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IceCap Asset Management: Hope Is Never A Good Strategy

Tyler Durden's picture





 

From IceCap Asset Management

Gunsmoked

Dodge City, Kansas is a lovely place. The home to 26,101 people regularly enjoy old west casinos, old west rodeos and old west movies. Like we say – it is a lovely place.

Yet years ago when it was still cool to be a cowboy, cowboys of all types were getting’ out of Dodge. And who could blame them - bullets flew around town on a regular basis.

As we look across the globe today, Dodge City’s are popping up all over the place across America, Europe and Asia. However, within the World of financial markets, government sponsored economic policies are desperately trying to keep everyone in the 2012 financial version of Dodge.

Today’s question of the century is which market is the equivalent of Dodge? One thing is for sure, financial bullets are flying fast and furious these days forcing every sane investor to keep their head down. For all other investors, be a good cowboy and be sure to have an exit plan – you never know when you’ll need it.

Europe = Dodge City

IceCap has certainly not recently jumped on the anti-Europe/Greece bandwagon. If anything, we’ve been pulling the wagon since we first opened our doors in 2010. Back then we had good fun hi-lighting the errors made by the majority of financial advisors, mutual fund sales reps and the big banks who confidently stated that Greece is less than 2% of Europe’s economy – that Greece does not matter.

Well, by now everyone knows that Greece certainly does matter. To further clarify our view everyone must understand that GDP measures spending, yet the World is in the midst of a debt crisis.

The point being, anyone can max out their credit cards on nice holidays, cars and lattes. For the GDP counting folks out there, all this spending certainly does add to GDP – how can it not? However, eventually the day comes when you are unable to borrow and your spendthrift ways come to an end, and with that the fabled GDP indicator of economic growth declines as well.

Greece’s GDP is valued at about EUR 200 billion, yet the unofficial total debt obligations of the country and financial institutions exceed EUR 1 trillion – over 5 times their GDP. Similar numbers also exist for Ireland, Portugal, Spain and Italy. This debt problem is very big and very real. Debt matters.

Greece’s end should have occurred three years ago. If it was allowed to follow every other bankruptcy process, today Greece would have been well on its way to recovery. What should have cost a few billion is now certainly going to cost hundreds of billions and maybe even hitting trillions once all is said and done.

On June 17, 2012 Greeks will once again head to the polls. We have no idea of the outcome. All we know is that Greece has already lost everything it had – it can’t lose much more. Rather, the biggest losers will certainly be the rest of Europe and this is why you will see subtle, then not so subtle and then lunatic fringe campaigning by Brussels to ensure that Greeks vote to remain in the Euro-zone.

The talking heads will tell you that we’ll have to wait until June 17 for this drama to unfold. IceCap is telling you the drama will happen before this pivotal day.

With Greece, we really only have two possible outcomes:

1 – Greece stays in the Euro-zone and continues to receive bailouts. The problem with this is that practically all of the bailout money received is quickly paid back to bond investors who just so happen to be European financial institutions. The only thing the average Greek receives is the privilege to pay higher taxes from the salary they no longer receive. Brussels is effectively telling Greece, the bullying will stop as soon as the morale improves.

2 – Greece leaves the Euro-zone and defaults on its debt. Here, the institutions who lent money to Greece will lose money and justifiably so. Everyone else in the World (who isn’t a bank), always takes losses when they make a bad investment, Greek bond holders including the IMF, ECB and EU should be no exception.

With outcome # 2, Greece will certainly enter a recession – yet, since they are currently in a depression it will actually be an upgrade from their current state.

Hope is never a good strategy

The fact that the financial World is completely dependent upon the fate of Greece and possible contagion spreading to other European countries makes us very worried. In addition, we haven’t even touched upon the rapid decline of growth in India and China, nor the upcoming American fiscal cliff.

We fully expect The Troika (European Central Bank, European Union and International Monetary Fund) with the blessing of the US Federal Reserve to announce yet another save the day money printing scheme. We also fully expect markets to rally strongly on the news.

We only have two fears. One, The Troika et al do not make the widely expected announcement. It’s our current view that the only reason markets remain at current levels is due to this very same expectation of another super-charged money injection scheme. Our other fear is that The Troika is actually too late with any new scheme and they are not able to self-arrest the snow-balling bank runs in Europe.

