In 1965 Deane Jones began trading commodities.
Never one to follow the crowd, he generated his own trading ideas from scratch, painstakingly charting all the commodities markets by hand and studying them for patterns and trends. After years of research he had some pretty good systems and was getting pretty good results with the trading he was doing for himself and a few other friends. Much later on he would be written up in the Wall Street Journal1 as having the best published track record of any commodity trading advisor.
He founded Jones Commodities in 1984 and launched the High Sierra Futures Fund to make it easier for friends and family to invest their money alongside his. It might be easy to overlook the true significance of this action, but it’s the single most important pillar in our firm’s culture, the conceptual reservoir from which all decisions flow.
We design trading systems and build funds for ourselves to invest in.
This approach runs completely counter to nearly all of the financial industry, and with good reason. Most financial firms exist to make money as a business. The way for a financial firm to make a lot of money as a business is to have a lot of money under management. The way to get a lot of money under management is to market your firm and your products to every investor in the world. The result is a large firm with a variety of mediocre products that the managers and principals have little or no personal stake in.
Don’t get us wrong, there is definitely a place for this. Every investor is different. Each investor needs special attention and a customized portfolio that suits his own level of risk tolerance and appetite for returns. This is the role of the financial advisor. Most financial advisors range from being moderately helpful to flat-out dangerous. But some can be real assets to their clients and are worth the fees that they charge.
We are not financial advisors.
Yes, we do dispense a lot of financial advice. And yes, we’re qualified to do so, each of us holding FINRA Series 65 licenses among other industry designations. We’re also registered with the SEC as a Registered Investment Advisor (RIA).
But financial advice is not our business. And because it’s not our business, we get to avoid the baggage associated with it. We can speak honestly and challenge conventions. We don’t have to peddle bits of traditional financial “wisdom” or take a watered down, mainstream perspective with our advice, worried we may scare people out of our products with what we have to say. We’re free to think and speak radically.
Our business is investing, to make money off our personal investments. Over the years we have found some kindred spirits who share our passion for alternative strategies, who appreciate investments that are strategically sound, diversified, and exhibit less risk per unit of profit. And these individuals have invested their money alongside ours. We’re proud of our 25-year performance track record, one of the highest in its category in both absolute returns and risk-adjusted returns2. But we’re prouder still that we’ve treated all of our investors over the years with honesty and respect, always holding their interests above our own.
Much of our current trading and investing is based on the foundation that Deane built. It’s been refined over the years, of course, thanks to the rapid developments in technology. Michael Abbott, our current Director of Research & Trading, managed his own software development company before being recruited to program computerized trading systems. That was nearly two decades ago, long before systematic trading would become widely popular.
Deane’s son Jeffrey joined the firm in 2003, after spending seven years in Los Angeles working as a commodities broker, an auditor and risk analyst with Ford Motor Company, and studying economics and computer programming at UCLA.
Kyle Ferguson & Trini Guillen, each homegrown from UNR’s business department, oversee trading and operations. Trini joined the firm in 1993 and has served in essentially every capacity since then, developing an intimate familiarity with how the business and industry works. Kyle signed on with the firm in 2002 after graduation to lead and develop our investor relations. If you live in Northern Nevada and are active in the local business community, you probably know these guys and their families.
This website is an interesting step for us. The bad news about alternative investments is that they aren’t available to most people, subject to rather strict investor net worth requirements. There are plenty of myths about the hedge fund industry, but it’s true that these funds are generally available only to the wealthy. And it’s a shame, because while a few rotten eggs have given the entire industry a bad name, there are a plethora of funds out there that are superior investments to a traditional portfolio of stocks and bonds and real estate, exhibiting less risk and giving investors a greater rate of return over the long run. In our opinion the average investor could really benefit from that.
We hope that this website and newsletter helps make some of that knowledge accessible to the average investor. Alternative strategies are our history and our area of expertise, and if we can help even one of you think about investing in a slightly different way, lowering your risk and increasing your return, we will consider it a fantastic success.
