Technology Select Sector SPDR ETF
PowerShares QQQ Trust ETF
1) Hedge Funds Crash in May. Hedge funds suffered a disastrous month in May, showing an average 3% decline in net asset values, and some funds like Eddie Lampert’s ESL Investments got clocked for a 15% loss. If you had to describe the global hedge fund position on May 1, it was long technology stocks and crude, and short Treasuries, natural gas, and the yen. This was absolutely the portfolio not to have. Alas, if they had only sold in May and gone away, as some newsletters advised (click here for the call). Long/short funds are now showing only 18% long positions, versus a usual 35%-40%. If you want to know where they will go fishing when they rebuild their portfolios, look below at the ten largest hedge fund holdings. Notice that six are technology stocks, a sector I have been banging the table about for the last 18 months (see Get Ready to Load the Boat With Technology Stocks by clicking here). They are followed by financials, which I never bought into, beyond a dead cat bounce, because there is still too much toxic waste buried in their balance sheets. Health care I have been warily circling as a target in the wake of the passage of the health care package. The jungle telegraph tells me that hedge funds have already started quietly accumulating on weakness the early leaders in this downturn, emerging markets, growth, and inflation plays. Keep your eyeballs focused on the tech ETF’s (XLF) and (QQQQ).
Any Landing You Walk Away From is a Good Landing
(Royal Air Force pilot instructor’s manual)