We speak often with investors and other managers on a regular basis and the high degree of complacency towards these very real problems continues to amaze us. Is this complacency due to a strong conviction of a positive outcome or is it simply due to the way the investment industry is structured to focus on profits and gathering assets? Sadly, we believe it is the latter. While we will be amazed if the Greek and European situation is sorted out, we will not be shocked if it isn’t. A positive outcome will certainly provide a super boost to all aggressive investment strategies and we will be ready to make adjustments should this occur.

Our view is that this positive outcome is one based upon hope. Unfortunately, hope has never been a very good investment strategy.

Full report (pdf)

 

 


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Sat, 06/02/2012 - 17:59 | Link to Comment SilverTree
SilverTree's picture

Hope with a bit of hype worked for Mr O.

Sat, 06/02/2012 - 18:23 | Link to Comment The Alarmist
The Alarmist's picture

Hope is not a strategy ... it is a way of life!

Sat, 06/02/2012 - 18:26 | Link to Comment SilverTree
SilverTree's picture

HOPE

 

Halley Optical Probe Experiment 

Have Only Positive Expectations 

Heart Outcomes Prevention Evaluation 

Help Ohio Public Education 

Highlights of Personal Experience 

Hospital Outcomes Project for the Elde… 

Hang On, Peace Exists 

Happy Our Program Exists 

Health Outcomes Prevention Evaluation 

Healthcare Options Plan Entitlement 

health-oriented physical education 

Hearing Other Peoples' Experience 

Heart Open Please Enter 

Heart Open; Please Enter 

Heart Outcomes and Prevention Evaluati… 

Heart Outcomes Prevention Evaluation s… 

Heart Outcomes Protection Evaluation 

Help Open People's Eyes 

Help Our People Excel 

Helping Other People Everyday 

Helping Outstanding Pupils Educational… 

HIV Outreach Programm and Education 

holistic orthogonal parameter estimati… 

Home Care Outreach for Palliative Care… 

Homeownership and Opportunity for Peop… 

Honckenya peploides 

Honest Open Positive Environment 

Honoring Our Professors Excellence 

Hydrogen-Oxygen Primary Extraterrestri… 

Hypertensive Old People in Edinburgh

hypothetical overpower excursion

Sat, 06/02/2012 - 18:36 | Link to Comment Colombian Gringo
Colombian Gringo's picture

Beware of greeks bearing gifts, especially if they have a bulge in their pants.

Sat, 06/02/2012 - 19:14 | Link to Comment BigJim
BigJim's picture

 Our view is that this positive outcome is one based upon hope. Unfortunately, hope has never been a very good investment strategy.

No, this 'positive' outcome is based on an appreciation that the oligarchs will not let the Euro fail, and will print, print, print to avoid the whole ponzi collapsing.

Yes, this will ultimately lead to hyperinflation. But our overlords will cheerfully pay hell on Tuesday, for another hamburger today.

Sat, 06/02/2012 - 22:40 | Link to Comment potlatch
potlatch's picture

Have One Physical Existence

Sat, 06/02/2012 - 18:37 | Link to Comment vast-dom
vast-dom's picture

Greece needs to exit asap. The only way out is through the escape hatch, sooner or later, with less or more pain, it will be done.

Sat, 06/02/2012 - 18:48 | Link to Comment LeonardoFibonacci
LeonardoFibonacci's picture

I am not worried as Rockefeller and Rothchilds will save the world, so that we can become Soylent Green (food) for a Reptilian race.

Sat, 06/02/2012 - 19:05 | Link to Comment blindman
Sat, 06/02/2012 - 19:20 | Link to Comment vast-dom
vast-dom's picture

here's the good version:

 

http://www.youtube.com/watch?v=fVyVIsvQoaE

Sat, 06/02/2012 - 19:57 | Link to Comment blindman
blindman's picture

that link just sucks, imo, my guess/hope is
that you know that.
check these if you like.
it appears there is an accounting for taste.
.
Towers of Baab’el and Levers of Control….
May 31, 2012
http://aadivaahan.wordpress.com/2012/05/31/towers-of-baabel-and-levers-o...
.
"The Secret Meeting that Changed Rap Music and Destroyed a Generation"
http://www.hiphopisread.com/2012/04/secret-meeting-that-changed-rap-musi...
.
"..Hello,

After more than 20 years, I've finally decided to tell the world what I witnessed in 1991, which I believe was one of the biggest turning point in popular music, and ultimately American society." ..
if you don't get it get back to me and i'll try
to help you out of the funk but i will not
go your bail under any circumstance. is it all
a farce , this thing they call civilization?

