Long Bonds

by Mr Juggles

In this time of financial uncertainty, we have experienced heretofore unseen volatility in our portfolio. Assets that were previously uncorrelated are now correlated, assets that were previously correlated are now uncorrelated, write-downs are good, the recession either didn’t happen or is already over, LIBOR is possibly a figment of a banker’s imagination and it’s always the best time to buy. As such, management has decided to allocate a significant amount of our cash on the balance sheet into a fixed income product that shows no correlation with any of our current holdings and is not in any way sensitive to interest rates.

Our new favorite fixed income product is barry bonds. We have invested a meaningful amount of our cash into this asset and the maturity is one year. The yield is 0% on a cash basis, but approximately 25% based on our performance enhancing risk model.

We think barry bonds will help dampen the volatility we have seen in our portfolio as the only thing they correlate with is steroids, perjury and racism. In turn, this should allow our subscriberholders to benefit from more stable returns. Yet again, we say, “You’re welcome.” We considered a pair trade with a short of roger clemens so that we could effectively short the racism spread, but that trade looks to continue to be volatile.

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POSTED: 04/16/08 11:03 AM
Comment (14)


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Comments

  1. JCauto
    April 16th, 2008 | 12:47 pm

    Quit being such a worrywart. Buying barry bonds are is a well known strategy to “juice” returns.

  2. HF
    April 16th, 2008 | 12:49 pm

    I believe you have to be an accredited investor to put money on these… since I know nothing about baseball I will be more confortable investing in a SIV with a pool of iliquid assets and having Brian Hunter and Nick Leason as the risk managers…

  3. John Forman
    April 16th, 2008 | 1:30 pm

    Thanks for a midday chuckle. 🙂

    I personally would go with Bobby Bonds. Depreciating asset, but much less volatility.

  4. Mr Juggles
    April 16th, 2008 | 3:11 pm

    We already did. He is our 2nd favorite fixed income product.

    http://www.baseball-reference.com/b/bondsbo01.shtml

  5. sunflower
    April 16th, 2008 | 8:51 pm

    Hungry people who can’t go anywhere like to sing songs so don’t forget to look for an entry point in Gary U.S. Bonds.

  6. nick gogerty
    April 17th, 2008 | 8:52 am

    Commodities are where it is at and for my money that means Darryl Strawberries. Much more fun for the weekend than a portfolio of barry bonds. got to keep pushing the old efficient frontier up and to the left.

  7. jag
    April 18th, 2008 | 12:18 am

    My favorite hedged arbitrage position currently: go simultaneously long and short Alberto Gonzalez – short the lawyer, long the shortstop. This is a pretty safe bet, but risks to this trade include extraordinary and unlikely events such as a ligament tear or McCain winning the presidency, both of which would serve to widen the spread.