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TRADERTALK<br />
Ian, you began advising clients<br />
over 17 years ago and<br />
established Naismith Capital<br />
Strategies in 1996. With this<br />
substantial experience behind<br />
you what have you discovered<br />
about the skill-sets required to<br />
be<strong>com</strong>e a successful money<br />
manager?<br />
Know how to act disciplined when<br />
a trade is not going your way. No<br />
matter if you are trading stocks,<br />
bonds, <strong>com</strong>modities, real estate,<br />
currencies, etc. - begin with a<br />
predisposed plan of action when<br />
the trade is moving against your<br />
desired out<strong>com</strong>e. There are really<br />
effective ways of ac<strong>com</strong>plishing<br />
this discipline – whether it be<br />
hedging techniques, trailing stop<br />
loss orders, selling at predisposed<br />
profit targets, etc. These all are<br />
logical and practical, but the<br />
meaningful part is pushing the<br />
button once a confirmation has<br />
sounded. In addition, when the<br />
markets are too volatile for trading,<br />
simply sit aside and watch.<br />
You formed Sarasota Capital<br />
Strategies with your business<br />
partner Anthony Welch, in 2002.<br />
What prompted you to set up the<br />
<strong>com</strong>pany?<br />
It happened due to a turning point<br />
in philosophy and strategy for both<br />
of us after the roaring 1990’s. In<br />
the 1990’s, Tony and I bought and<br />
sold individual stocks – which was<br />
quite easy, given the market<br />
158 | january 2010 e-FOREX<br />
TraderTalk<br />
With Ian Naismith, co-Principal at Sarasota and co-Manager<br />
of The Currency Strategies Fund (Ticker: FOREX)<br />
conditions. When I mention<br />
“bought,” I do mean we bought on<br />
the dips, and when sells occurred,<br />
it is because a stock was not “going<br />
up fast enough.” When 2000<br />
came and delivered a bear market<br />
for the previous years’ high flyers,<br />
buying on dips did not work.<br />
Thus, in the latter part of 2000,<br />
and especially starting in the early<br />
parts of 2001 and lasting into 2003<br />
– judicious allocations and stop<br />
orders became the norm. During<br />
that period, Tony and I decided to<br />
concentrate on trading indexes<br />
employing technical analysis using<br />
relatively new items called ETFs.<br />
We had known each other well<br />
since 1992, and since we were in<br />
concert with our thoughts, we<br />
decided to <strong>com</strong>bine forces. It is<br />
hard to believe the roaring 1990’s<br />
was more than a decade ago.<br />
What type of investment style<br />
does the firm undertake?<br />
We are an absolute return style<br />
firm that primarily uses technical<br />
analysis with <strong>com</strong>mon sense<br />
overlays. Once in a while,<br />
unusual occurrences happen that<br />
provide opportunities that cannot<br />
be possibly measured by a rigid<br />
technical model. A great example,<br />
recently the Powershares DB US<br />
Dollar Bull ETF (UUP) could not<br />
issue new shares. Within minutes,<br />
demand overtook supply and the<br />
ETF was trading up 2% while the<br />
US Dollar Index was flat. In less<br />
than 2 minutes after this anomaly,<br />
we started selling the majority of<br />
our 21% position of the ETF to<br />
realize a nice gain; that, in a<br />
perfect technical world – could<br />
not have happened. By the end of<br />
the day, we replaced the sold<br />
shares for another fund that was<br />
tracking the US Dollar efficiently<br />
and wrote covered calls on the<br />
small amount of remaining shares<br />
of UUP. On the flipside, fourth<br />
quarter of last year, our firm<br />
simply hedged<br />
through
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