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Philosophy & Posture
Copyright © 2003-2024 Red Rock Capital, LLC. All rights reserved.
The risk of loss in trading commodities & futures contracts can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains. In some cases, managed commodity accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the Commodity Trading Advisor. The regulations of the Commodity Futures Trading Commission require that prospective clients of a CTA receive a disclosure document at or prior to the time an advisory agreement is delivered and that certain risk factors be highlighted. This document is readily accessible from Red Rock Capital, LLC. This brief statement cannot disclose all of the risks and other significant aspects of the commodity markets. Therefore, you should thoroughly review the disclosure document and study it carefully to determine whether such trading is appropriate for you in light of your financial condition. The CFTC has not passed upon the merits of participating in this trading program nor on the adequacy or accuracy of the disclosure document. Other disclosure statements are required to be provided to you before a commodity account may be opened for you.
Testimonials are not indicative of future performance or success.
“CTAs managing smaller assets do, on average, have a return advantage over large CTAs… and as a collective outperformed their larger counterparts over the last
five years.”
- RPM
We are an effective, lean, highly efficient, two-man team with world-class pedigree and a combined
40 years of experience.
Our aim is two-fold:
1 - Produce the highest risk-adjusted returns possible for our investors and ourselves.
2 - Offer investors highly valuable diversification from traditional investments such as stocks
and bonds and, in the case of our Commodity Long-Short program, offer valuable diversification from most other CTAs.
We are two portfolio managers who have been investing - and who will continue to invest - this way for our own capital. Managing money for clients via our CTA is an extension of what we are already doing.
We desire to manage capital for savvy, well-funded investors who want access to our:
- Acumen & expertise
- Unique & valuable strategies
- 40 years combined experience
We prefer to make decisions, and especially investment decisions, using probabilities, objective and quantitative analysis, and critical thinking. We are not interested in "opinions" or "forecasts" or anecdotal examples of luck.
We choose to operate in a calm, deliberate, analytical, and thorough manner.
The ability of investors to "time" CTAs effectively is an illusion and an oft-held misperception in our industry. The only credible academic (thorough; quantitative) research analysis done in this area clearly demonstrates that investors are not well-served by trying to time CTAs.
Risk-adjusted returns are the proper way to compare similar manager returns who implement their strategies in the futures markets. Why? Due to the inherent (i.e. free) leverage found in the futures markets. A CTA and / or a managed account investor subjectively chooses at what level margin to equity to operate a program - but the level chosen is not, in and of itself, a source of "goodness." This point is repeatedly misunderstood by many in the managed futures industry. A program run with a higher margin to equity ratio will produce a higher compound rate of growth at the price of higher drawdowns (periods of loss). For example, assume one manager produces a 20% net return over 12 months and another manager only produces a 10% net return. If the second manager used only half as much margin-to-equity, and produced only half as much volatility in his returns, then the two managers' performance were essentially equal on a risk-adjusted basis (yet the first manager will often win awards and be touted for having "better" performance - which demonstrates a lack of understanding of, or lack of concern for, a very important aspect about managed futures and how to correctly measure performance).
