I spoke with one hedge fund manager today who has several billion dollars under management. His firm made a macro bet against the Nasdaq in January, got stopped out in February/March, and are crying now as disappointed investors redeem. Right idea, poor timing, too much volatility. Even though I have never been particularly fond of macro fund managers, I can empathize. I issued a short recommendation at 4390 in the Nasdaq 100 in late February and watched it go 400 points in my face before eventually being right -- ah, but the joy of a smaller position size and no leverage while waiting out such periods. But in general it's not a good environment to have your money at risk -- long or short as crazy people do crazy things and market timers come piling into the market in the last 30 minutes of trading to shift mutual fund allocations -- a practice that only exascerbates the frequency of closes right on the high or low of the day.

Indeed, not even many dedicated short selling hedge funds survived long enough to enjoy last week's drop, their numbers having slowly dwindled from 25 back in 1992 to just nine at last count. Then, just as those nine survivors could celebrate a bit last Friday, a 14% rally in the Nasdaq left them once again dissatisfied with no lasting profitable -- to date. Bottom line, it's a bitch out there and maybe time to take money off the table and put it toward a more passive and diversified non-equity correlated investment style. As we beat the drum a bit for our own upcoming fund of funds offering, we serve up today a link to Hedgeworld.com to read about a dieing breed -- Bear Busters. Yes, we wrote this article too. Building appropriate short sellers into any fund of funds portfolio, on a correctly weighted basis, is of course an integral part of building a good alternative investment product. How much worse can life get for these guys? Maybe their scarcity in number tells us something contrarian about the market itself.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.