By Mark H. Melin
John Wiley & Sons, Inc., 2010; $39.95; 304 pages
In “High Performance Managed Futures,” Mark Melin offers an experienced trader’s insight and perspective into how managed futures can even out the wild swings in commodities, derivatives and financial instruments in the hands of a talented and experienced commodity trading advisor (CTA). Managed futures, he says, are superior to hedge funds because of their inherent opaque nature and often secretive exploiters. With more than a passing nod to the Bernie Madoff $50 billion Ponzi scheme that bilked thousands of unwary yet complicit investors of their life savings, Melin dissects this “fraud of the decade” and delves into the minutiae that anyone with a real interest in uncovering the difference between hedge funds and managed futures will appreciate.
From the outset I would like to offer a personal disclaimer. I am not, nor have I ever been, a commodities trader. Yet I have reported on and written about commodity futures for nearly 30 years. This book is not for the neophyte trader. Instead it is for the intelligent, qualified investor who desires higher performance and considers acceptable risk an informed concession to appropriate reward.
Parts of this inside baseball book are actually impenetrable to someone who lacks the inside knowledge and experience needed to trade commodity futures and their derivatives. The book even makes the case for saying that managed futures are beyond the scope of the average financial advisor.
As the author says in chapter 4 (Realize It: The Old Way versus High Performance): “The Investment class outlined across these pages has worked well during the good, the bad, and the ugly of economic times; but at the same time has been ignored, neglected and misunderstood. Managed futures is both an interesting and fast-growing opportunity.”
A few positives about the book include its layout, choice of chapters, sidebars, chapter lead-ins (“In this chapter readers discover:..”) and “On the Book’s Web Site” references in bullet point formats.
Melin has written and/or edited three books, including the industry standard textbook “The Chicago Board of Trade’s Handbook of Futures and Options” (McGraw-Hill, 2006). Melin has worked extensively in the futures and options industry as a consultant for the CBOT and OneChicago, the single stock futures exchange, as well as several futures commission merchants and broker dealers. Melin’s interests include educating investors and financial professionals on managed futures, an asset class that he says can no longer be ignored.
“For years investors have been indoctrinated with a tonic that leads them to believe they can enjoy the protection of diversification with stocks and other traditional assets from the economy at large,” Melin says on page 10.
Patrick Kelly is a freelance writer with a background in commodity market reporting.