Blog Title: For those about to DIG (We Salute You)... For all those Gold Bugs out there...


All apologies to AC-DC fans out there...

I can't wait to dig into my topic this week in relation to GOLD & SILVER.  In my past I courted many online forums (I don't touch them now... to distracting) and there was always a contingent of hard core Gold 'believers'.  There are many who would state that it is the only true currency in the world today.... our gold backed currencies should never have been discontinued in the 70's.  Whatever the case... gold is truly just another commodity to trade and make money from.  Why do you always need it in your portfolio?  Why would you hold anything that has been in a downtrend?  You do have stops in place do you not? Oh boy....

Never forget the first rule of trading.  Make money.  Do you want to be 'right' in your calls?  Or do you want to be 'wealthy' from your calls?

If you truly think gold is a valuable asset you must have in your portfolio, then I have a few suggestions to possibly make it more profitable.  But, alas... yes... you still have to work for it.

So before we delve into that, it seems to be a common theme for me to review the past months' general market action.  So, lets continue with that for a brief moment.  It appears the S&P and Dow are right on the cusp of breaking out for a good 20% gain on the upside shortly.

First a medium term look at the S&P500:

When I'm just browsing the markets I love my Fibonacci lines.  They are uncannily accurate, but darn hard to trade in a systematic way.  You can see from the lows of 2011 and lining up our % lines we could have a good 9% gain still to come for the S&P to reach the 1875 mark.  This is all well and good, but lets go back to my long term Dow chart:

This chart reminds us of the long term channel we have been in and with the punch bowl not yet running out of good rum (AKA: thank you FED), we could see the breakout of this resistance channel line.  Forecasting a Fibonacci grid again shows us we could have a 20% breakout potential... But wait, didn't we say we only have a 9% gain achievable on the S&P500?

That's the danger of using only certain time frames.  Lets look at the longer term chart of the S&P:

From the 2009 low of the markets we stretch the Fibonacci grid 20% higher than the current price of 1720 (1720 X 1.2 = 2064).  Notice how it all 'fits'... (always makes me suspicious when it's too obvious...)

Long story short, with the Federal Reserve stating to hold off on their 'tapering', this could give markets just the last bit of juice it needs to extend it's rally... Before it all goes to hell.

Ha... Couldn't resist.  Really, no one knows what will truly happen, but does make me consider the future... What if the long term multi-decade channel reasserts itself?  Does that mean if it does breakout will it just have further to fall as prices start drifting into the channel again?  And what negative day it would be when it does break below the top trendline?  Profitable for some...

I've heard many times how portfolio managers would welcome a little bit of gradual pull back.  This would make sense to stay within our channel and ride it slowly up through the next few years.  If though we truly hit this 20% increase soon, this may just mean we could have a decade of sideways consolidation.  Truly a depressing thought for savers who have AGAIN put their faith in markets that will entice them further in the near term for long term depression...  Great for our Kinship Fund Systems though as we are negatively correlated to the markets in general (which is why we are not doing as well this year in comparison to past years).  Where there is fear, there is opportunity... Point is... Diversify (and protect yourselves...)

OK, enough with the depressing stuff... Lets have some fun...  Gold and silver have a very unique relationship.  In fact it is very rare to find two markets that are so similiar but different.  Both are affected by many of the same things, US Dollar, economies, currencies, et cetera.  It is important to stress that there are very, very few who share the same type or relationship as Gold & Silver, maybe Apple & Microsoft?, DOW& NASDAQ?  Hard to say as I really haven't tested those.

My point is for those who just have to hold a precious metal in their portfolio.  Why just stick to Gold?  Why not hold either Gold or Silver depending on what could be more profitable?

Here's a chart to get us started:

Here is a long term chart of Gold & Silver (Gold at the top, Silver in the middle, and the ratio of them at the bottom).  If you are an long term investor consider utilizing ratio charts to buy silver when gold is too expensive and buying gold when silver is too expensive (in relation to past history).  For example holding silver instead of gold from late 2002 to the middle of 2006 is much more profitable than holding gold.  Here are the results of this strategy in comparison to holding gold:

So it is interesting to note how it is much more profitable if you are able to formulate systematic trading parameters to hold EITHER silver or gold when either is cheaper compared to the other.  You can see utilizing the opposite trade is much less profitable, even though the general trend during the same time frame may be up.  You may say, "GREAT! That's all I need to know".  Aah, not so fast..

