How I Lost Money in LJM P&G Fund

February 6, 2018 is a day that I will remember for the rest of my life. I had investments in the LJM Preservation and Growth fund. This mutual fund totaled more than $770 million at its peak. On February 5, the share price dropped a full 55% from $9.67 a share to $4.27. The fund failed to report this loss, so none of the investors were aware. The next day, the fund dropped from $4.27 to $1.94 per share, another 54% drop, and a full 80% decline in just two days. I was devastated. Some analysts believe it to be the most dramatic two-day decline of any mutual fund ever.

Well, how could this have happened? On website, you’ll see some photos of someone hiking up snow-capped mountains. The website has an online brochure with the tagline “make volatility your asset.” It goes on to claim “investors commonly associate market volatility with uncertainty. But volatility can be harnessed to target a return stream uncorrelated with the equity and fixed-income markets.”

As is with actual mountain climbing, the reality of the situation was much more treacherous than advertised. This fund worked by selling naked put options on S&P 500 futures. Its borrowing levels were well about the average margin, and it was leveraged. Put options are essentially a contract that makes it possible for buyers to sell their securities at an agreed upon price. This is going to be the price they’re purchasing at. Buyers can then basically hedge an entire position or a portfolio or funds. In the worst case scenario where the price of the option falls below the strike price, at least the buyer can make some money on the options. When a lender writes put options to buyers, the lender is making a bet that the price will remain higher than the option’s price. When sellers do not own the securities of which it is writing options, this is known as naked option writing. This sort of writing comes with almost unlimited downside risk potential.

S&P 500 option prices are partly dependent upon market volatility. So by investing in LJM Preservation and Growth, my money was in a fund that was betting the market would remain stable. This is known among fund managers as shorting volatility. Unfortunately, the volatility index spiked severely in those days. It more than doubled, going from 17 to 37 on its index. This is what caused LJM P&G to fail. It was a gamble that proved disastrous.

This fund was managed incredibly poorly, to say the least. The fund managers operated with utmost negligence towards the wellbeing of its investors. Luckily, there are LJM Capital Preservation and Growth Fund lawyers that work to recover losses made from this fund. If you lost money by investing in this fund, you may be able to recover all or part of them by contacting the attorneys at Erez Law.

Defending Spousal Maintenance

I have a lot of divorced friends here in Texas on both sides of the alimony system, and so I hear a lot about it. The thing is, those on either side dont usually talk to each other about the issue. So, one set of friends complains about alimony. They feel its unfair, a huge expense, and that their former spouse doesnt deserve it. The other side praises alimony as a lifesaver and will defend the need for it and the justification for it. But again, these sides dont often meet, and when they do, it isnt amicable.

So, Im going to try to introduce a defense of alimony that both sides can hear here on the internet that might help calm the one and make the other a bit more compassionate.

Lets start with the easier road. For those receiving alimony, its important to not just feel but express (should the occasion arise) compassion for the other side of that deal. You may feel entitled to the money and very much need it, but it is still tough on your former spouse that they not only have had their lives as changed as yours but must also continue to pay for someone they are no longer connected to. It can be a rough fact to accept. That doesnt excuse a failure of payment, but it surely isnt fun, and those feelings should be recognized and legitimized.

Now, the bigger issue: alimony itself. The fact is, it can be very difficult to walk away from a bad marriage when the one thing that marriage offers is comfort. Those bad marriages may be full of all kinds of problems, including abuse, and sometimes people will tolerate it just to avoid suffering a significant plunge in comfort. This is particularly true in the case where children are involved.

That philosophical argument is strong, but it usually doesnt persuade my friends paying alimony. We werent abusive, they say. It was as much our former partner as us that ruined the marriage.

Thats a fair counter-argument, but the fact is, alimony is usually involved when the person requiring alimony is simply unable to provide for themselves on a reasonable level. That may be because they have to watch the kids, which limits the hours they can work and the kind of work they can do. It may be that they stopped working for an extended period and cant now return to a reasonable level of their former career without some time. It may be certain physical limitations are involved.

