@sidprabhu It probably makes sense in smallish size if you rebalance systematically? i.e. top him up in a big drawdown, withdraw when he's up a lot (assuming the fund has monthly liquidity)
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P Stats
205 posts
He ended up -40% last year and is -37% this year, so since 2019 about 7% annualized return with immense volatility. Why would anyone invest in this?
Negligible Capital@negligible_cap
*ANDURAND LOST 52% IN APRIL FIRST HALF AS CEASEFIRE HURT OIL BET Pierre Andurand’s hedge fund lost 52% in the first few weeks of April and is now down 37% YTD Yikes. Probably don’t deserve to call it a hedge fund at this point. Clearly not much hedging going on for Pierre
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@Parag_Oilman @DanielSLoeb1 Thanks, I guess you disagree with this view?
fortune.com/2026/03/28/ira…
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@DanielSLoeb1 @DanielSLoeb1 I’m a petroleum engineer and a professional in the industry. This reads as scientific-sounding, but physically inconsistent babble. This is not how water drive reservoirs work.
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This is correct. Iran can’t simply turn off its oil production due to issues of water encroaching its wells. From Claude:
This is a well-known technical challenge in petroleum engineering. If Iran were to deliberately curtail or shut in production across its major fields, water infiltration (also called water influx or water encroachment) would be a serious and potentially irreversible problem. Here’s why:
The Core Mechanics
Most of Iran’s giant fields — Ahvaz, Gachsaran, Marun, Aghajari — are carbonate reservoirs under natural water drive. Aquifers underlying or flanking the reservoir rock are under pressure, and they push water upward into the pore space as oil is produced. When you stop producing oil, you remove the pressure sink that was keeping water at bay. The aquifer doesn’t stop — it keeps pushing.
Specific Technical Problems
1. Water Coning and Cresting
In vertical and horizontal wells respectively, shutting in production removes the drawdown that was managing the water-oil contact. When production resumes, the water-oil interface may have moved upward significantly, meaning wells that were previously clean producers now produce predominantly water.
2. Irreversible Aquifer Encroachment
Carbonate reservoirs like Iran’s have highly heterogeneous permeability — fractures, vugs, and matrix. Water preferentially invades high-permeability channels (fractures) during a shut-in, bypassing oil in the matrix. This oil becomes residually trapped and is extremely difficult to recover later. The damage is often permanent.
3. Wellbore Flooding
In wells that are shut in rather than properly killed, water can migrate up the wellbore itself, particularly in older or poorly-cemented completions. Resuming production from a water-filled wellbore requires costly workover operations and risks formation damage.
4. Pressure Redistribution and Cross-Flow
In multi-zone completions (common in Iran’s stacked carbonate pays), shutting in causes pressure to equilibrate between zones. Water from a water-bearing zone can cross-flow into an oil-bearing zone downhole, contaminating it without any surface signal.
5. Reservoir Pressure Maintenance Complications
Iran has been injecting water into many of its fields (e.g., via the NIOC EOR programs) specifically to maintain pressure and slow natural aquifer encroachment. A sudden shut-in disrupts the carefully managed injection/production balance, potentially causing localized pressure spikes or collapses that further destabilize the water-oil contact geometry.
The Scale Problem
Iran’s fields are among the largest and most complex carbonate systems in the world, some with very active aquifers. The Asmari and Bangestan formations have notoriously high natural water drive energy. Unlike sandstone reservoirs where water movement is relatively slow and predictable, fractured carbonates can see very rapid water breakthrough once the equilibrium is disturbed.
Practical Consequence
A prolonged shut-in — even of a few months — across major Iranian fields could permanently impair ultimate recovery factors, potentially stranding hundreds of millions of barrels of recoverable oil. This is why, even during sanctions regimes, Iran has tried to maintain at least minimum production levels rather than fully shutting fields in. The engineering cost of a cold shut-in followed by restart is enormous, and the reservoir damage may not become fully apparent until years later when water cuts rise to uneconomic levels.
It’s a meaningful deterrent to any strategy that contemplates a clean “off switch” for Iranian production.
