We also find evidence of accounting gimmicks and trickery by in-depth reading of financial statements and footnotes. Our findings often foreshadow coming troubles within companies. Often we are expecting a catalyst, which we anticipate will create unfavorable operating results for a company. See Allocation and Holdings for a summary of types of stocks the Fund has sold short. Market timing is difficult, if not impossible, in today's environment.
Nobody can accurately predict what's ahead.
For this reason, we believe it prudent to allocate a small portion of your portfolio into a Fund like ours as a portfolio hedge against market uncertainty. The fund manager has established a decision rule to indicate how the Fund will be positioned. Fund investors are investing in a mutual fund, where they are only risking the amount of capital they have invested. This is a highly unlikely scenario, so bankruptcy should not be a significant concern. Any Fund losses will evidence themselves in the form of a lower NAV, but the important number to watch is the Fund Assets.