Whatever the reason, alimony is better not just for the former partner but for any children involved.

Since Texas is not as alimony friendly as some other states, its important we come to comfort with the idea and show some compassion on all sides. This is important here since, as Alexander & Associates points out, there are two types of alimony in this state, and the court-ordered version is far more painful, humiliating, and drawn out.

Better to try to come to voluntary, contractual agreements upfront and avoid all the mess of the courtroom. Plus, itll help avoid some grumbling from my friends on all sides.

Our home in Texas

I have been self-employed for several years in appliance repair and home construction. Everything was going great, I liked the work, and was supporting my family just fine. My wife also works some as a teacher, but she really does it to help the kids; it’s not like there is a lot of money in that field. Last year, I was repairing a roof on a home, and I fell and broke a leg and severely injured my back. I have been recovering ever since, but the bills have been piling up and I am behind on my mortgage and other major bills. I’ve also had a lot of medical bills due to the rehabilitation that my physician recommended. The physical therapy is helping but the bills are getting out of control. When you are in any repair or construction business, it is not possible to do the work if you have a traumatic back injury that hasn’t healed fully yet. Although my wife and teenage children are helpful around the house with chores and some repairs, I haven’t been able to work in my own repair business for 18 months. I was thinking about filing for bankruptcy, but I don’t want it to affect my family in any negative way. I heard that as a sole proprietor or independent contractor that I can file for bankruptcy. Although, I’d have to verify my income and answer a lot of questions while producing my financial and legal documents. Well, I don’t have a problem with that. For the past year, I have been mostly sedentary, due to my injury, and I’ve had a lot of time to go through my paperwork, income, and bills.  I have my income tax information and all previous earnings. I also heard that I don’t have to be employed right now to file for bankruptcy. I don’t want to file, as I feel like I would be failing my family in some way. However, I discussed it with my wife and kids, and they are fine with it and seem to be supportive, due to my extended injury.

My family and I just need a fresh start after my unfortunate accident. My wife has been working but we are still in a lot of debt. I’ve got numerous creditors contacting me and it is stressing out my whole family. However, in my situation, bankruptcy seems the right and most responsible thing to do right now. I don’t want to lose our home and other important property, as we have a small farm with some animals and the kids love to play outdoors and hang out with their friends.

I may need to consult with a bankruptcy attorney because I want to be sure that I can keep my business going after I recover from my extended injury. Also, I want to be sure that the home and farm are protected so that we can continue to live here until I recover fully and I am working again.

If you Own or Operate a Boat, Then This is Something You Need to Know

With all the water surrounding a vessel, it would easily appear that boating is the least risky recreational activity – unless you fall overboard and do not know how to swim. The fact, however, is, a boating accident is just like any other motor vehicle accident; if person behind a boat’s wheel does not follow proper safety procedures, or operates his/her vessel while intoxicated, then he/she and all other boat passengers may likely find themselves in a bad situation.

The U.S. Coast Guard makes a yearly statistical record of all reported boating accidents in the US. For the year 2012, 651 fatalities and 3,000 injuries were recorded under recreational boating. Though this number is the lowest since 2004, this can still be considered to be pretty high considering the fact that boating accidents can be avoided.

Records from the U.S. Coast Guard also reveal that the top causes of boating accidents are excessive speed, machinery failure, improper lookout, operator’s lack of experience, man overboard and capsizing; in all these accidents, fault is attributed either to drunk operators or drunk passengers.