What happens when gold and/or silver is MUCH more expensive for extended periods?  Take a look at the very long term chart of these two (Thanks to Greg Schnell for the chart):

It is obvious previous to the 1990's that Gold was indeed more expensive than Silver (from today's standard) for a few decades.  This is when a systematic system can come in handy.  What rules do you include that would change your 'switch' levels?  Would you monitor the opposite trade?  This is the work long term investors need to contemplate.  If you aren't able to work for your money, then your better off handing it to a qualified portfolio manager and have him or her handle your long term investment.  Long term trading at this level is not for the faint of heart or of low convictions.

One other consideration is what happens in a long term bear market?  You still run the risk of loosing a lot of money, albeit less than holding the opposite trade.  What parameters would get you out?  What is your, "I give up" point?

Very important considerations to ponder, but the premise of ratio rotation trading has it's merits.  Feel free to comment in regards to other symbiotic markets that may do well with this strategy that you are interested in and I will hit them in future blogs.

Next Month: Canada, our home and native land.... of OIL.

Protect yourselves,

Lee MacFarlane
Derivatives Trader - President
Kinship Investments Ltd.
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.
Lee MacFalane is a derivatives trader trained under the Canadian Securities Institute and is working toward his CMT designation under sponsors with the CSTA (www.csta.org). He manages Kinship Investments, a Private Managed Fund (working under the Capital Raising Exception Act of the BCSC). Kinship Investments is not an advisory service and does not provide investment advice. This blog represents Lee MacFarlane's opinions only and is not intended to be used as investment advice. Lee MacFarlane and Kinship Investments may or may not hold securities that are discussed in this blog. Please contact lee@kinshipinvestments.com for further information or go to www.kinshipinvestments.com/trustfund.html to view our latest results.

Blog Title: Manager Musings - Business Cycle & Stock Markets


So many interesting things came across my desk the last two weeks.  Markets are continuing higher and so many commodities are hitting important support and resistance levels.

First lets take a look at the current market levels on the S&P 500:

You may recognize the chart from the previous post, but notice how the recent action has broken out of the resistance levels.  Hard to 'dis' the strength of the market no matter what your views are.  If it's going up, you want to be long.  It's as simple as that. The blue line level is 1680, so that is a line in the sand for the S&P at this point for the near term. *** Note: Started writing this blog on the 15th of August and on the 16th it broke this resistance.  The near term upside breakout has failed.  This may be systematic of what is to come, but we will see soon enough.***

I recently just listened to a podcast from Micheal Covel (Trendfollowing.com) and he had on Jon Boorman as a guest who is a CMT (Chartered Market Technician).  It was an entertaining listen, and Jon echoed many of my beliefs.  One was that there are always so many people trying to 'predict' the top or bottom or direction.  What is critical to any good trading strategy is to always go with the price based trading.  This means that for the most part to make money you want to have positions that are in line with the movement of the price of the security that you are dealing with.  If you are wrong and loosing money, get out.  Period!  Seems so obvious, but it's hard to execute with the 'monkey brain'.

Saying that, it is always 'entertaining' to review what is and what can be.  Martin Pring is a guru when it comes to business cycle analysis.  He wrote in February that we were in what he calls stage 4 of the cycle.  If the business cycle is indeed in stage four, this means that bonds are selling and their yields are increasing.  This does seem to be the case because since May 2012 Bonds have been selling off and yields are increasing:

You can see how the yields bounced from the low that was set in 2008/09.  We still have a little bit of headroom if the yields want to continue higher (higher highs resistance trendline is coming down).

So, 'check'... bonds are selling.  So in this sense Mr. Pring is correct and this does have the attributes of being in a stage four.  Intermarket analysis states that commodities in general normally leads and follows the same direction as bond yields. *Tangent*- Intermarket analysis is such a horrible word associated to this study as it requires OUTSIDE (external) data, rather than internal data... Why wouldn't they call it outermarket analysis? Blarg... *Tangent*

Ok, so lets look at bond yields and commodities:

Commodities have not been keeping up.  So what's the deal?  The US dollar that's what.  Whenever you look at commodities you MUST be aware of what the US dollar is doing.

Here is a ratio of the USD to the Dow Jones Commodities Index.

The USD has been slowly making a bottom and set a low in the middle of 2008.  This is the hidden commodity bugaboo.  It is obvious though if anyone takes the time to look that when USD moves up, commodities go down or sideways (for the most part).

Point is that the stage 4 theory still applies.

