Bill Burt
Bill Burt, 66
Occupation
Commodities futures broker (retired)
The portfolio
Long futures positions on palladium, gold and the spread in German bonds over French bonds; short futures position on Japanese bonds; call options on sugar; a gold exchange-traded fund.
The investor
Bill Burt first tried his hand at trading commodity futures when he was 27. "I went long silver futures and lost a lot, fast," he remarks. But the loss didn't faze him: Intrigued by the leverage, he left his job as a stockbroker to become a futures broker.
How he invests
"I look for futures ideas that might produce a big move, and then I try to be patient and give the trade some room," Mr. Burt says. "My time horizon is weeks or months, not days.
"I look at a market as an amateur economist trying to predict the future," he adds. Of particular interest is how prices are affecting the market. For example, a low price curtails supply and boosts demand, providing the basis for a price recovery (vice versa when prices are high).
Mr. Burt is long palladium because supply shortages should boost prices.
"Russian stockpiles are depleted and there are production troubles in South Africa."
He is bullish on gold because it is "the only real money." Plus, the recent slide in price has wrung out speculative excesses.
As for his play on the spread in German bonds over French bonds, he expects ongoing "sovereign debt anxieties in Europe will push up French bond yields compared with Germany."
The short sale on Japanese government bonds (JGBs) is a bet that their yields have nowhere to go but up. "A rate of 0.68 per cent on 10-year JGBs is absurdly low."
Call options on sugar were bought because prices are way down, reining in supply and lifting demand. As well, "speculators are very short the market."
Best move
"Catching a move in crude oil futures from $85 [U.S.] to $137 in 2008."
Worst move
"Being short JGBs." But Mr. Burt remains confident his "ship will sail in soon."
Advice
"In futures, don't get wiped out. Each idea is unlikely to be your best. Size your positions cautiously. It is a zero-sum game and the other players aren't stupid, so don't risk too much on futures trading until you've learned the game."
Special to The Globe and Mail.
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