The following are facts about each of the top causes of boating accidents:

  • Excessive speed: if speeding on the road is like challenging the angel of death to snatch the life out of you through a tragic accident, operating a boat at excessive speed is no different. The force of impact created each time a speeding boat bounces off and back on the water can be strong enough to stun you and throw you or your passenger/s overboard, leaving you or anyone else with not enough strength to swim to safety. Boat owners and operators ought to know that drowning is the number one cause of death in the water and 80% of those who drowned were reported as not wearing a life jacket.
  • Machinery failure: if regularly maintained machines are still prone to malfunction, what can one expect with those that are not regularly checked and kept in good condition? Boats are definitely much more expensive than cars, thus, making sure that these are well maintained is not only less costly, but may also reduce chances of an accident (provided, of course, that the operator never does any irresponsible thing).
  • Improper lookout or improper forward watch: when operating a boat, steering clear out of danger can be more effectively done with the help of someone who can provide extra eyes and ears. Many accidents due to collision could have been avoided had an operator been given help in navigating his/her boat safely – to avoid anything that may cross its path or to navigate safely through shallow and rocky waters.
  • Inexperience: the less knowledgeable an operator is about his/her boat and the sea, the greater the risk of an accident, especially during emergency situations. While some states never require boat operators to undergo formal training, having the initiative to do so will definitely be beneficial; this includes paying lower insurance premiums.
  • Man overboard: abrupt maneuvering, freak waves, and rough weather can toss a passenger overboard, especially one who is not securely seated, intoxicated or just caught off-guard. The shift in momentum created by a powerboat, as it makes a turn, can also have the same effect.
  • Capsizing: this leading cause of fatality in boating accidents usually occurs during nightfall, when both darkness and intoxication begin to cause an operator to make poor judgment, especially when maneuvering, docking or anchoring. It is always safer to secure an anchor from the bow (front), rather than from the stern (the rear of the boat), or from the sides.

Taking a formal boating safety training course, wearing a life jacket, conducting a vessel safety check regularly, not drinking while out in the seas, not overspeeding and having a proper forward watch are just a number of the safety tips that the Coast Guard asks boaters to observe.

In its website, the law firm Truslow & Truslow says, “Many people who are on the water enjoy the view of the beautiful beaches with a drink in hand. However, when a boater is believed to have become too intoxicated to properly operate a boat, they can face serious criminal charges. In South Carolina, for instance, where those who engage in boating under the influence of drugs or alcohol (BUI) has increased so much that approximately 34% of boating fatalities per year are caused by BUI’s, simply operating a boat gives implied consent for a law enforcement officer to perform an alcohol test. Failing such a test can lead to fines of up to $6,000 and imprisonment for up to three years. It is possible to protect yourself from the harsh penalties that can be incurred for boating while intoxicated (BWI) charges with the help of an experienced Columbia boating while intoxicated attorney.”

Road Hazards to Look Out For

You are the not the only person on the road. Even though you are driving safely, you may still be involved in traffic accidents because of external factors, such as the recklessness of other drivers and the negligence of manufacturers that made your car malfunction.

But the list of external factors doesn’t end there. In fact, there are a lot more that you should be conscious of. These factors put not just you in danger, but also the others around you.

To be fair, there are road signs that tell you that animals tend to cross the road. You drive diligently, so you can react when animals do cross the road. But what do you exactly? The best thing to do is to just drive forward, because abruptly changing lanes for the sake of a deer may cause more devastating consequences. But if the animal is too large, like a moose for example, you can make the effort to hit on the brakes instead.

Construction Zones
Do not underestimate construction zones and drive carefully and slowly. Take the extra effort of following all the merge signs and flaggers. Also, remember that there may be construction workers and construction equipment in the area that you can hit. To reduce the potential of collisions, you can turn on your headlights. Workers will see you better and you can spot and avoid their equipment with ease.

Debris on the road
Debris may come in many forms, such as car parts from traffic accidents, spilled substances because of rolled over trucks, and trees that have fallen because of winds. Big debris may be visible from afar and you may notice a slowing of traffic flow. Slow down, pass through the debris, and speed again.

Road defects
Defects on the road such as potholes can also cause accidents. When you see a pothole, slow down, grip your steering wheel firmly, and go through it. Only go around it if it is possible and safe. Another common road defect is malfunctioning street lights, and other motorists will have the tendency to exploit it by not giving right of way so they can have an advantage. Your safety is more important than a few seconds of wasted time. Make sure that the other vehicles are stopped before going through that defective light.