The Top Traders Of 2009: Financial Commodity Investments' Diversified Strategy

The financial markets have been a perfect storm for investors seeking high returns with low risk. With the global economy experiencing a severe downturn in early 2009, many investors turned to managed funds as a way to navigate this challenging market. One of these managed funds that stood out for its diversified approach was Financial Commodity Investments' (FCI) Credit Premium Program (CPP). In this article, we'll explore what makes FCI's strategy so effective and how it compares to other option writing programs.

The Hidden Cost of Volatility Drag

One of the key factors contributing to FCI's success is its ability to diversify across various commodities. By trading energies, currencies, bonds, and grains, FCI is well-positioned to capitalize on volatility shifts in different markets. This diversified approach allows the fund to benefit from opportunities that would otherwise be missed by more narrow-focused programs.

That said, this strategy also comes with a cost. With over two dozen markets to monitor, FCI's team must conduct extensive research and analysis to identify high-probability trades. As Max Ansbacher, one of the original traders behind FCI's Options Selling Strategy (OSS), notes: "You really have to monitor a lot more markets than most options writers do." Despite this challenge, Ansbacher emphasizes that the benefits far outweigh the drawbacks.

Why Most Investors Miss This Pattern

When volatility spikes in 2008, many investors are caught off guard and unable to respond. However, for those who follow FCI's strategy, the opportunity is always there waiting. As Daniel P. Collins, FCI's President and founder, explains: "We've learned that when volatility explodes, it becomes a poker game. We wait for the opportunities to come to us." This approach has proven successful time and again.

A 10-Year Backtest Reveals...

A critical factor in FCI's success is its ability to identify patterns and trends over an extended period. By analyzing historical data, Collins notes: "We've developed a 10-year backtest that shows our strategy is highly effective." This data-driven approach allows FCI's team to refine their strategy and make adjustments as needed.

What the Data Actually Shows

The data speaks for itself. In 2009, FCI's CPP achieved returns of 29.04%, while its OSS managed a respectable 38.91%. However, it was in 2008 that Collins' strategies really paid off. Despite the extreme volatility, FCI's team rode out the storm and came out stronger on the other side.

Three Scenarios to Consider

When considering FCI's strategy, investors should keep several scenarios in mind. One scenario is a conservative approach, where investors focus on established markets with low risk. Another scenario is a moderate approach, where investors balance risk and potential returns by investing in a mix of assets. Finally, there's the aggressive approach, where investors take on more significant risks to maximize gains.

The Upside of Writing Options Across Diversified Markets

One of the key advantages of FCI's strategy is its ability to capitalize on volatility shifts across multiple markets. By trading energy futures, currencies, bonds, and grains, FCI's team can benefit from opportunities that would otherwise be missed by more narrow-focused programs.

A Warning for Investors: Don't Let Volatility Drag You Down

While FCI's strategy has proven successful in the past, it's essential to remember that volatility is a natural part of investing. As Collins notes: "We've seen too many investors get caught up in trying to time the market and forget about diversification." By staying focused on long-term goals and avoiding emotional decisions, investors can ride out volatility with confidence.

Conclusion

The top traders of 2009 were those who successfully navigated the global financial storm with FCI's Credit Premium Program. By diversifying across various commodities, conducting extensive research, and staying focused on long-term goals, these investors were able to capitalize on volatility shifts and achieve impressive returns. As we move forward into an uncertain economic landscape, it's essential to remember the lessons of 2009: diversification is key to success in investing.