Terry's Model Portfolio: A Work in Progress

Let's have some fun.

I could write another dry daily update about the market today. The market continued to bounce within a symmetrical triangle and the trend remained down. Volume was awful, thus producing a delicious rising wedge pattern. But I decided to be more creative.

Let's assume that I am a Hedge Fund Manager. I manage Twyman Asset Management. Terry is my first client. After assessing market conditions, I decided that we can grow his account by least 100% between tomorrow and November 2011. Terry doesn't know what to make of this goal but he decides that I must know something about the market.

I lay out the following terms and conditions for this campaign:

Beginning Portfolio Balance: $10,000

Duration of Campaign: June 21, 2011 to November 21, 2011

Fund Manager: Wink

Fund: Twyman Asset Management

Rules of Engagement: The world is my oyster. I can make 1 trade, 5 trades, 10 trades or no trades at all. I can buy or sell. I can use stocks, bonds, treasuries, derivatives, exchanged traded funds, options, commodities, mutual funds or ultra funds, and, of course, cash. I have total discretion.

Execution of Trades: I must notify Terry of the trade confirmation as soon as possible. No hindsight investing.

Five Strikes Against Me:

1. I only have five months to reach my 100% goal. Fund managers normally have 12 months to reach their goal.

2. I don't have a cracker jack staff of tens of researchers to go out into the field and research companies. Its just Wink and his lap top.

3. We are in a strong Bear Market. It is easier to lose money than to make money.

4. 100% rate of return is unheard of for a Fund Manager. According to my preliminary research, the top Hedge Fund in 2010 was Bridgewater Associates: +38%. "Ray Dalio's 'zen' approach to an investment firm paid off as they returned one of the higher totals across the hedge fund industry last year." They manage $75 billion in global investments. Wink will be managing Terry's hypothetical $10,000 portfolio.

5. I am fading myself in a sense. The trend is down. Attempting to make any money, let alone 100%, will require a good sense of timing and market skill.

Conclusion. This exercise will be in real time. Can Wink grow Terry's portfolio by more than 100% with five strikes against him? Can Wink leave Bridgewater Associates in the dust for the year 2011? Stay tuned....

Your hypothetical fund manager at the starting gate,

Wink

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