Gary Brode@Gary_Brode
The Strait of Hormuz Reverse Uno Card When Raji Khabbaz and I were running Silver Arrow Investment Management, whenever we were trying to figure out why something happened, he was unsatisfied the explanation that people are sometimes stupid and institutions are often stupid. He correctly thought that people usually have a good reason (at least to them) for doing something even if it appears to make little sense to an outsider. More importantly, he thought that “sometimes people are stupid” was a lazy answer that was dismissive. As investors, it was our goal to understand what was happening, not to ignore it. Recently, I’ve written that many of President Trump’s critics are making the same error. When Iran closed the Strait of Hormuz, the narrow waterway that previously transported 20% of the world’s oil supply, the price of oil rose. Gas prices in the US have risen in response. Many screamed that this was an obvious move by the Iranian regime and insisted President Trump should have known it was something they’d do. How could he not know?! In 2002, the US Navy conducted war games they called the Millennium Challenge. One side represented Iran. The other represented the technologically superior US Navy and included an aircraft carrier, warships, and cruisers. The US Navy side had a substantial advantage in firepower. Retired Marine Corps Lieutenant General Paul K. Van Riper used asymmetric warfare tactics to wipe out the US side in one day. Had this been a real fight, the US would have lost 20,000 servicemen. The result was such an embarrassment that the Navy re-floated the sunk ships, changed the rules of engagement to ensure a US victory, and started the challenge again. These games were not a secret. They have been widely covered in the mainstream media and have been the subject of a New York Times documentary. Over the past two decades, I have seen the Millennium Challenge discussed in my daily financial news reading at least a dozen times. The event has its own Wikipedia page. Regardless of your opinion of President Trump, do you really believe that neither he, nor anyone in the White House, nor any of his military advisors, nor Secretary of War, Hegseth knew about this? I realize that many of you reading this have strong negative emotions regarding President Trump. I’m not asking you to like or respect him. I’m just suggesting that “he’s stupid and has no idea what he’s doing” is not good analysis. This is a point I’ve made in this space in the past. Early in the war, Iran closed the Strait which placed economic pressure on the rest of the world. Despite the fact that it was Iran mining the Strait and shooting at the ships that attempted to navigate it, many countries expressed anger at the US and Israel. This was the outcome Iran wanted. Then, the regime decided to allow friendly ships to pass if they paid a fee. The fees were about $1/barrel of oil, or about $2MM per large container vessel. (Many of these fees were paid in Bitcoin, something macro analyst, @peruvian_bull, explained in an excellent post within the past week.) This looked like worst-case scenario for the US. Iran succeeded in closing the Strait and causing economic problems all over the world, then found a way to profit from their own actions. Then, President Trump played his “reverse uno” card. He correctly realized that it wasn’t just the rest of the world that depended on free passage through the Strait of Hormuz, and that it was Iran that had the most exposure. Iran is a big oil producer, and oil exports account for 80% of Iran’s exports, 60% of government revenue, and 25% of its GDP. It turns out that Iran has more economic exposure to this narrow waterway than anyone else. President Trump sent the US Navy to form a blockade. He closed the Strait himself ensuring no more $2MM/vessel charges and an inability for Iran to export oil. Iran is close to filling its own storage. Once its oil tanks are full, the regime has two choices, either capitulate and come to an agreement with the US, or to stop producing from its own wells. The problem with the second choice is that it’s difficult to reverse. Stopping production on an active oil well tends to damage it and it’s hard to re-start later. Iran now has a limited amount of time to find a course of action before 25% of its GDP becomes permanently(ish) impaired. While no one in the US likes paying more for gas, prices were much higher just four years ago in 2022 and around $4/gallon in 2008, 2011, and 2012 when $4 had more purchasing power than it does now. The US is a net energy exporter with an economy that has survived higher prices in the past. Foreign ships are turning away from the Strait of Hormuz and sailing to Texas and other southern US ports to fill up at premium prices. I’m not suggesting that this is great for the US; but rather, that the US is well-suited to manage the situation while Iran is about to be faced with a massive long-term problem. Finally, Iran maintains control of the country using extensive human infrastructure. There are police everywhere monitoring protests, internet usage, the attire of citizens, and the hair of Iranian women. That level of control is expensive and the government just lost 60% of its revenue. I’m wondering how long they’ll keep doing their jobs without paychecks. I don’t know how this conflict will end. What I do know is that President Trump and the US Navy have turned Iran’s biggest strategic strength into a giant weakness. Sometimes people do stupid things. And sometimes, we just aren’t seeing the reasoning behind those actions. Last week, one of DKI’s interns wrote, ”The bottom line is that (financial analysis) can tell you what the market’s pricing in, but it’s your job to figure out why”. Right now, the mullahs are facing a difficult decision. It will be interesting to see what comes next.