Sat, 06/02/2012 - 20:59 | Link to Comment vast-dom
vast-dom's picture

nigga please!

Sat, 06/02/2012 - 22:20 | Link to Comment blindman
blindman's picture

hilarious

Sat, 06/02/2012 - 22:33 | Link to Comment 5880
5880's picture

God,

i hate people

Sat, 06/02/2012 - 22:44 | Link to Comment vast-dom
vast-dom's picture

i hate people too! and blindman is a fucking jerkoff with that utter bs hip hop article. maybe some more dumb ass conspiracies like building projects that resemble prisons so that project residents get used to prison-like structures, bentham's panopticon notwithstanding. or secret meetings with lizard shapeshifters in order to produce more violent movies -- fucking fucktraded conspiracy theory morons up in here....

Sat, 06/02/2012 - 23:00 | Link to Comment blindman
blindman's picture

you love people and you know it you
bicameral schizophrenic nigga. don't
be hatin on the blindman cause you be
unsatisfied with your master.
http://ckuik.com/graffiti_man_trudell
the american citizen is the new indian pt1
john trudell and alex jones
.
" it is all about energy, think more believe less."j.t.
aka graffiti man.
.
ps.
recheck the links, if you like, and look.
who makes the laws and who is in prison,
and who never goes there? please, you
simple nigga. the actual number, in millions,
of young black men in prison escapes me nigga.
anyway, it is an industrial thing traded on the street,
good for the gdp and all and in many ways?

Sat, 06/02/2012 - 20:22 | Link to Comment Nid
Nid's picture

I say they take the side-hatch.

Sat, 06/02/2012 - 22:48 | Link to Comment potlatch
potlatch's picture

I'm already heatin up the mac n chee

 

Sat, 06/02/2012 - 18:51 | Link to Comment LeonardoFibonacci
LeonardoFibonacci's picture

where is King Leonidas & 300 brave Spartans to get rid of the EU vultures.

Sat, 06/02/2012 - 20:02 | Link to Comment Pure Evil
Pure Evil's picture

Unlike in video games, they only had one life to give to save western civilization.

Sat, 06/02/2012 - 18:15 | Link to Comment wee-weed up
wee-weed up's picture

But... but... isn't Sheriff Ben coming to save us all?

Sat, 06/02/2012 - 18:18 | Link to Comment lolmao500
lolmao500's picture

Everything will be alright folks with these people in charge...

http://redtape.msnbc.msn.com/_news/2012/06/01/11998060-first-amendment-r...

'First Amendment rights can be terminated': When cops, cameras don't mix

http://www.youtube.com/watch?v=I9glmgLIhaM

Sat, 06/02/2012 - 18:23 | Link to Comment A Lunatic
A Lunatic's picture

I'll be down at the Long Branch if anyone needs me................

Sat, 06/02/2012 - 18:24 | Link to Comment blindman
Sat, 06/02/2012 - 18:34 | Link to Comment SilverTree
SilverTree's picture

Vat is dis my spaece you spek of?

Sat, 06/02/2012 - 18:47 | Link to Comment blindman
blindman's picture

i'm not sure but if you hit the link you might
hear the voice? it works on my shit space
a dell deal with windows 7. seems to work like
an old record player without having the record
in your house or car or table at starbuckers.
but there you need earphones or similar social
noise reduction/enhancement gear.

Sat, 06/02/2012 - 18:25 | Link to Comment Sudden Debt
Sudden Debt's picture

When all hope fades... PRESS THE RED BUTTON!!!

Sat, 06/02/2012 - 18:27 | Link to Comment SilverTree
SilverTree's picture

When all hope fades...start a War.

Sat, 06/02/2012 - 18:35 | Link to Comment q99x2
q99x2's picture

Let us see the system runs on fraud and everyone is coming up with ideas on how it will all work out by running without fraud. Something doesn't seem right. It is a planned collapse. Arrest them. Maybe at the State level and then don't let them out.

Sat, 06/02/2012 - 19:18 | Link to Comment Crab Cake
Crab Cake's picture

Exactly. The first step must be justice, the swifter and more terrible the better. Without it there wont be any recovery, no matter what solution anyone comes up with. Hopefully then we could also take the step to end the terrible tragedy that is the US war machine; foreign, terror, and domestic/drug.

Sun, 06/03/2012 - 13:29 | Link to Comment Clashfan
Clashfan's picture

See the blueprint for it--Atlas Shrugged.  http://www.illuminati-news.com/2007/0322a.htm

Sat, 06/02/2012 - 18:38 | Link to Comment johny2
johny2's picture

"Greece’s end should have occurred three years ago. If it was allowed to follow every other bankruptcy process, today Greece would have been well on its way to recovery. What should have cost a few billion is now certainly going to cost hundreds of billions and maybe even hitting trillions once all is said and done."

 I wish you explained how 3 years ago it would have been " few billions" only. 

Sun, 06/03/2012 - 02:58 | Link to Comment verum quod lies
verum quod lies's picture

This begs the question: Where was IceCap Asset Management with their opinion/analysis three years (OK, they began in 2010), two years, or even one year ago? I for one hate investment advisors who jump from one popular bandwagon to another with the only advice being that they will be correctly positioned for some outcome exactly at the moment that outcome becomes clear to them and them only; and always acting as if they have been ahead of this situation the whole time (the "I am a great trader, hear me roar" types). I could get better analysis reading Bloomberg's advice on high calorie drinks. I much prefer, right or wrong, people who several years ago noted that, for example, China was going to be a royal clusterf__k when these types were waxing poetic about what a juggernaut China is (now was). OK, Greece needs to default and reset its economy, but we have whole bureaucracies devoted to not allowing that to happen. For many of them, their solution has been, at least since around the early 1970s, hit print in one form or another and don't call it print. My money's on Greece defaulting but not until every form of alt + P has been tried. This will unravel soon, but not until all the major players stop hitting print because they cannot physically hit the right keys; and that is the message ZeroHedge has evolved that seems to make the most sense in our seemingly senseless world of Banksters and other frauds, traitors and assorted Kenyan face eaters.

 

Sat, 06/02/2012 - 18:41 | Link to Comment scatterbrains
scatterbrains's picture

"One thing is for sure, financial bullets are flying fast and furious these days forcing every sane investor to keep their head down" 

I fully expect when the "Big Blocks" start hitting AAPL it's going to sound something like this...

http://www.youtube.com/watch?v=j0TPWV3zB3Y&feature=related

 

 

Sat, 06/02/2012 - 19:05 | Link to Comment scatterbrains
scatterbrains's picture

and just incase you didn't get enough of that nassty girl playing base..

http://www.youtube.com/watch?v=ipSspfDNVGc

I got a kick out of the expression on the keyboard player at around 2:28 in response to her bass licks..  blown away

Sat, 06/02/2012 - 20:27 | Link to Comment Nid
Nid's picture

If the crash sounds like Tal, it'll all be OK.

Sat, 06/02/2012 - 18:43 | Link to Comment Atomizer
Atomizer's picture

Put Valerie Jarrett in charge of Ice Cap Management. She'll have the building lights rationed quicker than the City of Detroit.

Sat, 06/02/2012 - 18:53 | Link to Comment nmewn
nmewn's picture

"Hope is never a good strategy."

Now they tell us.

Next it will be "change"...as in, change (without stating to what) is risky asset management ;-)

Sat, 06/02/2012 - 20:31 | Link to Comment Dr. Engali
Dr. Engali's picture

My feeling is that the "change" is not the change people were hoping for. There's a storm brewing I " hope" you're prepared.

Sun, 06/03/2012 - 00:48 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Birds of a feather.  By which I mean you are both complete assholes.   Do you recall that Hank Paulson (Goldman Sachs CEO turned George W Bush T.S.) told us we needed to give the banks a few hundred billion?  Do you recall that Bush created the Patriot Act?   Do you really think that O is the source of the problem?  Wake.  The.  Fuck.  Up.

Sun, 06/03/2012 - 09:01 | Link to Comment Dr. Engali
Dr. Engali's picture

Rand you are a complete fucking moron. I am neither a supporter of bush nor obama. I am poking fun at people like you putting hope in one man who, we knew all along, is just as corrupt and just as much a tool of TPTB as the previous asshole.

Sat, 06/02/2012 - 19:10 | Link to Comment Crab Cake
Crab Cake's picture

Fucking hilarious. You opened your doors in '10, which means your previous firm ate it in '09; right? Secondly you talk about justifiably taking lossea for bad bets, but then sum your worst fear is that TPTB wont press ctrl+p? Just another Wall St douchebag hoping and praying to not be crushed like the rest of the "little people". No spam for you asshole.

