A. M. Post

The Tiger
Franz Marc

I cooked my first "flap steak" last night. I saw this cut of meat for the first time at BJ's. I had no idea what to do with it. With the power of the internet, the next time I went to the store, I was already armed with an idea of how to fix it.

I'm also rather intent on using stuff out of the garden. I elected to marinate this flap steak and serve it with grilled vegetables wrapped in a tortilla. It was remarkably delicious. I had to grill in the pouring down rain, but I was grateful for the precipitation given that our yard is taking on dust bowl characteristics.

CNBC reported, yesterday, that there was a hedge fund (oil/gas) that blew up. I didn't hear a name but apparently it was $3B in size and was forced to file bankruptcy. Apparently they were on the wrong side of the market in oil and were responsible for a good part of the run up. I've speculated about that here given the precipitous run up in prices, for I remember well Amaranth and Mother Rock in the natural gas space. That precipitous run up (lauded by all of the fundamental reasons as to why it should be so) ultimately ran out of the jet fuel (short covering) that propelled it so.

Despite our incessant efforts to find them, there are no sure things in the market--and the short in oil was the 'sure thing' with a slowing economy etc. I dipped my toe in with the buying of DUG calls, but nothing extreme--though the calls were not cheap as they were Sept calls that I purchased in Apr.

And in the space of 2 weeks we saw a deflation in financial stocks through unmitigated fear and then an equally astounding short covering rally--both seemingly 'sure things'. Here's a chart of UYG (2x financials).

It's gone from 69 to 24--that's a 65% drop. So when you hear the astounding jump off the bottom, even with that, the amount of loss is still substantial. The WSJ online had a very interesting article (click on title below)

Ellison's New Position: Cash Hoard

Money Manager,
Tired of Pummeling,
Dumps His Stocks

By DIYA GULLAPALLI
July 24, 2008

About HF manager David Ellison's (FBR Large Cap and FBR Small Cap Financial Funds) large position in cash, 50% and 38%, respectively. What I found interesting about those large positions is that these are sector specific funds. I often hear about the fund mandates of staying invested even in protracted downturns. It was refreshing to read about this manager.