Consider Your Options: Avoiding the Fate of the Thanksgiving Turkey
By Attain Capital
Our weekly newsletter is out, and as has been the tradition at Attain, we are in the Thanksgiving mood. This Thursday, homes across America will be inundated with the succulent scent of roasting turkey, whipped mashed potatoes and fresh pumpkin pie. Though we look forward to celebrating with family and friends, the Attain office is thinking about a different kind of turkey at the moment – a hypothetical turkey, complacent in his well-fed routine and ineligible for a Presidential pardon, as imagined by none other than Nassim Taleb.
Taleb describes the comfort a turkey finds in consistent feeding, and the confidence that arises from reliable care. Of course, the turkey has no idea that his comfort is merely preparation for the comfort of a home cooked meal in which he will be the not-so-comfortable guest of honor. Because we’re nerds, every year we get a chuckle out of recreating a graphic from The Black Swan, depicting 1000 and 1 days in the life of the fowl, getting a bit of a  morbid laugh from the fate of the poor turkey in question.
This metaphor isn’t just an exercise is geek humor, though; there is an important lesson to be derived from the untimely end of the well-fed bird. Whether the chart here runs an uneasy parallel to your equity portfolio in 2008 or seems to mimic the trajectory of your Netflix stock holdings, it serves as a reminder that the unthinkable can and will happen. The investor most likely to be familiar with such an equity curve, however, is the investor in an options program. They’ve feasted on the bird, and they’ve been in its shoes on the cutting block, but, still, most don’t go vegan… click through to find out why.
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To read more Managed Futures research pieces, visit Attain’s Managed Futures Newsletter archive and our Managed Futures Blog.
DISCLAIMER
Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.
The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.
The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices: such as survivorship and self reporting biases, and instant history.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.
Copyright © 2011 Attain Capital Management, licensed Managed Futures, Trading System & Commodity Brokers. All Rights Reserved. Reprinted with permission.
