[CLOSING...] MOVETO.FUND - MoveTo Growth Fund

[cytokine]

We are now live @ https://glbse.com/asset/view/MOVETO.FUND

381 shares sold thus far - leaving 619 IPO shares available. Hopefully we can get the full 1K sold soon (I personally have a few hundred or so coins I'm still in the process of transferring over). I am also quite excited since we made our first asset purchases today!

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[friedcat]

Nice. Starting small will make you flexible and agile. Nearly 40% selling at the same day of IPO is also a good sign.

Before the transparent funds are implemented by GLBSE, could you provide us the portfolio information somewhere else? Thanks.

[cytokine]

Before the transparent funds are implemented by GLBSE, could you provide us the portfolio information somewhere else? Thanks.

I am still thinking about how to best do this. There is a tradeoff between giving out trading information to competitors vs being transparent for investor trust.

In the meantime, I think the way to go is with regular auditing by a trusted third party:

(1) Every month I will post the current NAV (i.e. price per share) NAV per share, # bitcoins I have on reserve for buy-backs, and fees paid
(2) I will get Nefario to look at the fund's account to verify that the information is correct, and that I am following what I have promised in the contract.
(3) Nefario will sign the audit with his private key.
(4) I will post his signed audit here on the forum with my monthly report.

I'm in talks now with him to see if he would be willing to do this for me. Naturally he would charge a fee which would come from my own pocket each month.

[friedcat]

Before the transparent funds are implemented by GLBSE, could you provide us the portfolio information somewhere else? Thanks.

I am still thinking about how to best do this. There is a tradeoff between giving out trading information to competitors vs being transparent for investor trust.

In the meantime, I think the way to go is with regular auditing by a trusted third party:

(1) Every month I will post the current NAV ( i.e. price per share ), # bitcoins I have on reserve for buy-backs, and fees paid
(2) I will get Nefario to look at the fund's account to verify that the information is correct, and that I am following what I have promised in the contract.
(3) Nefario will sign the audit with his private key.
(4) I will post his signed audit here on the forum with my monthly report.

I'm in talks now with him to see if he would be willing to do this for me. Naturally he would charge a fee which would come from my own pocket each month.

Thanks for your reply. I'm very glad to know about this.

But in my opinion, your proposition has some parts of it which are "overdoing" while some are not enough.

"Overdoing" part: Nefario with his private key as an escrow. (But I secretly think that bothering him for this will give him an incentive to give transparent funds a higher priority in GLBSE's todo list. Just joking.)

Not enough: Many hedge funds will give their investors information about their portfolio and positions in addition to just the NAV. You might not want to disclose too much information on the forum, or everyone else may read and emulate your strategy. But you could send information to shareholders. If you think 1 share(1BTC) is a too low threshold for people to know your financials, you could issue something like "MOVETO.FUND.MAJOR", which sells, say, 500 BTC each share, of which equals to 500 "MOVETO.FUND" shares, but the shareholders have the privilege of knowing more information than normal "MOVETO.FUND" shareholders.

Hope some part of the suggestions above will be useful to you. Best regards.

[cytokine]

But in my opinion, your proposition has some parts of it which are "overdoing" while some are not enough.

"Overdoing" part: Nefario with his private key as an escrow. ...

Not enough: Many hedge funds will give their investors information about their portfolio and positions in addition to just the NAV. You might not want to disclose too much information on the forum, or everyone else may read and emulate your strategy. But you could send information to shareholders. ...

Good points on all counts, and I certainly understand. My objection was to publicly announce positions, but privately sending them to all shareholders makes perfect sense.

So how about this?

(1) I post a monthly update here publicly on the forums each month with the NAV per share etc.
(2) I send out financials privately to all shareholders with the monthly report
(3) Ideally have both reports signed by a trusted auditor

#1 and #2 I will immediately commit to. #3 I would absolutely desire to do as well, but it depends on when/if the GLBSE allows a read-only login for fund auditors. I will toss this idea to him since it would mean he wouldn't have to audit anything himself, and he could still make a commission off of auditors (or however he wants to structure this feature business-wise).

