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Futures trader bets against extremes in sentiment

Terry Gervais, 65


Business owner

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Several positions in the futures market, including a short on Japanese bonds and a long position on natural gas and long position on the spread in German bonds over French bonds.

The investor

Terry Gervais is currently self-employed in a party and tent-rental company. Previously, he spent more than three decades as the owner of a successful catering company. At this time of the year, he can be found getting ready to make maple syrup on his hobby farm, located in the sugar bush near Belleville, Ont.

How he invests

Mr. Gervais has traded stocks since he was a teenager. "My first large win put me through first-year university," he reports. It was in the shares of Mississauga-based Steadman Industries, a maker of a patented "universal retainer to hold cargo containers on trucks, trains, and boats." Steadman was later sold to a Swiss investor group.

He is now more of a futures trader, playing commodity trends in his own account and a managed account with Toronto-based Blackheath Fund Management Inc. that has registered a 13-per-cent average annual gain since 2003 – by trading against extremes in sentiment.

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Mr. Gervais has found during his four decades of investing that "the best investments … have been to go short a commodity that seems to have risen to an unsupportable height."

His first big score came in 1976. "I felt that coffee was trading too high at $3 a pound. Over the next month, I was able to make $100,000 playing coffee from the short side, as it fell." Other big wins included shorting oil in the 1980s and shorting the Mexican peso in the 1990s.

It can be a real gamble. "One needs nerves of steel – or stubbornness," he declares. He says he has plenty of the latter – at least according to his wife.

The stress can sometimes be too much. After his coffee trade, he lost all the gains on other commodities. "I must take breaks, where I will walk away for a half year or so."

Best move

Shorting the Nikkei stock index (in Japan) when it was above 30,000 in the early 1990s.

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Worse move

Right now – his short on now-rallying Japanese government bonds, which are now rallying.


"My advice is to deal with an adviser to start."

Special to The Globe and Mail.

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