Best of 2005
On insurance, I was in the money with MetLife, Prudential, Assurant and Montpelier. There are three ideas here. First, scale is an advantage in insurance, and that helps Met and Pru. Second, Assurant is a well-run corporation. It is my hedge fund's largest holding.
I shorted Montpelier after Hurricane Katrina (along with other property-exposed reinsurers), and recouped my losses. (I try to report all of my significant trades on RealMoney, but my agreement with my legal department precludes reporting companies that I am short, unless they allow my disclosure.) I also got Fannie Mae (FNM) right, and I am no longer short.
I had the auto sector right, where I like Toyota (TM - Get Report) but not General Motors (GM - Get Report) and Ford (F - Get Report). I feel sorry for Kirk Kerkorian, but it's foolish to follow the actions of wealthy people simply because they are wealthy. The stock market doesn't care who owns a stock, but it sometimes cares why large investors buy and sell. Unless GM can figure out a clever way to legally spin out GMAC, I can't see how GM is buyable.I predicted the yield curve inversion well in advance of most commentators. My strategy of barbelling fixed-income investments for 2005 worked very well. The long end rallied, and the short end fell. My trading of the iShares Lehman 20+ Year Treasury Bond (TLT) also worked out in 2005. I made money in each trade. What is gratifying here is making money in an unusual environment. Long rates were low due to foreign investment. I was ahead of the curve on:
|My Best Sectors
|My Best Investments
|Canadian Natural Resources||2.0|
|Anglo American Plc ADR||1.4|
|Japan Smaller Capitalization Fund||1.2|