Monday, July 5, 2010

Purpose of this blog

This blog is being created to provide a place for clients and friends to gain insights into the way we think about the world. Much of what we do is complex but we hope to simplify it for those willing to follow along.

The concept for creating Dorr Asset Management was born in 2001 when Brian and I first moved to Miami and we were fine tuning our strategies for trading commodities and FX. This was in May 2001 and before the world changed on September 11. We were young aspiring traders fueled with inspiration from reading Jack Schwager's Market Wizards (still one of my favorite books).

One of our first trading accounts was $10,000 and funded by me, Brian, and a good friend. I remember making $600 in an hour trading the Japanese Yen from a payphone back then and thinking I was going to be the next Soros. Oh how much we had to learn!  It didn't take long to realize that unless we had some real starting capital our dreams of making a living as traders working for ourselves was going to take a long time.

We subsequently took a financial detour into the life insurance industry working as life settlement brokers. We must have had trading in our DNA because 2 years after working for a broker in the life settlement industry we left and started a trading platform for the industry called Life-Exchange.

To skip forward several years in 2007 Bear Stearns was a client of ours. All our energy was focused on building volume for our trading platform and when Bear's hedge funds blew chunks we knew that our industry was going to feel the strain. I'm not claiming that we fully saw the crisis coming, we did not. We did recognize the warning signs though almost immediately. We were applying credit cycle analysis that we had used since first trading as kids to analyze market trends for insurance assets. As a side note Life-Exchange used to publish the most comprehensive set of data on the life settlement industry comparing it to other asset classes. The popular meme regarding life settlements, that we constantly fought to dispel, was that life settlements were a non-corollary asset class. We were proven right of course but it was bitter sweet since 99% of our personal net worth was tied up in Life-Exchange which was at the time a public company.

We knew it was going to get ugly and it was like watching a train wreck in slow motion. I'm sure several of you can relate.

With the 1% we had that wasn't locked up in Life-Exchange we bought gold. It was an excellent trade for us but just like the early success we had trading a $10,000 account it wasn't even remotely enough to make any financial difference in our lives. While we did build Life-Exchange up post crisis our heart was no longer in the market because we believed that the financial fundamentals were going to be changed for at least a decade. I wrote an article to this effect just last month published here.

After some soul searching we realized we wanted to return to doing what we loved most which is figuring out the way the world works from the top down and expressing it through creative trades. Some guys are great stock pickers others excelled fixed income traders. Brian and I are and have always been global macro guys.

We launched Dorr Asset Management in February of this year to focus 100% of our energy and efforts into navigating what we believe is going to be a very different world over the next 20 years.

Many people already believe the crisis has passed, we hope to prove through this blog and more importantly through our investment performance that there is much more market dislocation to come. Thanks for joining us on this journey!

Dave & Brian

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