The Samurai Fund – All Hands On Deck!

Searching For Fortune On The Fund’s Yacht

With great pleasure, I announce the launch of The Samurai Fund!

Thesis: Through random selection based solely off permutations of reader’s names (personal or site title), we are able to create a long-only mutual fund that will outperform the S&P 500 index!

Fund Details: $1,672,003 billion launch, $100/share NAV, with 17 positions equally weighted.  Concentrated multi-strategy portfolio with defensive names in the alcohol and utility space, as well as higher beta names in technology and health sciences.  Small caps and large cap names included.  S&P 500 start value 1,115 benchmark.

Investment Outlook 2010: The stock market continues to rebound, but at a slower pace.  Inflation and interest rates remain benign, leading to a re-emergence of consumer spending.  Housing stabilizes with 30-year mortgage rates staying below 6.5%.  The government maintains record spending to stimulate the economy and the unemployment rate begins to fall in the second half of the year.  The S&P 500 increases by 10-15% with a blue-sky target of 1,322.

Duration & Rules: One year.  The bottom 3 performers will be up for review every quarter. To stay in the fund, one must write a convincing argument as to why we should not cut our losses.  Picks down more than 20% also will be re-evaluated.

Goals: To have fun, learn something about the stock markets, prove a theory that luck plays a big part in performance, and to build better relationships with the community.

Contributors: Please retweet and spread the word to any of the social media sharing sites below.  We need all the support we can get to outperform the professionals!  Contributors are encouraged to provide updates and commentary as the months progress.  If anybody wants to do a portfolio analysis below, please feel free to do so!


Let “Freement” Reign! Spending Paralysis, Material Lust And Obsession

For those of you who don’t know, I’m a recovering car-aholic.  Funny enough, the way I deal with my addiction is to go to the BMW dealer!  I also go to the Audi, Mercedes, Honda, Land Rover and Porsche dealers too, but only the BMW dealer is on my way home and has an easy parking lot to leave Moose unattended.  I wonder if they cut out the free popcorn and diet cokes because of me.   Hmmm.

Over the past 3 years, I must have visited the BMW dealer at least 65 times to the dismay of the sales people.  They must have a code word for my type, “cheap bastard” or “stop wasting my time you poor SOB” maybe, but I don’t care.  Nothing thrills me more than sitting in a brand new, over-priced automobile and inhaling that unbeatable new car smell!  After every experience, I deftly try and avoid the salespeople and pick up a new brochure so I can extend the enjoyment at home.

In fact, as a joke I wrapped up the latest Land Rover LR4 brochure for Christmas and gave it to my wife.  I told her she should expect a nice shiny black on black beast when we get back to San Francisco.  She was kinda amused, not really.

If the salespeople insist on going for a test drive, who am I to argue?  But, I make it a point to only waste the time of the most eager of sales people beavers.  The fun of gunning a $80,000 BMW M3 every other month is such a thrill!  Besides, I hear they get a little commission for every test drive anyway.


Samurai Predictions And Resolutions For 2010

It’s amazing how quickly time goes by.  Usually, I get nostalgic this time of year, reminiscing about all the memories over the last 12 months.  Not this year.  Let us remember that we went through an economic blitzkrieg in 2009, and I am so glad it’s over!

The one thing I am really hopeful for is a rebound in employment. Over the past 3 months, I’ve encountered so many positive job data points in my industry from friends and acquaintances on the job front, I’m absolutely hopeful those who are seeking jobs, or better opportunities will find them in 2010.  Companies always over fire during downturns, and therefore have to scramble to rehire in this upturn. Below are five more predictions you don’t even have to think won’t come true!


Creating A Masterpiece By Failing Forward

Here’s a guest post from Ryan at Planting Dollars.  I was intrigued by one of his comments of “failing forward” (not falling forward) and asked him if he’d be interested in writing a guest post about the topic.  Please enjoy and visit his site afterwards.  He has my envy of living in Hawaii and pursuing his dream of being a shark photographer!  Best, Sam

Have you ever noticed that some of the most successful people in the world seem to just naturally fit in their role? It’s as if they’ve been perfectly sculpted to be the best actor, businessman, or even blogger.

I have a secret to tell you… It’s because of their previous experiences… The one’s you didn’t see before they became wildly and unbelievably successful. These people are actually the biggest failures in the world! But shhhhh, I didn’t tell you that…

Don’t believe me? I want you to try something… The next time you talk to a successful person simply ask them this question:

“What failures have you experienced on your journey towards being where you are today?”

They’ll probably talk your ear off for hours and you’ll begin to realize this: They’ve just swung the bat of life a few more times and eventually hit one out of the park.


The Katana: Lauching The Samurai Fund To Prove A Theory 12/28

The S&P 500 is up about 22% year-to-date, and up 69% since bottoming at lucky 666 in early March.  Being up 22% after being down 40% in 2008, still means the average portfolio is down 27% from the 2007 peak.  You may fool yourself into thinking the average 401K balance of $50,000 has recuperated most of its losses, but you’re confusing contribution with performance i.e. going from $50,000 down to $30,000 (40% loss), but contributing $16,500 + a 22% rebound ($6,600 on $30K) = $52,000 does NOT mean you’re back to even!

The tipping point in your 401K, where performance starts outweighing a maximum $16,500 annual contribution is roughly $200,000. Once you have $200,000, the real juice comes from performance where an 8% return equals roughly the maximum contribution you can make every year.

There are two lessons to be learned in 401K land: 1) Contribute the max to your 401K every year, and in 10 years, you will likely have $200,000 given company matches, and performance (even in this past decade) and 2) Once you reach $200,000, you’re going to hurt like no other if you lose 40%, or $80,000 of your portfolio, so diversify!  The sword cuts both ways.


I’ve only had a couple big stock hits in my life, and I attribute it all to LUCK.  Of course, I also attribute all my loss making ideas to BAD LUCK, and not to poor timing, bad fundamental analysis, and generally not understanding what the hell I’m investing in!

Essentially, I believe with a lot of luck and a little bit of effort we can outperform the markets.  Hence, let’s see if the PF community can outperform the S&P 500 with our own randomly unscientific stock picks based on permutations of our own names and blog titles!