Lets look at the VERY long term market trend now:

 Visually we are running near the top of the long term channel that has the potential to provide resistance. This resistance may coincide with Mr. Pring's assertion that we may be ripe for a August 2013 pullback in stocks that will take us into stage five of his business cycle. What is critical to what I 'believe' and what is actually happening though is that even if I do 'believe' that the markets are ripe for a pullback, the fact is that it is in an uptrend and there will be AMPLE and OBVIOUS warning of a break of this trend.

Regardless, utilizing my magical 'predictive' techniques.  It does appear placing a long term Fibonacci graph over the price action lines up with existing resistance and support levels.  If we are to move higher we really need to breakout of 15,500 level for the Dow Jones.  Then we can see a pop to the 18,500 level (20% increase).  If of course resistance levels and cycles are proven correct then we may see a 7 to 22% decrease.  What's interesting to see is that this is a very healthy correction for a long term bullish market that has another 10 years to go before it has the potential of reaching the 18,500 level if it stays within this price channel.

I am all about empirical evidence.  Business cycles and intermarket theory have been discussed and theorized for many decades.  I am very excited that Mr. Pring at least has created the Dow Jones Pring US Business Cycle Index.  This means we are seeing money being put where the mouth is so to speak.  There are unfortunately only two years of history for this index, but so far it has been working well.  The problem though is that we do not really know when the Pring Index will change their levels of allocations when they move from stage four to five.  This may be very informative for the public (or trader like myself) after a few more years of activity.  Let's say the Pring Index continues to exhibit a channel type quality of price action for many years, then lets further say that the price has been trending toward the top of this channel.  Could we possibly utilize this as a trading mechanism so that if we know the Pring Index is reducing their allocation of stock, maintaining their commodity allocation, and increasing their cash position that we could basically short their index?

The real problem with the Pring Index is that it does not completely remove the stock portion of the portfolio as it should (In my humble opinion).  Business cycle states that in stage five we should see a reduction in the price of stocks.  So why have a portion allocated toward stocks at all?  Well this is due to the fact that what they are doing is employing a sector rotation strategy that would allocate their capital into ETF's that better mirror a sector that would do better within this business cycle.  It is a good system, and so far it is working, but it would be interesting if Mr. Pring had an index or returns that exactly mirror the business cycle (as I thought it should be interpreted).

Anyway, it appears in my opinion we may be moving into stage five of the business cycle from looking at different sources here (I have posted just a few examples obviously).  As I always state, protect yourself!

Next Month: Systematic long term ratio trading examples.

Protect yourselves,

Lee MacFarlane
Derivatives Trader - President
Kinship Investments Ltd.
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.
Lee MacFalane is a derivatives trader trained under the Canadian Securities Institute and is working toward his CMT designation under sponsors with the CSTA (www.csta.org). He manages Kinship Investments, a Private Managed Fund (working under the Capital Raising Exception Act of the BCSC). Kinship Investments is not an advisory service and does not provide investment advice. This blog represents Lee MacFarlane's opinions only and is not intended to be used as investment advice. Lee MacFarlane and Kinship Investments may or may not hold securities that are discussed in this blog. Please contact lee@kinshipinvestments.com for further information or go to www.kinshipinvestments.com/trustfund.html to view our latest results.

Blog Title: New Format  Manager (Lee MacFarlane) Musings & Getting to know your Real Estate...


We are changing the format for our blog.  This is now going to by my place to muse about what is coming across my desk in regards to technical analysis.  This might include commodities, the stock markets, currencies, the economy, or whatever suits my whim at the time.  Right now real estate has been in my pervue.

My family just made the investment to buy our first home.  Being an entrepreneur, I previously stashed much of my 'wealth' in business, not real estate.  We also had very reasonable rent.  Well that all changed now.  It's funny when you are invested in something how much more interested you become in the gyrations of that particular sector....

I think I may have a unique perspective.  Yes, I am a self-made technical analyst (currently studying for my chartered designation - CMT), but I also own a construction company and I was the President of the local home builders association.  One reason why we created computer driven trading systems at Kinship Investments was to take the emotion out of decisions and expectations.  I hope with my experience in the real estate field coupled with my analytical perspective I can keep my opinion subjective even though I am now a 'locked-in investor' :-)

One thing which is very important when it comes to studying any market is data.  If you only have a small amount of data, then it could alter your view.  My rule of thumb is to take your average holding period and times it by 30-40 data points.  This will give you a general reflection as to how much information you 'should' have to make a well reasoned analysis of the market you are studying.  For example, if you use a 60 minute chart such as the one below that has an average trade time of 1.5 days then that works out to about 1500 bars.  The picture below only shows about 400 bars.  So you may look at this chart and say, "OK, it's in an uptrend, it possibly has an ascending triangle, RSI has come off lows, and the price recently completed a support line, so there is the potential for a long trade depending if it breaks up or it could be a short sale if it breaks down".

