Posts Tagged ‘CWOC’

Profiting from Deflation/Disinflation According to CWOC

Saturday, January 28th, 2012

In a recent newsletter put out by the CommonWealth Opportunity Capital, suggestions on how to make profits from deflation/disinflation were put forward:
“1. As rates will remain absurdly low for the foreseeable future, high quality carry/roll down strategies will outperform. We have been doing this for some time and see it as the gift that keeps on giving. Our risk management focuses on credit risk (if any), currency risk (where appropriate) and duration mismatches that may result in undesired (but transient) mark to market volatility. To mitigate volatility, durations will be kept short and where this is not possible, position sizing will be small. We believe we have some novel assets in this category and are happy to discuss them with our investors.
2. We continue to maintain tail risk insurance because the political class will continue to drive volatility. We find it optimal to offset roll down strategies through tail risk insurance, as anything is possible especially in these uncharted waters.
3. Relative value non-directional opportunities. Although some of the (dare we say easier) bullish secular trends are broken, it may be that they weren’t as secular as they were levered. In any event, we do see larger complex/index level relative value opportunity. For example, Japanese banks vs the Nikkei or large cap vs. small cap equities in the US. These opportunities are getting larger risk allocations in the portfolio, and we expect to continue to see opportunities in this space. As always, we are happy to share our work on these opportunities with our investors.
4. Special situations. Strange times will lead to strange opportunities borne of market dislocations. We will not always get these correct (we hope to be right over 50%). This year we were wrong far more than we were right in this space, and it has hampered our performance.”
Reagan Silber is a co-founder of the CWOC.

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Explaining Market Economies: Reagan Silber & CWOC

Monday, January 23rd, 2012

In response to recent feedback, CommonWealth Opportunity Capital, with co-founder and president Reagan Silber, explained why they believe that market economies are the most efficient way to allocate resources.

They explain that, “Since Adam Smith recognized the value of a free market, the per capita income and productivity of those countries that adopted this form of economic structure have moved exponentially higher. Prior to this period in history, very few countries saw substantial per capita income growth for large swathes of their population.”

CWOC continues by explaining their point with the housing market.  They illustrate how the US policy makers went overboard in assuming that home ownership for all was an unabashed good for the country.  They explain that this system was a sort of ponzi scheme that simply enabled more to share in the scheme and that it was nothing more than “vote buying.”

As they explain, “Many areas of the economy (e.g. healthcare, transportation, capital banking) have become distorted by policy intrusions that are so obvious that stakeholders have little clue as to what assets are worth.”

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CWOC and Swiss Franc

Saturday, January 14th, 2012

The Commonwealth Opportunity Capital (CWOC) predicts that “the Swiss franc should remain a safe haven for European capital flight.”  As well, according to a recent article in the Financial Times on line, “the Swiss franc’s safe-haven status will increase the Swiss National Bank’s international influence.”  No-one is sure exactly what is going to happen with this currency, since recently, along with the yen it “weakened against most of their major counterparts on evidence of recovery in the world’s largest economies, supporting demand for higher- yielding assets.”  The franc also depreciated 1.1%, following another decline which was anyway at an already weak low.  Reagan Silber is president and co-founder of the CWOC.

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