December 2015 Commentary and 2016 Outlook

True hedge funds proved their worth during 2015, and unless oil producing nations back off from their game of chicken, the value of running a hedged book will only increase in 2016. Markets are running out of good news bullets, hence risks are rising. The longer oil prices remain below $50, the higher the probability that a non-bank financial company or country dependent upon commodity prices catalyzes a negative event for stocks and further flattens the yield curve. In contrast, should markets anticipate $60 plus oil towards the end of 2016, equities will see vicious sector rotation that only the nimblest of managers will be able to capitalize upon. Want to place your bet on where markets go? Not me! While my team has put together a repositioning “play list” for our funds for when the world begins to “reflate”, entering 2016 we’re positioned for defence after delivering a strong year on the offence side of the ledger.

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