He likens his Marketfield portfolio to a hedge fund for smaller investors, minus the illiquidity, high fees and opaque operations. The fund has a $25,000 investment minimum, though advisors can allocate smaller amounts for individual accounts. Expenses are capped at 1.75%.

His first priority is to help investors preserve capital, using a wide range of investments, rather than beat a particular index or benchmark in a particular style category. Besides shorting equities and investing in commodities futures, the fund's broad charter also allows him to use fixed-income securities and options. "Some people categorize the fund as absolute return, others call it long-short," he says. "My view is that the fund is designed to shepherd assets in any kind of market environment."

Recovery Plays
With the economy in recovery mode, Aronstein is steering the fund toward cyclical stocks in the consumer discretionary and industrial materials sectors, which tend to rebound sharply in economic upturns. He holds an exchange-traded fund in the retail sector, for example, as well as individual stocks for MasterCard, Sears, Family Dollar Stores and Ford. The fund also has sizable positions in manufacturing and transportation as well as in information technology, which has less inherent risk, Aronstein believes, and is benefiting from the increased global dependence on IT products.

On the other hand, he is wary of health care stocks. Although some investors see these equities as a safe haven, the recent proposals for health care reform have made investing in them "a matter of political guesswork," says Aronstein, and evaluating the industry according to more general macroeconomic forces has become all but impossible. Instead of the health care reform ideas being pushed around in Washington, Aronstein thinks a better solution would be to introduce more competition among insurance providers and for employers to treat health insurance as a taxable benefit.

Because of his positive economic outlook, the fund is now using short positions in less than 10% of its assets, down from last year when, during his more bearish posture, he held short positions in anywhere from 20% of the portfolio to its 30% short maximum. Most of those shorts were in the battered real estate and financial services sectors. Now, most of his short positions are in financials and, to a lesser extent, emerging markets.

His positions have declined on the long side as well since the beginning of the year, but for different reasons. The fund now has about 65% of assets in long positions, down from 70% to 74% from February until April. "This past spring looked like a once-in-a-lifetime give-up," he says. "That's as about as aggressive on the long side as I would ever be."

The rest of the fund is in commodity futures contracts tied to industrial metals as well as in gold, cotton, rice, wheat and other commodities.

Looking For The Inflection Point
Aronstein's current bullishness on the economy and the stock market is tempered by his concerns about how the actions of the federal government and regulators will affect the economy over the long term.

"We are navigating between two macroeconomic currents," he wrote in a recent letter to shareholders. "On the one hand, we see restorative forces of capital markets and monetary liquidity setting the stage for a surprisingly vigorous recovery in overall economic activity." But these beneficial forces could be thwarted, he says, by reckless spending and several new regulations and tax initiatives that can do long-term harm to economic functions in the U.S.

He believes that the Federal Reserve's emergency measures to address the credit crisis were necessary and have worked fairly well.