60Minute chart with only 400 bars showing.

Now stretch out your view with 1500 bars:

60Minute chart with 1500 bars showing.

Now it's getting interesting.  Not only are we confirming the resistance at 1680, but it has been reinforced by the move on May 21st.  But, now we are witnessing a possible cup formation here that could have a major potential to breakout in a significant way to the upside.  But, we may have to wait for a proper 'handle' before this happens which could break the two week support and could pose a serious test to the formation. ***Update: While starting this blog post chart and research graphs it has indeed broken out to the upside on the July 18th morning, but then ended the day below the trend line and is in serious danger of breaking down***

This is why our systems look at a much larger data pool when deciding what direction to take.

My point is, when it comes to real estate, forget about long term data... There is none.

The first question you must ask is what is your investment time frame?  Five... 10... 20 years?  This ultimately allows you to set your data pool that you want to study.  To simplify our review we are assuming if you are buying a home or an investment you are acquiring a five year mortgage.  This should mean that you are concerned about what the price of your investment will be in five years....  It would be nice to see that principle actually go to equity and not be washed down the drain because the home decreased in value.

If we are working with monthly charts and we 'hold' for approximately 60 months of time then we should have a data pool of at least 1800 months (60X30).  Now if you have done that math you would know 1800 months are many years of data (150 years to be precise).

How is anyone supposed to make an 'analytical' technical choice of investing in real estate when the most I can find from the Canadian MLS service HPI (Housing Price Index) is back to 2005?

All you could really say is that it has the tendency to 'go up'.  Pretty bad data to make any good decisions on.

At least in our local real estate market they have tracked the average home prices and the volume of sales completed back to 1978.  This gives us 4 times the amount of data. A little more helpful...

The middle line is an linear trendline just averaging the data points.  Yes, I know... we live in an expensive part of the world (I'm not going to attempt to compare price to affordability!).

So at least with the above graph we can see that we are above the mean, but still little is gained but the knowledge that throughout all the crisis's in the last 35 years the average home price here has at the most 'run sideways' for extended periods.

Now this chart shows the total yearly value of sales which gives us an interesting look at the fact that we have had a huge run up of volume in the mid 2000's and it has slowly tapered off from the highs.

A little tool I LOVE using is RATIOS.  Ratios tell a story that is completely unique.

Ratio Chart 1


This ratio chart is the $ volume of sales divided by the price average.  Now we have something interesting to work with.  You can see that one of my favorite chart patterns is forming as we speak (see my previous post on Gold).  The descending triangle is a powerful formation, BUT as the chart shows there could be no resolution to the upside or downside at anytime before 2018.

If in fact this ratio does 'break down', what does that imply?  That means that there is less overall volume OR that home prices are increasing OR a combination thereof.  Charts tell us one thing, but put on your 'practical hat'.  A measured declining triangle move should put this ratio to '0'.  Frankly an impossibility.  This would mean there is absolutely no volume and/or housing prices are through the roof, both an assumption that would mean the end of the financial world as we know it.  So, what does this tell us?  Sure, it may 'break down' but what we would practically see is a false breakout as it re surges to the upside or just frankly moves past this triangle to form a different formation in the future with.

Ration Chart 2

Another way to look at it is that it will revert back to the mean.  If this ratio moves up it is just the opposite of moving down.  This means that volume is up, or the value of homes are decreasing OR a combination thereof.

Recently for the first half of 2013 our local Real Estate Board reported: "While sales are up, prices remain flat.  It is more important than ever to focus on the median prices."  This WILL push our ratio higher for 2013 as there is more volume but prices are steady.

The volume graph shows that it is below the mean while prices are above the mean.  What people forget is that you can at times 'revert' back to the mean, but you can also 'stagnate' back to the mean.  If you have an 45degree mean line and you have data that has accelerated past the direction then it has the ability to just move sideways rather than move in an opposite direction to revert back to it.  Look at the 'local real estate average home price' graph.  Because prices have increased more than the mean it has the ability to generally move sideways to revert back to the mean, where as if it was below the mean like volume, then it MUST move up to revert back.  So if you are above an up trending mean line (and you believe that any market DOES revert back to it's 'mean') then you are more likely to A. go sideways or B. go down.  This is in stark contrast to if you are below the mean, you only have one option to revert back to the mean (go up).

