It will take a couple of years for market to bottom, not 1-2 months: Daniel Niles
If you lose 50 per cent of your assets, you have to be up 100 per cent to get to even, says the Founding Partner of AlphaOne Capital Partners
Talk to us about the indicators which you saw? When the lights turned from green to amber and you called out the case for correction building in?
There are a couple of things. We were worried about the coronavirus back in January and in late January, we started selling the stocks that we owned, either hedging them such as Disney or we got very negative on some like Apple which you can see on my twitter handle @DanielTNiles. On February 10, we had started to short Apple because we thought there was a virus risk from China. People just chose to ignore it which surprised me and did not make much sense to me. We tried to position ourselves appropriately because we thought eventually the US market would start reacting to it as the virus continued to spread. That, in fact, is what happened and that is how we saw the data.
This is a correction which was pretty swift. Investors and traders worldwide perhaps failed to gauge it. Suddenly, the fall accelerated. How important is it for professional and personal money managers across the world to focus on risk management or perhaps a little more than generation of returns?
It is more important than ever because of the way the map works. We have talked about this on our website. Danniles.com is the name of our website and there we talk about the fact that if you lose 50 per cent of your assets, you have to be up 100 per cent to get even. It is not being up 50 per cent. That is really the key to making money over the long term.
If you look at even the most recent correction in S&P500, you are down 34 per cent from peak to trough but you have to be up 52 per cent to get just even. From that angle, trying to make sure that you do not lose a lot of money is certainly the key to making money over a long period of time.
We really try to focus very hard on not losing money and that is why we cannot talk about specific performance due to our funds private registration. But for March, we made money and for the year, we made money through the end of March as well.
The way we would be able to do that is when the market was down 34 per cent. We were not down very much at all from the highs. That is how we are able to do well and managing the risk on the downside.
There are a lot of Indian high net worth individuals (HNIs) who are keen on investing in the US markets. The US markets having this 10-year massive rally was not really giving opportunity for investors worldwide including here in India. Now that there has been a meaningful correction, what would you tell these investors?
We are seeing a lot of interest. We have decided to open a second hedge fund which does not meet the government required income and wealth criteria for being a hedge fund. Everybody deserves the chance to protect their investments when markets get bad and this is only going to be open for about 99 investors and we will see if there is demand.
There are a couple of things. We were worried about the coronavirus back in January and in late January, we started selling the stocks that we owned, either hedging them such as Disney or we got very negative on some like Apple which you can see on my twitter handle @DanielTNiles. On February 10, we had started to short Apple because we thought there was a virus risk from China. People just chose to ignore it which surprised me and did not make much sense to me. We tried to position ourselves appropriately because we thought eventually the US market would start reacting to it as the virus continued to spread. That, in fact, is what happened and that is how we saw the data.
This is a correction which was pretty swift. Investors and traders worldwide perhaps failed to gauge it. Suddenly, the fall accelerated. How important is it for professional and personal money managers across the world to focus on risk management or perhaps a little more than generation of returns?
It is more important than ever because of the way the map works. We have talked about this on our website. Danniles.com is the name of our website and there we talk about the fact that if you lose 50 per cent of your assets, you have to be up 100 per cent to get even. It is not being up 50 per cent. That is really the key to making money over the long term.
If you look at even the most recent correction in S&P500, you are down 34 per cent from peak to trough but you have to be up 52 per cent to get just even. From that angle, trying to make sure that you do not lose a lot of money is certainly the key to making money over a long period of time.
We really try to focus very hard on not losing money and that is why we cannot talk about specific performance due to our funds private registration. But for March, we made money and for the year, we made money through the end of March as well.
The way we would be able to do that is when the market was down 34 per cent. We were not down very much at all from the highs. That is how we are able to do well and managing the risk on the downside.
There are a lot of Indian high net worth individuals (HNIs) who are keen on investing in the US markets. The US markets having this 10-year massive rally was not really giving opportunity for investors worldwide including here in India. Now that there has been a meaningful correction, what would you tell these investors?
We are seeing a lot of interest. We have decided to open a second hedge fund which does not meet the government required income and wealth criteria for being a hedge fund. Everybody deserves the chance to protect their investments when markets get bad and this is only going to be open for about 99 investors and we will see if there is demand.