Skip to main content

Volatility in the commodities market

Update (9/3/08): the latest news on the Ospraie Fund closure.

Found an interesting story over at Bloomberg.com which details the high levels of volatility in the commodities markets.

What's remarkable about this piece is that they've managed to interweave the subject with an inner look at the workings of Dwight Anderson's Ospraie Fund. According to Bloomberg, Ospraie Management LLC is the world's biggest commodity-focused hedge fund, with $7 billion under management.

Most of the commentary on Ospraie and Anderson's vision seems to be pieced together from indirect sources and relayed quotes (from the likes of Marc Rich), but it is still surprising to see the players behind this prominent hedge fund placed in center focus. Lots of background info on the fund and Dwight Anderson's career are found here.

Which leads me to the following question: are hedgies slowly warming to the media spotlight? Or is it just that reporters are piecing together more info on their dealings and personalities, knowing that we want to read about them?

Here's an excerpt from Bloomberg's story, "Ospraie's Anderson Dives Into Commodities, Survives Swoon".

The Ospraie Fund makes long and short investments -- that is, it bets values will rise or fall -- on the prices of commodities such as oil, copper and corn and on the shares of companies in basic industries such as energy, mining and agriculture. What hurt Ospraie and other commodity hedge funds in mid-2007 were the wide, sometimes unpredictable, swings in prices in all markets.

``Commodities are more volatile compared with stocks and bonds,'' Banque SYZ's Friche says. ``So the stakes are higher, which means that while there are great profits to be made, there are great losses too. It's a dangerous game.''

Enjoy the piece. For more background on Ospraie and commodity focused hedge funds, click the link to view our previous posts.

Popular posts from this blog

Lessons from Hedge Fund Market Wizards: Scott Ramsey

Today we continue our series, "Lessons from Hedge Fund Market Wizards" , with a look at Jack Schwager's interview with Scott Ramsey of Denali Asset Management.  Ramsey, a futures trader and CTA who works on the island of St. Croix, spoke to Schwager about his first foray into the markets, his evolution as a trader, and the process he stands by to protect and grow his clients' money. 1) . Ramsey started trading in college. He was roped into the OTC metals market via a broker's ad in the Wall St. Journal. The broker charged customers a flat fee to buy and sell as much as they wanted in a particular market for six month. At the time, Scott was a novice and didn't know about futures, so he traded metals in this fashion through the inflationary run-up of the late 1970s. 2) . Scott had to rethink his trading strategy after he bought silver at $50 an oz., only to watch it collapse to $26 following a long string of limit-down days. He sold as soon as the market...

How to "Pull the Trigger" on Your Trading Ideas

In our last post, I quoted hedge fund manager, Jim Leitner on the importance of following up on your investment ideas.  Today I'd like to follow up and share some thoughts on how you can learn to consistently "pull the trigger" on your best trading setups and investing ideas. In order to help you do that, we'll take from the best and offer up key insights from interviews with top traders and trading psychologists like Alan Farley, Brett Steenbarger, and Doug Hirschhorn .  Now before we get to their key insights on overcoming trading anxiety and pulling the trigger on your trading ideas, let's remember what Jim Leitner said in his interview: "Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's an interesting idea" only to find out a year later that the company you could've bought shares in is now up 500-fold. You never want to say woulda, coulda, shoulda...

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi...