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David Einhorn: "We Have Avoided The Volatility Of The Schizophrenic Market"
From Greenlight's Q2 Letter, courtesy of Dealbreaker.
"The S&P500 fell about 7% by early February. Then, it went straight up, rising about 16% by late April only to give back all those gains and a bit more by the end of June. Just after the economy finally appeared to be recovering earlier this year, a series of weak economic data have put the recovery into question. What will happen next? We have no idea. We have maintained a conservative and defensive portfolio, with a small net long position throughout and have almost entirely avoided the volatility of the schizophrenic market...We made some gains on our macro positions (most notably gold, which appreciated from $1,113 to $1,244 per ounce during the quarter)." - David Einhorn
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Must be good to have ol' Herb Greenberg back.
You're going to need him.
As you get your "game face" on for Monday, be sure to listen to this. About 10 minutes.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/7/17_J...
I do think that hyperinflation is a possibility. However, I remember John Williams saying it (Weimar-like inflation) would happen in 2007. He said it was guaranteed to happen in 2008, and repeated the tale in 2009.
anyway, check out this funny stuff
http://www.youtube.com/watch?v=4k4xPUZRdC0
He was right. Inflation is the increase in the money supply, not prices. We more than doubled the money supply in one year. You are confusing inflation and price inflation.
http://www.shadowstats.com/alternate_data/money-supply-charts
http://www.shadowstats.com/article/hyperinflation-2010
You can read what Mr. Williams has said yourself, without having to rely on some random blogger. I don't think Mr. Williams has predicted hyperinflation for 2007, 2008, or 2009. I heart shadowstats.
The scale on the y-axis is a bit strange. Is that an annualized percentage, or a monthly percentage? If annualized, it's not really a big deal, giving us about a 25% increase since the start of the crisis. If monthly, it means that M1 increase ~7 fold in a year, and is still rising rapidly, though not at the disastrous levels seen last year.
These charts may be better. I'm no expert, but I am pretty sure that M3 needs to u-turn and head north for hyperinflation to occur. For now, it is going in the wrong direction.
http://www.shadowstats.com/charts/monetary-base-money-supply
What you actually need is the "True Money Supply'
http://mises.org/content/nofed/chart.aspx
This is what skyrockets when you have hyperinflation, and really its NOT hyperinflations, is a "Currency Crisis". Hyperinflation != High Inflation.
"When ye'r borrowin' jes' tuh pay duh int'res', ye'r FUCKED!"
We have a long way to go before hyperinflation of the USD. Need collapse of tax revneues. geometrically rising debt service, and the "no other option to avoid default" need to print to monetize/pay the US debt, plus you need that to be "known" as opposed to the current covert operations that are partially funding the US Treasury auctions via purchases through UK, etc. Right now, doctor says deflation. Once rampant printing is known, currency fails.
The weekend interviews on King World News are just great. Upcoming interview is Eric Sprott no later than Monday.
What is alpha in regards to portfolios?
Generally, returns generated through skill-driven stock picking are referred to as "alpha". Passive market exposure (AKA volatility) is known as "beta". :-)
what does he knows others do not understand?
may be that gold will go up no matter what?
is it really this difficult to get?
i dont really get it....if there is anything that is sure this is it!
It is always a pleasure to hear from Einhorn.
Are Cramer touts similar to DE positions ???
When I first read the title I thought that perhaps Bi-polar might be a better choice. Then I read this:
Schizophrenia (pronounced /?sk?ts??fr?ni?/ or /?sk?ts??fri?ni?/) is a serious mental illness characterized by a disintegration of the process of thinking, of contact with reality, and of emotional responsiveness.[1] It most commonly manifests as auditory hallucinations, paranoid or bizarre delusions, or disorganized speech and thinking with significant social or occupational dysfunction.
Spot on!
Cheers,
Spot on!
Oh my God -- I'm seeing spots -- is that one of the symptoms, too?
Oh, never mind, I was just looking at some .999 Russian gold...
A -19% year this year erases all of 2009's gains.
Jim Rickards was on CNBC this past week talking about China with Wilbur Ross and Mark Olson (Fmr. Fed Board Gov.). I missed it but here is the link:
http://www.msnbc.msn.com/id/21134540/vp/38240747#38240747
Wilbur Ross is a hoot. He was on cnbc when housing crash began...He was buying up 'distressed' housing and saying that housing was in a 'correction' and would soon begin it's upward momentum. I was LMAO.
I wonder how much Wilbur has lost on CRE and residential...
I believe he pointed out in this report that the RE has not been marked to it's true value by the banks so perhaps he was wrong but may also be honest.
:=))) Too funny how David "Ein"-horn is selling his incapability to capture alpha of market swings to his investors. I call this successful "marketing". It´s his damn job to participate in this "schicophrenic market". If he is not able to capture the essence of the market as a "hedge fund manager", who will - a mutual fund manager ??? LOL !!
There is a lot of whining that this market can't be traded.
well...dahhh...finally people awake up or run out of others people money to lose?
you can trade at your own peril - the safest bet: buy gold or good gold mining stocks and sit on....let them trade...eventually, they will come back.
i just dont get it....it is as clear as it can be the easiest trade of the century...got to be really blind not to see it....
This whining usually comes from people who are either amateur traders that just started out or from people who do not trade for a living and are worried about their 401k. Nobody who does this for 10 years would complain about an "untradeable market". This market is not more untradable than it was in 1994 or 2002.
What will happen next? We have no idea...
refreshing
We have maintained a conservative and defensive portfolio, with a small net long position throughout and have almost entirely avoided the volatility of the schizophrenic market...
translation: our hedges held up.
"easiest trade of the century" I don't think so. I shorted GS @ $148.45 May 3 and bought to cover @$133.60 on May 6. That's about a 10% profit. If I had been smarter and sooner it could have been a lot more. If I had been really smart I would have shorted BP. There's tons of better trades than gold.
And if I knew what was going to happen tommorow everyday I could end up owning all the assets in the world!
But seriously how many times must it be said? Look trade volatile assets to make money and store wealth in non volatile assets...ok? I buy gold to SAVE MONEY , not to make a trade.
sharp investment manager. IMO, there is a reason other HF's have copied him in gold. He was one of the first "mainstream" guru's to allocate physical gold. He's obviously not a "gold bug", but he obviously has connected the dots on gold. Looking forward to Moody's future.
That right shoulder pain developing quickly like 1930. I see now many more econofucks leaving Barry and saying what needs to be said. We are going down. Europe is going for broke - gonna take it all down. Probably playing the VIX here forward.
Ka Chung Law, chief economist and strategist at the Hong Kong branch of Bank of Communications Ltd. talking global economy.
K.C. says "the global economy it's going to worsen as well as the stock market" and "we may probably see some double dips in the U.S., Europe, and probably in China and some emerging markets...there is a high chance, or some probability of getting a double dip."
http://www.bloomberg.com/video/61577986/