Andrew Hall / 2008 / Commodity Long
A shortage years in the making.
Andrew Hall and the slow adjustment of physical supply.
Before the outcome was obvious.
The oil case in the workbook is built on a tension between growing demand and constrained supply. Unlike a financial position, a new source of production cannot be opened with a keystroke. That lag can allow an imbalance to persist. The model represents a multiyear commodity view with futures, ending in the 2008 oil spike. Its clean endpoint should not be mistaken for a smooth journey or a complete account of Hall’s book.
What could have gone wrong
Demand destruction, new supply, futures roll costs and leverage can overturn or erode a commodity thesis.
Understand the physical clock. Supply responses and financial holding periods rarely move at the same speed.
Put the thesis to the test.
Change the assumptions and watch the arithmetic update. These are simplified scenarios; they do not recreate the instrument’s pricing or the path of the trade.
How this model works
Profit ratio = profit ÷ stated position. Exposure ratio = stated position ÷ fund assets. Neither is a measure of maximum loss or a net investor return.
The workbook’s simple annualisation is profit ratio × 365 ÷ duration = 6.7%. It is linear, not compounded, and is not a repeatable annual return. Fees, financing, collateral, premium carry and changing exposures are not modelled.
What these figures mean.
Source: Legendary Trades Models, Master Comparison!A10:L10; Trade P&L Models, case 7. The following are original workbook inputs, preserved for transparency. They are estimates, not independently audited results.
- Workbook position
- $3bn
- Workbook “gross profit”
- $1bn
- Workbook duration
- 1,825 days
- Workbook fund assets
- $2bn
- Workbook fund return
- 100%
- Workbook position ROI
- 33.3%
The fund-return field is a separate source claim, not a calculated result of this trade. Its reporting period and gross/net basis are not independently established here. Model ratios are recalculated from inputs rather than copied from rounded source ROI values.