LM portfolio as at 05/08/2022:

When I'm not writing on this website complaining about how the market is refusing to go up, I enjoy reading books on the subject of big businesses imploding. I find them fascinating. There's "The Smartest Guys in the Room" concerning the rise and fall of Enron - which is truely brilliant.

Then I often re-read "When Genius Failed", a book that explains how the hedge fund Long Term Capital Management initially stunned the financial world with its exceptional investing returns and then almost brought down the whole financial system when it collapsed.

A third book, slightly different, is "American Kingpin". This one tells the story of the dark web drugs marketplace "Silk Road" and how the creator and main admin of the site, Ross Ulbricht, was tracked and caught.

Ross had some pretty strong anti-establishment views, not atypical of university students as at that age we tend to think we know everything. He was very smart but he made some little mistakes that led the FBI to find him and catch him, red-handed, whilst he was logged into the Silk Road admin panel on his laptop in a San Francisco library.

The funniest mistake he made was one which many newbies make when they create a new website - he went on a forum to try and drum up business. However, instead of being upfront (hey, this is my new website, whaddya think?) he pretended to be a third-party who had just 'stumbled' across this hidden, Tor-only, dark web site.

So all that someone needed to do, and this is what one of the investigating agents eventually tried, was to search Google for the very first time the Silk Road website was mentioned on a forum.

Up popped the post on a forum under the username "altoid" and when investigators then looked at the post history of the forum member who posted it, they found another post from that user with Ross's gmail address clearly stated - rossulbricht@gmail.com.

And that was pretty much the end for Ross. He is now going to spend the rest of his life in prison.

At one point in the investigation they even tracked down the Silk Road server to a data center in Iceland and got an image (full copy) of it sent to the FBI offices in the US. On looking into it, they found that the server was called "frosty". This eventually helped tie Ross to the server as he had used the word "frosty" in other places - forum usernames, passwords, computer names and so on.

As a tribute to Ross I will spare you having to read any further swear words on this site, following the little one from the last update, and instead substitute any naughty words from now on with "frosty".

Being serious for a moment, I can highly recommend "When Genius Failed" by Roger Lowenstein for anyone who is interested in hedge funds and investing. The "professors" who created LTCM got themselves into a pickle when the markets turned, losing millions every day with no way of escaping their positions. A sober lesson that even Nobel prize winning economists can get it wrong.

The difference between a huge fund like LTCM and a small investor like me is that I can sell any position immediately and limit my losses. With the size of investing I do, around £1250 per trade, it should be simple to sell up and get out of any kind of troubling situation. Now that may come after a huge fall but in the vast majority of situations I should be able to get out with something before I retreat to lick my wounds.

The portfolio

Still sitting on just one position as you can see in the above table. Said position is almost at break-even so nothing exciting to say about that.

It's been a very quiet summer and I have been concentrating on other things to make money rather than attempt to eke profit out of a subdued market.

The FTSE 250 has now popped above the 50 day and 100 day simple moving averages but is still some way from the 200 day SMA. There may be some possibilities in the commodity and currency markets but at the moment everything seems weak so I am content to hold cash and wait.

<- Previous Update

Next Update ->

<- Back to homepage