Has anyone here invested in managed futures? I have been studying the subject for a couple of months and (if I finally decide to do it) I was thinking of investing between 5 to 15% of my net worth. I would like to hear about your experience(s). Thanks in advance. Jacques Kerrest
I put about 10% of my retirement (tax advantaged IRA) account into a managed commodity options account two years ago. This account only SELLS out of the money options and never purchases options. The idea is to pick strike prices far enough from the current price so they will expire worthless to the buyer and you pocket the premium. The idea is to hit a lot of singles but no home runs. The company is Liberty Trading group (www.libertytradinggroup.com/). The managing partner James Cordier wrote a book a few years ago that was reviewed in the WSJ and I read it. The book is, “The Complete Guide to Option Selling”, 2nd Edition (McGraw-Hill 2009) By James Cordier and Michael Gross. My thinking when I decided to try this was to have another investment category that was not dependent on the stock market.
How has it performed…ok but I’m not ahead yet. The first year was great and I was up about 35%, then last fall with the dip in the markets I lost that 35% and then 30% more! Very frustrating as I thought this strategy was less volatile. Anyway, as of this month I’m back to where I started. Historically, this firm averages about 25% a year. As I don’t need this money for a while I’m leaving it be for now though its tempting to cash out and buy more precious metals. For what its worth the firm believes that volatile markets are perfect for this strategy as even out of the money strike prices have high premiums.
It helps to free your IRA before you do something out of the box like this and I would recommend doing that first.