What does this tell me?  Prices are above their mean and volume is below it's mean.
Either prices will decline or go sideways AND volume of $ sales will increase.

Now, I don't mean to act like a smarty pants, but lets look closer at that ratio.  What is it of again?  Oh ya... $volume of total sales divided by the average home price...  Doesn't that just give us the total sales of units?  Your right... Does that now give you a different perspective of the ratio's 'weight', or how valuable that information is?  That ratio of three is actually 3000 units sold.... Could it be that we sell less than that in any current or future year?  The last time we saw less units sold was in the very early 1980's.  With population increase, and the amount of new home builds we see year in / year out and intercity / inter provincial / or international immigration that we would see this number go below the 3000 units per year?  Possibly, but the odds are against it...

Taking this information moving forward this means that we can expect, for possibly the next five years, that the number of units sold per year will be between 3000 and 3500 if we expect the descending triangle and support/resistance line to hold sway.

With this information it is still hard to say how this will affect prices, but it may be said that we may have reached some 'stability' in the housing market.  If prices remain the same ($600,000) and we reach a high of 3500 units sold, then (funny enough) the volume $ sales would reach 2.1 $Billion which would put it right on the 'median'.

Even though John Paulson has made a terrible bet on gold recently (again, see my previous post) where he has lost 65% of value in his gold fund, he apparantly is good at finding returns in the housing market and he has recently stated, "If you already own a home, buy a second one.  You won't make returns that good by investing in me".  Personally I think that is a little optimistic.

The data states that the worst 10 year period (1993 to 2002) the average home value increased by 2.44%.  The worst 20 year period (1982 to 2001) was an increase of 4.06%.  Because of our huge runup in value between 2002 and 2007 we could see that 4.06% 20 year hold if we only average 1% a year for the next five years (basically keeping up with inflation).  Is that so bad?  Well, we have to live somewhere, but if it was an investment I would rather look at other products to leverage my returns...

Next up: Using business cycle, intermarket relationship theory, and technical analysis to take a long view of the current markets.

Protect yourselves,

Lee MacFarlane
Derivatives Trader - President
Kinship Investments Ltd.
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.
Lee MacFalane is a derivatives trader trained under the Canadian Securities Institute and is working toward his CMT designation under sponsors with the CSTA (www.csta.org).  He manages Kinship Investments, a Private Managed Fund (working under the Capital Raising Exception Act of the BCSC).  Kinship Investments is not an advisory service and does not provide investment advice.  This blog represents Lee MacFarlane's opinions only and is not intended to be used as investment advice.  Lee MacFarlane and Kinship Investments may or may not hold securities that are discussed in this blog.  Please contact lee@kinshipinvestments.com for further information or go to  www.kinshipinvestments.com/trustfund.html to view our latest results.

Kinship Fund - July 2013 Update

Blog Title: Kinship Fund - July 2013 Update

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Managed Futures Fund (working under our local Capital Raising Exception Act). Currently, we are seeking capital from qualified investors. Kinship Investments is not an advisory service and does not provide investment advice. Please contact lee@kinshipinvestments.com for further information.

Getting Hot!  What an amazing few months it has been, and it is getting nice and toasty around our area.

I was going to divulge the fact that my wife and I personally have entered the fine achievement of home ownership.  But, I would like to keep that to a post in the near future.  There is so much information about what is good and what is terrible about our real estate market.  I have learned a great deal about this and I put my quantitative hat on to get some interesting facts and figures that I will look forward to writing about in the coming weeks.

Currently I have to discuss Gold.  We have just completed a move that needs to be analysed.  Especially for those in the 'trust your advisor' category.

So... Who has Gold in their portfolio?  Well if your Canadian, then you probably do and you may or may not know it.  Maybe your 'Financial Advisor' said that 'owning gold' is a good move for the long term or maybe you own gold stocks.  Did you know that 16.7% of the S&P/TSX 60 (The main Canadian index) is composed of mining stocks which are mainly gold and silver based?

Lets show you the long term Gold picture (you may have to scroll to see it all as I haven't quite figured out how to make a pop up picture in blogger, sorry):

What you are looking at is a measured down move from a Declining Triangle.  The measured move comes from the 2011 low to high and is transfered to the break of the support line at around $1560.

The Declining Triangle is one of the most basic technical chart patterns around.  For 1.5 years this pattern has been developing. 

