The Make Us Rich hedge fund, a bogus investment conjured up by columnist John Crudele and Wall Street veteran Bill King, has made two winning bets on the market.
The fund began trading last Friday with an imaginary $1 billion in assets, $300 million of which was invested right then in bonds, the day before the monthly employment report.
That investment was cashed out yesterday morning for a $3.2 million profit.
Next, $1.8 million was used to purchase 1,000 “put” contracts on the Standard & Poor’s 500 index. The “put” options, which appreciate in value as the price of the index falls, represented a bet that the stock market would not cheer if the Federal Reserve didn’t raise interest rates.
The Fed left rates right where they were, and stock prices fell.
Each of those “put” contracts rose $400 in value for a total gain of $400,000, but we didn’t sell them because we believe stock prices will go even lower and our contracts will rise more.
Here’s the boxscore:
* Yesterday, sold $300 million of 30-year U.S. government bonds: Gain/Loss: +$3.2 million.
* Yesterday, bought 1,000 S&P 500 put contracts (betting on falling stock prices.)
Gain/Loss: +$400,000.
Current Position: Holding 1,000 S&P 500 puts.