Sat, 06/02/2012 - 19:36 | Link to Comment Atomizer
Atomizer's picture

A bit of humor: This is why the system is eating its own. Have to admit, this is more entertaining than watching TV.

 

You cock suckers better back us up. We did everything you told us to do. Now we find money missing from our books on a keyboard entry error? Bollocks you twat! Listen to me very closely, we’re considered as a too big to fail entity. Start nodding your head before my lips start moving.

WIRE Feed Me

 

/sarc

Sat, 06/02/2012 - 19:48 | Link to Comment Crab Cake
Crab Cake's picture

That must have been Iksil right before the genie got out of the bottle, lol.

I just love reading insight by people whos 2 and 20 is in dire straits. Stop, please no more, or Ill have to open another hedge fund as soon as I find some more marks I mean clients.

My greatest fear is that the Troika wont step in and print! Nice Icecap nice. Krugman... Its you isnt it? I knew it! I hope your clients do the sane thing and flee your dumbass before its too late, thats my fear lol.

Sat, 06/02/2012 - 19:38 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Yes Hilarious!

Can someone tell those ticket clippers that the game of pass the parcel and collect 3% as you do, Is Over.

Newsflash to Icecap: You have nowhere to hide and nowhere to run, like all of us we wait for the inevitable to come. I Hope I "Dodge" the bullet, but Hope as you said is not a good plan.

Sat, 06/02/2012 - 19:50 | Link to Comment Atomizer
Atomizer's picture

Oh Mommy & Daddy, I've gotten so dizzy playing pass the parcel. When does my party bag arrive in my lap. Please... oh please Mommy & Daddy, I want my party bag.

{inserts wicked laugh}

 

Sat, 06/02/2012 - 20:13 | Link to Comment midgetrannyporn
midgetrannyporn's picture

They expect the banksta to save the day on the one hand and worry about complaceny on the other. Color me complacent. More central bank debauchery is a certainty, not a false hope. There is no chance they won't juice the markets again and again and again. Their avarice knows no bounds.

Sat, 06/02/2012 - 20:16 | Link to Comment WallowaMountainMan
WallowaMountainMan's picture

"The fact that the financial World is completely dependent upon the fate of Greece"

uh, no. take greece out and magically make it healthy. now think of spain. hmmm, completely dependent on spain now, eh?

uh, no. take spain out and magically...

now, after that continent, let's try another.

turns out the obvious is obvious.

the system is crashing not because of a particular geographical (or that mater, geo-political) place.

it is depending upon nothing but itself as the trigger.

Sat, 06/02/2012 - 20:30 | Link to Comment Bill D. Cat
Bill D. Cat's picture

Everybody knows .... right ?

 

All are making fiat on the way down ...... right ?

Sat, 06/02/2012 - 20:56 | Link to Comment Atomizer
Atomizer's picture

 

 

The blithering idiots know once EU show time begins, so goes the USA. The good news, our country has gone through this process before.

The History of American Money

Mr. 1913 middleman is the one shitting his pants. His 4,000 TV channel  PR coverage shall enforce.. Hooo, Hoooo, Hooo, Merry Stimulus my fine pets. We’ll throw a new bone to keep you content in your cages. Hooo, Hoooo, Hooo, Merry Stimulus and Happy Dollar debasement year.

 

/lol

Sat, 06/02/2012 - 20:52 | Link to Comment Amish Hacker
Amish Hacker's picture

The author reports a high level of complacency among "investors and other managers." This is a very bad sign, because the sensible thing to do at this point would be to move toward the exits in an orderly fashion. Instead, everyone will remain seated in the burning theater until it's too late, then make a panicked rush for "safety."

Sat, 06/02/2012 - 21:04 | Link to Comment tony wilson
tony wilson's picture

never mind that shit what about

bill de berg.

what does he think what is he and is satanic spawn  planin

zerohedge sure feels  like it's the antithesis part of the

Hegelian Dialectic

 controlled opposition all sides are being played

while nobody is

Paying no attention to the man behind the curtain...

Sat, 06/02/2012 - 23:11 | Link to Comment Rynak
Rynak's picture

Once again, the icecap team delivers.

Possibly the best consistent "guest article" provider on ZH.

Do NOT follow this link or you will be banned from the site!