Economic environments


The statements made are the opinions of its author or the source cited, and are not to be relied upon by anyone as the basis for an investment decision. Any investments made in whole or in part by a party in reliance thereon are made at such party’s sole risk. No guarantee of any kind is implied or possible where opinions as to past or future market conditions/events is provided. There can be no assurance that trend-following methodologies will achieve their objectives or that losses will be avoided. Trend-following products could decline in a wide range of different market scenarios. “Trading ranges” and “whipsaw” experienced by many markets since 2009 (with notable exceptions), along with abrupt changes prompted by government intervention and highly correlated markets, have been adverse to many trend-following products. There can be no assurances as to when such market conditions will change. Past performance is not necessarily indicative of future results. See “Certain Risk Factors and Disclosures”.


This communication is published by EAM Partners L.P. (“EAM”). Copyright © 2014. The content in this communication is the property of EAM and is protected by copyright and other intellectual property laws. This communication is for information purposes only, and should not be construed as investment, legal or tax advice. Neither this communication nor any information contained herein constitutes an offer to sell (nor the solicitation of an offer to buy) any security. Any such offer may only be made by a prospectus or similar disclosure document prepared by the issuer of each such security, which contains important disclosures and risk factors. Investors in a product based on a Product shall solely rely upon such disclosure document in making an investment decision.

Certain Risk Factors. Investors cannot invest directly in trend following methodologies or indexes (“Product”). A Product is structured based on, among other things, the general expectation that prices will exhibit tendencies to trend over the intermediate or long term (as applicable). An investment in a investment product or vehicle seeking to replicate a Product is speculative, involves a substantial degree of risk, and should not constitute an investor’s entire portfolio. Moreover, performance of a Product may be volatile and investors could lose all or substantially all of their investment. Some or all alternative investment programs may not be suitable for certain investors. No assurances can be made that the trend following methodologies will achieve their investment objectives or that losses will be avoided. The longer-term an investment the greater the likelihood that the performance potential suggested may be realized. Over the short-term, on the other hand, there is a much greater possibility that a Product may decline substantially causing significant losses. Among the risks associated with trend following methodologies are the following: In contrast to traditional “all long” methodologies or indexes, a Product does not always maintain long positions and may not profit from the cyclical nature of its components. • A Product is not a proxy for “all long” indexes or methodologies. • A Product is vulnerable to “whipsaw” markets in which market movements may cause the bulk of its components to be positioned in a certain direction (e.g. long, short or no exposure, as the case may be) and then a sudden reversal of prior price trends occurs, causing losses. • The complexity of the different factors which contribute to the results of a Product. • A Product could decline in a wide range of different market scenarios, including ones in which other similar products (both all long and long/short) rise substantially. • Replication of a Product involves execution costs and position slippage which can be substantial, and may be affected by, among other things, disruption caused by market closures and/or trading price or volume limitations imposed by one or more markets. • A Product is subject to the risks of, among other things, “trading ranges” (in which there is a lack of sustained, directional price movements in many markets) and “whipsaw” markets (described above). In general, such market conditions are more likely to occur during economic environments of low-growth or static GDP despite very low interest rates, accompanied by low inflation (e.g. economic environments similar to that experienced by Japan since 1989). The “trading ranges” and “whipsaw” experienced by many U.S. markets since 2009 (with notable exceptions), along with abrupt changes prompted by government intervention and highly correlated markets, have been adverse to many Products. The length of time for which such market conditions have persisted is unique in the United States in the last 50 years. There can be no assurances as to such current market conditions will change.

General. EAM makes no express or implied representation or warranties as to (a) the advisability of purchasing or assuming any risk in connection with any transaction related to a Product; (b) the results to be obtained by the issuer of any security or any counterparty or any such issuer’s security holders or customers or any such counterparty’s customers or counterparties or any other person or entity from the use of a Product or any data included in this communication; or (c) any other matter. Without limiting the foregoing, in no event shall EAM have any liability (whether in negligence or otherwise) to any person for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Not a Sponsor of Third-Party Products. EAM does not sponsor, endorse, sell, or promote any investment fund or other vehicle that is offered by third parties and that seeks to provide an investment return based on the returns of a Product. A decision to invest in any such investment fund or other vehicle should not be made in reliance on any of the statements set forth in this document. Prospective investors are advised to make an investment in any such fund or vehicle only after carefully considering the risks associated with investing in such fund or vehicle, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or vehicle. EAM Partners L.P. itself does not provide portfolio management services. In particular, EAM Partners L.P. itself does not direct client accounts or provide commodity trading advice based on or tailored to the commodity interests or cash markets or other circumstances of a particular client.