When even Dan Loeb, one of the few hedge fund managers who have so far passed untarnished through the centrally-planned market morass of the past 5 years, is finally underperforming the S&P, things are getting serious.
Things are so serious in fact, one may question the logic behind his decision to dump all his gold, a move which courtesy of an idea dinner here and there, appears to also have been imitated by David "Jelly Donut" Einhorn.
From Third Point's letter:
If we finally see accelerating growth rates, yields should normalize from the unusually low levels we have seen recently. The playbook for investors in that scenario is to focus on assets that will benefit from US growth while avoiding investments that are hurt when real yields rise, such as gold, emerging markets, and fixed income – all areas where we have very little exposure today. Indeed, we sold our long-held gold position early in the second quarter at approximately $1,450.
"If" - that is. If growth rates do not accelerate, and if the taper sends housing sliding (as it already has), and if the surplus to the US budget from the GSEs reverts back to a deficit, and if the Fed has no choice but monetize more once again, then those who bought from Dan Loeb at $1,450 will be the ones benefiting.
For much more on this, as well as more on Loeb's preexisting activist Sony position, his divestment of two thirds of his Yahoo! stake, as well as the new position in CF Industries (which hopefully is not watching the pounding happening in POT), read the full letter below.