Did your advisor move or protect these holdings in April 2013?  He/she should have.  It was a text book 24% decline in Gold prices in the last 2.5 months that ended recently.  Where does it go from here?  Who knows?  I believe if you are getting advice in regards to this, you should really take a hard look at who is giving you advice.  This is a basic pattern that is taught through the Canadian Securities Institute.  If you have a CFP, CIM, BS'er, or whatever financial 'expert' advising you in Gold; they should have made adjustments to your portfolio in mid April to protect yourself from the majority of this move.  If they don't understand technical analysis (which is not uncommon), then THEIR superiors and advisers dropped the ball.

Further, if you are now getting advise as to what to do AFTER they dropped the ball, then STOP! THINK!  They have just missed saving you loads of money (or capitalizing on it), and now they say to 'hold steady'?  This has been a multi-month trade that has just completed.  There is no other multi-month trend in effect yet (That I admit, 1190 does look like a low for gold, but who is to say?)  At this time GOLD IS EXIBITING THE PROPERTIES OF GOING DOWN.  That is all anyone can seriously state with any confidence (Unless of course you are a trader NOT an investor).  There are always opportunities, but if someone is giving you advise after bad advise... Then make sure they at least admit that they screwed up in the first place...

Portfolio management must incorporate many things in a tool box, such as fundamentals, news, OR technical analysis (TA).  This is the basic building blocks of financial management.  I am just finishing my level 1 of my Chartered Market Technician (CMT) designation through the Canadian Securities Institute.  Does this mean I am all knowing when it comes to TA?  Absolutely not.  You have to be working on identifying portfolio and holding risks 24/7 (or at least 6/5) if you do not use a quantitative approach to the markets.  We at Kinship Investments utilize computer driven models that get us in and out of trends to be profitable.  As a portfolio manager (CIM, CFP, etc) you have to identify these trends without computers (because you visually have to 'check' the charts) and make sure that if any of your clients have holdings that may be affected... you act.  Do you rely on these types of professionals to look after your holdings?  If the answer is yes, and you have lost money on Gold or your Gold holdings, then you have not been serviced properly.

I know I can expect flack from very well intentioned and good people in regards to my accusations... But I stand firm.  This move was text book... and I am not talking figuratively.  This move is literally in the Technical Analysis Course text book from the Canadian Securities Institute.  If your manager did not see this, then THEIR manager should have.

Make them accountable, this is their job.  Also, maybe give our Kinship Fund some consideration....

Our systems were up 4.5% for the month of June putting us in positive territory for the year.  We definitely have not been producing significant returns for 2013 ourselves.  But, it is nice to finally be in positive territory again and there are indications our current short term positive trend should continue.  Our average return expectations are 16.5% a year, so it will be interesting to see if we are able to put in a rip-roaring 2nd half of 2013!

Please view our latest results, posted @ www.kinshipinvestments.com/trustfund.html

Protect yourselves,

Lee MacFarlane
Derivatives Trader - President
Kinship Investments Ltd.
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.

Blog Title: Kinship Fund - June 2013 Update

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Managed Futures Fund (working under our local Capital Raising Exception Act). Currently, we are seeking capital from qualified investors.  Kinship Investments is not an advisory service and does not provide investment advice. Please contact lee@kinshipinvestments.com for further information.

Ho Hum Spring!

 

Well it has been one year since our latest 'update' so we have obviously been lax in blogging about what we are doing.  Since we are strictly systematic trend following traders, we may not have much to say.  As boring as it is, we don't honestly care what markets are doing.  Theoretically, we are making money in any down, up, or sideways markets.  But, just because we don’t care what the markets do, doesn’t mean we don’t find them fascinating.  So, without further adieu: our current commentary.

The Kinship Fund declined by 1% for May 2013, with a total decline of 3.4% for the year.   This is in stark contrast to the S&P 500 index which has posted another gain for the month.  The separation is quite substantial between the two.  It would take a large amount of gains to put us on par with the general markets.  Again, does this worry us?  Not so much.

Kinship Fund is not correlated to the S&P 500 when it has a positive month.  But, we are negatively correlated to the S&P 500 when it has a down month.  What does this mean?  Generally, when the markets are going down the Kinship Fund has a 60% chance of having an average 6.99% positive month.  But you may ask, what about the other side?  Fair enough... Generally when the markets are going down the Kinship Fund has a 40% chance of having an average 2.23% negative month.  These are pretty good odds anyway you look at it.  This is one reason why month after month, we are insisting to our potential investors that our Kinship Fund is truly a great diversifier for many investment portfolios.

As we are late in our reporting of our commentary for our May results we will save general musings for the next week and June results review which is only 2 weeks away (where does the time go?).  Next up: Have you truly done your real estate ‘due diligence’? Where is the market going in 40 years?