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@CliffordAsness Honest question @CliffordAsness, is the intra day correlation on specific (eventful) days really that important when considering the diversifying properties of an asset? Even trend following can be short term correlated with risk assets, but is a fantastic overall diversifier.
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@dampedspring @MacroMosaic Any levered funds that could be substituted for ALLW? That would be the easy way to get the leverage without overpaying for margin.
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@BergMilton Joined your retail newsletter upon receiving notice that it went live. Thank you for offering this service, @BergMilton. I value your insights and analysis.
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Retail averages 1 round trip in 1.25 years its long term. Institutional is more trading oriented and tactical and invests broadly not simply S&P 500 and T Bills
DCam@dcamtrades
@BergMilton Why is there different positioning depending on whether it's retail or institutional clients?
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The dumbest thing about this is that it's trivially easy to simulate the performance of shorting UVXY and investing the cash into treasuries, and it's obviously much worse over the long term than going long SPX.
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@__paleologo "We must admit that our opponents in this argument have a marked advantage over us. They need only a few words to set forth a half-truth; whereas, in order to show that it is a half-truth, we have to resort to long and arid dissertations."
Frédéric Bastiat
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Another instance in the wild of the Bullshit Asymmetry Principle. The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.
We are going to live with the $140k poverty line for the next 10 years.
On the positive side, you can bet against bullshit[ters]. In the long run the market equilibrates.
Clifford Asness@CliffordAsness
Green writes a piece saying 140k is the new poverty line. It’s thoroughly debunked. And a legion of the credulous sycophants who dig the vibe ex post redefine poverty to ennui (the piece never would’ve gotten traction without the 140k poverty thing which we are now told is ancillary to the vibe) and tell the people what they want to hear from populists, and they are populists, that all is just terrible. And it spreads like wildfire. Welcome to populism + social media. But @swinshi @MichaelRStrain @jmhorp @Noahpinion are just tools of the plutocrats and their lifelong expertise in the issues Green dabbles in and mangles doesn’t count, or counts against them, as “reason by lack of authority” now rules. This summed it up well (I have said similar above but this was short and pithy): x.com/modeledbehavio…
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@EconstratPB I mean it must be one of the most sampled songs ever... Here's a clip of a comedian making fun of this 20 years ago:
youtu.be/JdxkVQy7QLM?si…
YouTube
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I was today years old when I realized that Maroon 5 cribbed the melody of “Memories” from a classical piece written 350 years ago by Johann Pachelbel.
Cannon in D minor.
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@BergMilton Well, that was arranged surprisingly quickly, looking forward to it. If there's anything you want to say in the meantime, we're all ears.
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@BergMilton It feels that you want to say more, given your recent tweets? On another Monetary Matters podcast perhaps? @JackFarley96
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This is actually incorrect. TRIN measures relative volume breadth to A/D BREADTH . It represents neither bullish nor bearish information. See our report “ Boundaries of Technical Analysis”
Taigosan@Boqueron66
TRIN, or the Arms Index, is a short-term technical analysis indicator that measures market strength by comparing the ratio of advancing and declining stocks to the ratio of their trading volume. A TRIN value of less than 1 typically signals a strong market or a bullish sentiment, while a value greater than 1 suggests a weak market and bearish sentiment
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@MacrostratPB Are you short already? Was gold via futures or options?
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@DsrPrivate I guess part of the drawdown is that the Smart part of SmartBeta (the largest impact of which has been the reduction in beta exposure) has been correlated to Alpha?
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1/13) I was President Trump’s Asst. Secretary of the Treasury (for sanctions etc.) during his first Admin.
Q: What should happen if Putin refuses an immediate, complete ceasefire?
A: Immediate, crushing sanctions.
@POTUS should tell @USTreasury to take the following 9 steps…
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@DsrPrivate Which are the "currencies of global net savers looking to repatriate capital"? JPY, I guess? Others?
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