Great ideas, thanks! Keep them coming. I have updated the FAQ.
-cyto

[friedcat]

And another thing to consider:

It would be very interesting if you could develop a more conventional strategy as real-world hedge funds do? What in my mind is something like a combination of several or all things above:

1. longs on GLBSE.
2. shorts on GLBSE.
3. longs on BTC vs USD.
4. shorts on BTC vs USD.
5. call/put options of GLBSE assets.
6. other derivatives not re-invented in the Bitcoin world yet.

Because I feel that long-only strategy is more vulnerable to risk than a carefully planned combination-based one. If you could make it fully automatic and rely on a sound investment model, MOVETO.FUND may become the Renaissance Tech of Bitcoin(http://en.wikipedia.org/wiki/Renaissance_Technologies).

[cytokine]

And another thing to consider:

It would be very interesting if you could develop a more conventional strategy as real-world hedge funds do? What in my mind is something like a combination of several or all things above:

1. longs on GLBSE.
2. shorts on GLBSE.
3. longs on BTC vs USD.
4. shorts on BTC vs USD.
5. call/put options of GLBSE assets.
6. other derivatives not re-invented in the Bitcoin world yet.

Because I feel that long-only strategy is more vulnerable to risk than a carefully planned combination-based one. If you could make it fully automatic and rely on a sound investment model, MOVETO.FUND may become the Renaissance Tech of Bitcoin(http://en.wikipedia.org/wiki/Renaissance_Technologies).

Lol with my teenie market cap of 1K BTC! Seriously though, thanks for the motivation.

For now I choose long-only with a market-timing component, since that performs better in my experience than the classical "hedge-up/lever-up" approach. The problem with the long/short strategy is that it makes less money, and yet although it may appear to have less risk, in reality you never know when your spreads are going to come apart (think LTCM).

[friedcat]

Lol with my teenie market cap of 1K BTC! Seriously though, thanks for the motivation.

Your 1K BTC fund might become 1M or 100M USD or even more after 5 years, if BTC really takes off, and you manage to cash out exactly before each time it rallies.

The problem with the long/short strategy is that it makes less money, and yet although it may appear to have less risk, in reality you never know when your spreads are going to come apart ( think LTCM ).

I think a well engineered long-short strategy not just reduces the risk, but also increases the expected return. "makes less money" means it will make less money in the best scenario. However, what we care about most is the expected average return rates, right? So both the "what if a meteor hits earth" condition, and the "if I long AAPL from the start" condition, contribute only a little to the average return rates.

Of course it's just my personal view which I'm not very sure of.

[exahash]

A couple questions for you cytokine...

Who are you and what qualifies you to run this fund?  You have only been registered here for a few weeks, use a tormail email, aren't verified on GLBSE.

Are you selling blocks of shares at a discount?

[cytokine]

I think a well engineered long-short strategy not just reduces the risk, but also increases the expected return. "makes less money" means it will make less money in the best scenario. However, what we care about most is the expected average return rates, right? So both the "what if a meteor hits earth" condition, and the "if I long AAPL from the start" condition, contribute only a little to the average return rates.

Sorry, I should have been more specific, but with everything I say I must be careful not to give up my methodology.

I have tested many long-short models and have found better performance from a long-only model that can switch into a completely different strategy during bear markets, albeit with higher draw-downs than a pure spread trader. So it's a tradeoff between return and draw-downs, just as it is with any approach to the market. But then again, perhaps this simply means I don't have as effective a pure long-short strategy as something you are familiar with.  

[cytokine]

A couple questions for you cytokine...

Who are you and what qualifies you to run this fund?

I have run various different funds in "real life" and have been doing trading and investing for many years.

You have only been registered here for a few weeks, use a tormail email, aren't verified on GLBSE.

Blame the regulators. Everything in the Bitcoin world is a legal grey area, especially if you're doing any sort of money management. That is why I use tormail.

Are you selling blocks of shares at a discount?