Please view our results, posted @ www.kinshipinvestments.com/trustfund.html

 

 

Protect yourselves, 

Lee MacFarlane
Derivatives Trader - President
Kinship Investments Ltd.
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

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Past performance is not necessarily indicative of future trading results.

Kinship Fund June 2012 Update

Blog Title: Kinship Fund - June 2012 Update

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund. Currently our status is that we are seeking capital in 2012. We will start trading our systems in September 2012. All results posted are theoretical gains from our systems that we track hourly. Real results could differ due to slippage or other factors. Kinship Investments is not an advisory service and does not provide investment advice. Please contact lee@kinshipinvestments.com for further information.

Happy Summer!

Our Kinship Fund was down a modest amount for June 2012 (-2.065%). Whereas other Hedge Funds have had wild double digit negative or positive swings recently, we believe it is better to have modest steady increases without those surprises.

Our Volatility System has had great success during the first part of the year but has been given back gains recently, regardless it is hitting its targets. The Medium Term Systems have not had a great run so far for 2012 which gives us a possible indication of potentially huge gains as it reverts back to the mean for the rest of 2012. Lastly, our Short Term Systems have been working as expected with gains of 11% for the first six months of 2012.

Our Results are posted @ www.kinshipinvestments.com/trustfund.html

The detailed breakdown of our three systems are:

Kinship Fund June 2012 Results = -2.065%

Year to date 2012, Kinship Fund Systems:

Medium Term Systems (MTS) = -5.551%

Short Term Systems (STS) = 11.082%

Volatility System (VTS) = 7.038%

Kinship Fund Total Year to date (June 2012) = 4.19%

Comparable Benchmarks Year to date (June 2012):

Newedge CTA Index = -0.261%

Barclay Hedge Fund Index = 2.35% (estimated from reported data from 2,681 funds)

Canada S&P/TSX 60 Index = -4.74%

S&P 500 Index benchmark = 8.31%

Our funds have been structured to have positive returns if the general markets are down or up. We describe this well (I believe) via our Kinship Presentation which is able to be viewed online @ http://www.slideshare.net/LeeKinship/hedge-fund-investment-v5 (we recommend viewing this presentation by first going to www.kinshipinvestments.com and following the instructions on the first page). We hope you had time to view this presentation now as we will be following up with interested investors very soon. In our presentation we show when the S&P 500 index is getting smacked with large losses - we are positive, and when the S&P is making huge gains - we may not be as good but we are still positive.

This is an interesting time to show one of our main advantages the Kinship Fund has over traditional funds. This is the fact that 'We do not make money until you the investor make money'. Simply put, we don't just have a Performance Fee hurdle, we also have a Management Fee hurdle.

Let's concentrate on the Management Fee and the 'hurdle' we need to maintain as this is timely. Management Fees are fees that are paid to an investment management company (Kinship Investments) that is responsible for directing the Fund (Kinship Fund). It is a % fee based on assets under management (AUM) that is paid out each month. Our Management Fee is 1.5% per year. To calculate our monthly fee, this 1.5% is divided by 12 (months) for a percentage of 0.125%. This 0.125% is what we multiply the AUM at the end of every month to receive a Management Fee. With me so far?

So, what does this mean to you? If you invested $1,000,000 and we had a result of 1% for the month then you would have a month ending with $1,010,000. To calculate our Management Fee we multiply this number by 0.125% to receive a Fee of $1262.50 ($1,010,000 X 0.00125) for this month.

So what makes us different? We have a hurdle to attain that is cumulative every month. We must provide a 0.8% gain for the Kinship Fund every month. This means in January we need to achieve 0.8%, in February we need to achieve 1.6064%, in March it would be 2.419% and so on.

Which brings us to our current month ending June 2012. At this point the Kinship Fund has a year to date result of 4.19% (end of June, 2012). For June our hurdle stipulates we need a result of at least 4.897% before we can receive our Management Fee. So, even though we may be able to receive our Management Fee for the first five months of the year, we would not receive our Management Fee for June.

But what investor wouldn't be happy with a return of 4.19% in six months? Regardless, we only receive Management Fees for 5 of the 6 months in 2012. This is our dedication to our clients' hard earned capital.

We've had great response over the last few months but we still need to raise a little more money to be able to start with our minimum amount on September 1st in the Kinship Fund. We are hopeful meetings in the next month will go well.

Hope to talk to you soon,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.

Blog Title: Kinship Fund - Raising money for the Kinship Fund.

