the "Big Ugly"

European investors should pay attention and learn from what they are witnessing across the Atlantic. Fortunately for them, investing in stocks is a relatively new game; most Europeans have remained on the sidelines during the roaring 1990s, AND since the decline started more than 2 years ago.

June 2, 2002

The Euro is Here to Stay!

The US market is undergoing profound changes that will affect global investment strategies for some time to come. Several factors are converging at a most inopportune moment for the US. These factors could spell the decline of the attractiveness of US investment markets for many years to come.

April 10, 2002

Light at the end of the tunnel?

Our previous commentary suggested that stocks were a good buy, with the caveat that higher interest rates might cause trouble down the road. We continue to maintain this belief that stocks could rise throughout the summer, perhaps dramatically, until interest rates rise to levels that could cause investors to reconsider the attractiveness of stocks.

March 7, 2002

The Turning Point?

Aegis is looking at a major turning point in the market, an important pivot that could give stocks a strong boost, or cause a sudden downward correction. One way or another, something big will be happening very soon…

January 27, 2002

Reading the Risk "Tea Leaves"

Aegis is suddenly paying attention to developments in the global bond markets. The winds of change do not encourage us to recommend a sustained recovery in stocks any time soon. Indeed, these shifts appear to be symptoms of a more systemic problem facing the markets-namely, that investment risks remain very high. And it is the debt markets that are giving us clues to the severity of these risks.

January 1, 2002

Resolutions and Predictions

The year 2001 is now history, and the new year is upon us with all its anticipation of better days. This holiday season has given us time to reflect on where we've come, and where we're going. It's clear that the investment game, much like history, is not a static exercise. History is not exactly linear. You can't fully anticipate what may happen tomorrow because many of the decisions you make today can affect tomorrow. We learn from history, but allow ourselves the flexibility to change for the future.

November 27, 2001

When will the Bad News hurt this Bull?

As we suggested in our previous commentary, the markets could continue their run-up, for no other reason than investors are looking for any shred of good news to grab onto. Even "not-so-bad" news seems to take on a life of its own. It makes no sense to Aegis, but these markets are heavy on expectations and short on substance; it causes us to consider that the short term might be stable, but the long term will prove more difficult to manage.

October 22, 2001

A time to forget about the bad news--and look to buy!

Yes, economic history suggests that stocks are still terribly overpriced at current levels. Yes, we will continue to see a slower economy, including more layoffs, bankruptcies and difficult times. Yes, much of the bad news is getting still worse. And, no, we haven't yet seen the kind of "capitulation" that we normally see at a traditional market bottom. Yet, we are starting to see-at least temporarily-some hope for stocks to make a comeback. Aegis is starting to shift its thinking away from pessimism and toward an impending rebound in stocks.

September 13, 2001

A Lousy Way to Make a Profit

This week's disaster comes at a critical juncture in the current economic cycle. Many times throughout history, unexpected events have provided a catalyst to force a change in economic direction. This week's carnage in the US is one of those catalysts. It may prove to be a "watershed" for future events, a specific point in time that we will be able to reference in the future as the moment when economic trends began to shift.

August 8, 2001

Stocks? Caveat Emptor

The stock market game gets uglier by the day. Who can interpret the craziness taking place all around us? There is no sense of reality, of where true prices of stocks should be. Add to this the continued sense of optimism in the markets, and you get a picture of distorted reality. Unless this optimism is eliminated, no serious house-cleaning can occur, and the markets will continue sideways for an uncomfortably long time to come. We need a good hard rain to wash away the deep problems left by the past several years of euphoria, fancy accounting, over-expansion and accumulation of debt.

July 11, 2001

Waiting for the Other Shoe to Drop

Talking with brokers and investors in times like these, one is reminded of John Maynard Keynes wonderful line about the markets. Don't feel too bad. "In the end," he said, "we're all dead."

As of this writing, we are at a critical juncture in the evolution of this downtrend in stocks and other assets. Either some mitigating factor appears unexpectedly to reverse the downtrend, or we may see much lower prices very soon. All the talk about having reached a "bottom" in the market may prove to be premature. Remember our rule of thumb: When things look like they can't get any worse, they usually can, and DO. Changing the tide of the current downtrend is like a captain trying to change the course of his supertanker….This downtrend could last longer than anyone believes.

June 6, 2001

No Pain, No Gain

Much of the problem of the marketplace is trying to measure the state of mind of investors. Not surprising, it is a daunting task. A quick read of recent business newspapers and magazines suggests most investors remain confident in the ability of Alan Greenspan to pull the world economy from the brink of a recession. Everyone thinks we have seen the "bottom," and investor sentiment is running high.

Aegis adopts a more pessimistic viewpoint, believing that too many, expect too much, for too little. With the exception of the NASDAQ related markets, stocks have moved sideways over the past year. This is hardly a "disaster," as many suggest, or the kind of pain you might expect after the speculative fever that has gripped the world since 1994. In our view, investors still haven't paid the price for their speculative party over the past years.

May 10, 2001

Betting on a Recovery? Think Again.

As the old saying goes, Spring is in the air, and a young man's thoughts turn to……oh, you know the rest.

Everyone feels better when the flowers bloom, the weather warms, and people shed their drab overcoats and try rebuilding their healthy skin color. As for the stock markets, the hope is that this spring will be the turning point from an ugly winter of discontent, and the Federal Reserve will serve us plenty of sunlight. Optimism is in the air; buyers are lining up to take positions, and old investors are watching their capital positions improve again. Or, is this all a mirage, an illusion to make us feel better until the heat of the summer?