I can probably sell you some IPO shares at a discount if you buy a large quantity, but I would have to put in the difference myself s.t. other investors do not lose NAV. Just PM me with how many shares you want and I'll let you know what I can do.

[friedcat]

Sorry, I should have been more specific, but with everything I say I must be careful not to give up my methodology.

I have tested many long-short models and have found better performance from a long-only model that can switch into a completely different strategy during bear markets, albeit with higher draw-downs than a pure spread trader. So it's a tradeoff between return and draw-downs, just as it is with any approach to the market. But then again, perhaps this simply means I don't have as effective a pure long-short strategy as something you are familiar with.  

Well don't take my words too seriously. It is just very exciting to see MOVETO.FUND appearing, since it's practically the first hedge fund in Bitcoin, and I can't help throwing out random ideas.

In fact our fund MU is also a long-only fund which profits mainly from buy-IPO-then-sell and market-making. Because of this, I'm very glad to see other funds thrive. Although they may bring some competition, the bullish impact of them to the GLBSE market is sweet.

[cytokine]

... I'm very glad to see other funds thrive. Although they may bring some competition, the bullish impact of them to the GLBSE market is sweet.

I agree. The GLBSE is growing so rapidly that I'm sure it will accommodate a large diversity of funds and strategies. There are always more companies springing up, which means more opportunities for everyone.

[cytokine]

A few updates:

• Made a small improvement to the backend analysis code today
• The model issued a fresh buy signal today on a very liquid asset, so we're ramping up our purchasing in this area
• 251 222 IPO shares left - now is a great time to get in!

Take care,
-cyto

[cytokine]

Updates:

• Completed work on one of my slightly higher-frequency indicators, which will help us to time purchases after a buy signal is received
• Received several sell signals today, luckily nothing we own
• Optimized some strategy parameters to reduce portfolio turnover
• Moving over about 2K BTC into the GLBSE, so I will buy up the remaining IPO shares soon. I will issue an additional 4K shares shortly thereafter, giving us an initial target market cap of 5K BTC.

Take care,
-cyto

[cytokine]

Based on questions I have received, I have updated the FAQ to clarify how fees work. If you don't want to re-read the OP, here is the relevant section:

The 20% fee only applies to the differential between the last high water mark and the new high water mark. This means that I only make money when my investors make money. For example: if we have a losing month, that means I have to make that money back and then some before I can get paid. ( This is also known as a performance fee. ) There is no management fee.

Thanks,
-cyto

[cytokine]

GLBSE Commentary:
The assets on the GLBSE are badly mispriced. The data I'm looking at is kind of bizarre with how mis-priced the market is. Prices for certain bonds are going to have to rise (and therefore yields per btc invested fall), that much I am certain of, which is why I'm focused on those so that we may experience capital gains. But it's possible that even the lower yielding bonds could be worth a lot in the future even at these prices if yields fall sufficiently in the broader market. There is a huge gap, so something is going to have to give. So there is a reason to allow the purchase of *small amounts* of lower-yielding assets: capacity, since other assets are very hard to come by.

One of the few non-mining securities with a decent upside potential I see is the IBB, but it is extremely overbought at present so I just cannot buy it at these inflated prices. I am very bullish on Bitcoin in general and the potential for the overall Bitcoin economy.

[Polvos]

Good analisys. Seems accurate to what's happening, and most important, what will happen. BUT (here goes the ubber question):

- Are you earning money to us, your shareholders?  

[cytokine]

Good analisys. Seems accurate to what's happening, and most important, what will happen. BUT (here goes the ubber question):

- Are you earning money to us, your shareholders?  

I will be updating the NAV per share at the end of the month as well as posting the buy-back price (this is the normal routine that I'm sticking to). In the short-term we're about flat because we had to pay up to get higher-yielding assets, but only by sacrificing about a couple weeks of future gains. So I expect these investments to pay off within the next month. Keep in mind that I have purchased the vast majority of the shares (over 3.5K right now), so my interests are your interests.

[finkleshnorts]

Just what I've been looking for. I'm in for the long haul. looks promising.