The Long/Short Strategy for the New Reality
1. Go long companies that cater to the 1%.
2. Short companies that cater to the middle class.
3. Go long companies that cater to the poor.
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
...as the Treasury waited for news, fear began to spread, "we waited minute by minute on updates from the market and then we learned that the billion or so [of taxpayer money] we had put aside Tuesday to defend the pound up to the weekend had gone in a few minutes on Wednesday morning," shattering the myth of government omnipotence.
In our dire era of increasing economic inequality, we need a symbol for the oppression of the masses. Now is time for a new revolution. All the talk of the American entrepreneur is bullcockey. Warnings about human complexity and the need for peaceful cooperation is just a smokescreen for tyranny. Our freedom lies in tearing down those better and more well-off than us. We are the glorious heirs to the brave candlemakers who sought to block out the sun. Where our French brethren fought for freedom from natural competition, we fight for the liberty of not feeling inadequate next to an adorable feline. It is the most noble of causes. For if inequality is a crime, then Tarder “Grumpy Cat” Sauce is hostis humani generis.
As an investor, it is simply your job to step away from your "emotions" for a moment and look objectively at the market around you. Is it currently dominated by "greed" or "fear?" Your long-term returns will depend greatly not only on how you answer that question, but to manage the inherent risk. “The investor’s chief problem – and even his worst enemy – is likely to be himself.” - Benjamin Graham
There is a saying that you don’t ring bells at the top. It’s not really true. Every time the market forms a major peak, at least in the last 15 years, there are usually a preponderance of signs of excessive speculation and leverage.
A few points the "stocks are cheap" crowd should consider.
In the second of three interviews (part 1 here), Hugh Hendry tells MoneyWeek's Merryn Somerset Webb why central banks will go even further than anyone expects to keep the global economy afloat. Hendry notes, "there’s so much debt that if you reprice debt, the economy slows down. We saw that I think in 2012, after the taper tantrum and ten-year bond use went over 3%. What happened next? The economy slowed down. If anything I would be a buyer of U.S. Treasuries."
Though, if history is anything to go by, it offers a potential for outsized returns
The legendary Hungarian-American investor, George Soros, told Handelsblatt that the European Union and euro currency zone could unravel if member countries can't agree on a unified response to Russia's aggression in Ukraine. "Wake up Europe," he chides, adding that Western economic sanctions against Russia, which are limiting the ability of Russian businesses to obtain financing on the global market, are a necessary evil, concluding "Freedom sounds like a free good, but you have to be ready to defend it."
"Solutions to the world's problems are not produced in a meeting between Bill Gates and George Soros... Renewal has to come from below... Limiting the influence [of the richest] is of the utmost importance... so that today's upper-class, high-finance capitalism can once again revert to being a capitalism of the real economy and the societal center."
- 25 BANKS SHOWN WITH CAPITAL SHORTFALL IN ECB TEST: DRAFT TEXT
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George Soros Slams Putin, Warns Of "Existential Threat" From Russia, Demands $20 Billion From IMF In "Russia War Effort"Submitted by Tyler Durden on 10/23/2014 12:35 -0400
If even George Soros is getting concerned and writing Op-Eds, then Putin must be truly winning.
"...the American scheme of world domination through military aggression and unlimited money-printing is failing before our eyes. The public has no interest in any more “boots on the ground,” bombing campaigns do nothing to reign in militants that Americans themselves helped organize and equip, dollar hegemony is slipping away with each passing day, and the Federal Reserve is fresh out of magic bullets and faces a choice between crashing the stock market and crashing the bond market. In order to stop, or at least forestall this downward slide into financial/economic/political oblivion, the US must move quickly to undermine every competing economy in the world through whatever means it has left at its disposal, be it a bombing campaign, a revolution or a pandemic..."
The European status quo and EU elites are becoming increasingly concerned by popular calls in Italy for Italy to leave the European Monetary Union and the euro "as soon as possible" and return to the lira.