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund. Currently our status is that we are seeking capital in June of 2012. We will start trading our systems in July 2012. All results posted are theoretical gains from our systems that we track hourly. Real results could differ due to slippage or other factors. Kinship Investments is not an advisory service and does not provide investment advise.  Please contact lee@kinshipinvestments.com for further information.

 

Well we are at the end of May and the S&P 500 has given up most of it's gains for the year and is only up about 1.7% while the TSX-60 has managed to decline 4.9% for the YTD.  To put it mildly, it is a very difficult environment for Fund managers.

Thank god we do what we do.  We are up 6.3% for the year to the end of May.  Not bad.

We are now commencing our road show and hope to raise between $3 and $10 million.  There are a few main differences to our approach and our results:

1. Our incentive is to make you, the investor, money for the Kinship Fund.  That is the only way we can profit at Kinship Investments.  If we make less than 10% per year we do not make $1 for Management AND Performance fees.  Again, our Management Fee can only be granted if we hit a 0.8% a month (accumulative) target and our Performance Fee is only granted if we are able to achieve a 10% profit for the year.  By the way our fees are 1.5% and 15%, which we believe is reasonable.

2. Industry standard Hedge Fund risk exposure is usually 3:1.  Meaning, for every $1,000,000 a standard Hedge Fund has for assets under management (AUM), they are able to leverage it up to $3,000,000 in positions.  We are 1:1 at our maximum positions.  On the average we are only 0.25:1.  This means we take far less positions to make a profit.  We use leverage wisely...

3. Talk about risk... The Kinship Fund has 50% of it's holdings in a low risk non-correlated bond or similar instrument that provides a small but steady minimum yearly return of 2.5%.  In fact we only actively use a maximum of 25% of our total holdings for our positions.  25% of our total holdings are held as contingency.

4. The Kinship Investments Systems are completely computer driven and indicate when and where us mere humans are to make our trades.  There is no emotion or discretionary trading involved.

WE TAKE THE EMOTION OUT OF TRADING

Here are details from our 'tear sheet'

Fund Performance
	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sept	Oct	Nov	Dec	YTD
2012	4.42%	2.28%	3.73%	-0.49%	-3.49%								6.39%
2011	2.86%	6.53%	-5.28%	16.96%	-1.68%	0.41%	0.61%	-0.87%	8.31%	-4.95%	-6.26%	-6.54%	7.80%
2010	0.26%	18.42%	-3.40%	5.89%	11.86%	15.38%	-6.78%	8.92%	7.60%	-6.19%	2.24%	5.04%	72.53%
2009	0.63%	3.93%	14.50%	-1.39%	-2.55%	0.37%	6.69%	8.40%	8.05%	7.31%	-4.01%	-9.59%	34.42%
2008	11.83%	6.36%	13.48%	-1.19%	-14.49%	4.31%	1.42%	13.21%	15.53%	10.20%	2.09%	2.94%	82.77%

(Past performance is not necessarily indicative of future earnings)

2008 to 2011 are real-time and back-tested results for Kinship Fund which included ‘Kinship Investments - Medium Term Systems’

2012 to Present contains the current Kinship Fund model of ‘Kinship Investments - Medium Term Systems’, ‘Kinship Investments - Short Term Systems’, and the ‘Kinship Investments - Volatility System’.

All systems trade only Gold, Silver, Copper, Crude Oil, Natural Gas, and/or the S&P 500 index futures contracts.

Analytics
	Kinship Fund	S&P 500 Index
Compound Annual Returns	46.20%	8.64%
YTD Compound Returns	6.39%	4.19%
Annual Standard Deviation	34.64%	27.05%
Sharpe Ratio	0.087	-0.011
Worst Drawdown	16.72%	49.90%
Months To Recover (1)	5+	39+
Percentage Up Months	67.92%	52.83%
Fund AUM	N/A

(1) The Kinship Fund and the S&P 500 Index has not recovered from their respective ‘Worst Drawdown’.

Something we are careful to point out is that our previous years (2008-2011) systems used slightly higher risk mainly due to not having the diversification that we do have in our systems today.

Our internal system results that we currently use in 2012 and beyond has a CAGR of 24.9% with a .05% standard deviation (I know, ridiculously low).  We have been trading possible larger returns for less risk lately.  In a nutshell we are aiming our sights at creating for the Kinship Fund a 25% return per year compared to the historical norm of 46% per year.

We look forward to any comments and our presentation in the following weeks.

Cheers,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)http://www.kinshipinvestments.com/

check us out on