Short Greek Bonds vs Long Apple: No Contest

Tyler Durden's picture


One may be surprised to learn that in the past 6 months NASDApple is not the best performing "asset class." Sure, it has generated a respectable 43% return since last September when the Greek 1 Year bond crossed a 100% yield for the first time ever (or a cash price of 54). That was also the time when many were saying to buy Greek bonds as there was no chance the yield could tumble much further (probably the same ones who said to buy AAPL). As it turns out, now that the saga of Greece is officially over, and its existing debt is being "retired" at a final price of about 19 cents of par, here is the final tally: shorting Greek bonds since September 2011 has generated 63%, while being long Apple returned 43%. And that's with virtually every hedge fund and their mother entering the Apple hedge fund hotel. So yes - sometimes going against the conventional groupthink does generate the best results. Now if only one could short the "new" Greek bonds at par, the return would be 80% in a millisecond as the bonds will break for trading under 20 cents.

There's more. All the banks that buy New "Fresh Start" Greek bonds at under 20 cents will be able to immediately turn around and repo them to the ECB. What cash equivalent will they get in return? Why just ask Jens Weidmann: he will be delighted to tell you. In other words, the ECB is about to provide another €25+ billion handout to Europe's insolvent banks, or an instantaneous 400% return, once again courtesy of the Greek "default" smokescreen, where the grand prize of course is the full confiscation of the Greek 100+ tons of gold.

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Fri, 03/09/2012 - 17:46 | 2241488 ACP
ACP's picture

Bonds for gold bitchez!

Fri, 03/09/2012 - 17:54 | 2241529 Gene Parmesan
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1-877-FIAT -4 -GOLD

F-I-A-T, fiat for Gold


Sell out your country to-day

Fri, 03/09/2012 - 18:06 | 2241551 ACP
ACP's picture

"Or make some poor, dumb bastard sell out his country." - Gen. Patton, if he were a trader

Sat, 03/10/2012 - 10:45 | 2242984 Fukushima Sam
Fukushima Sam's picture

On a long enough timeline entropy always wins.

Fri, 03/09/2012 - 17:47 | 2241495 Future Tense
Future Tense's picture

Shorting Greece can be only topped with shorting Tilson right?  Or do you need short Tilson on margin?

Fri, 03/09/2012 - 17:47 | 2241497 Temporalist
Temporalist's picture

"You can check out any time you like, but you can never leave."

Fri, 03/09/2012 - 17:52 | 2241506 hedgeless_horseman
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See?  In the end, Leo's long Hellenic bonds and RIM calls were...oh...oh my...oh...poor Leo.

Fri, 03/09/2012 - 17:52 | 2241520 Tyler Durden
Tyler Durden's picture

"Long FSLR"

Fri, 03/09/2012 - 17:58 | 2241535 hedgeless_horseman
hedgeless_horseman's picture



T'was a hell of a trifecta.

Fri, 03/09/2012 - 18:24 | 2241605 Temporalist
Temporalist's picture

Greeks will Tri anything...or that's what I've heard.

Fri, 03/09/2012 - 17:53 | 2241524 Piranhanoia
Piranhanoia's picture

I can eat an apple, but can not eat greece.

Fri, 03/09/2012 - 17:54 | 2241530 adr
adr's picture

And the banks buy Greek debt for .20 cents and sell it to the ECB for another $20 billion on cash.


How the banks gets billions while fucking over millions.

Fri, 03/09/2012 - 17:57 | 2241532 resurger
resurger's picture

a Greek


Fri, 03/09/2012 - 18:05 | 2241536 SheepDog-One
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So all this 2 year long high drama and week after week dire emergency actions to avoid the 'worst of the worst case scenarios, Greek default', turns out to be a total non-event? -20 DOW points, +5 on S&P, is the 'worst case scenario' they had to take everyones rights and pensions and futures and put everyone in massive debt to avoid,  yet happened anyway? 

Unless theres something Im totaly missing in all this, theres absolutely no point to any of this at all.

What was the point in it all? Why didnt they just go into Greece in 1 week! Why did they need to HARASS us all for damn near 2 fuking years for? What is all this, just sick entertainment for these psychos?

Fri, 03/09/2012 - 18:16 | 2241578 bank guy in Brussels
bank guy in Brussels's picture

Still a little early to say it is 'non-event'. It took about 84 hours after the Lehman bankruptcy for the world to start blowing up ... this may take a few days longer.

To recall a Zero Hedge classic ... The post-Lehman near meltdown of the US and global financial system in 2008 ... from ZeroHedge, 'How The World Almost Came To An End At 2PM On September 18':

« On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.

We are no better off today ... »

Fri, 03/09/2012 - 18:19 | 2241587 SheepDog-One
SheepDog-One's picture

Well yea thats true. And the day before Bear Stearns crashed and burned Cramer was hitting the buy button on his show for $ who knows. Not us, certainly.

Back to the 'mysterious electronic run on the banks'...planned.

Fri, 03/09/2012 - 18:21 | 2241595 Temporalist
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Yes and notice when the announcement occurred today 3:15pm EST on Friday just before markets close for the weekend so no further action can take place until next week.

Fri, 03/09/2012 - 18:31 | 2241618 Gene Parmesan
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Beware the Fridays of March

Fri, 03/09/2012 - 18:03 | 2241547 tempo
tempo's picture

This is all so beautiful. Someone should start a website or service promoting "entitlements" how to milk the system. How to live free forever!! Start off with a worthless 6 year undergraduate degree from a low end college w lots of financial aid and food stamps. Waste a year looking for low end work while staying on food stamps. Then enroll in a 3 year worthless masters. Get a relative to co sign for financial aid. Volunteer for progressive liberal candidates. Bitch and blog about how unfair society treats the poor. Protest and network for best handouts at churches and homeless shelters. Lobby for more taxes and fees. Make sure your parents feel guilty and are afraid so they will put your 4g lte apple smartphone is on their family plan. Move back home and make life misable so your parents will start paying your rent. Be sure to get them to co sign on the financial aid so its in their best interest for you to stay in school as long as possible. We need to share ideas on how to live free and progessive.

Fri, 03/09/2012 - 18:26 | 2241611 Agent P
Fri, 03/09/2012 - 18:04 | 2241549 Tic tock
Tic tock's picture

if true, it would be hyperinflationary

Fri, 03/09/2012 - 18:08 | 2241564 automato
automato's picture

Would someone please correct me if I am wrong. It is my understanding that you do not actually need to own underlying assets (i.e. greek bonds) to purchase derivatives or CDS or other gambling type contracts to bet that the 'default' would occur. Isn't that how a LOT of so-called genius types made billions in the subprime collapse? Again it was my understanding that many of the derivatives that paid off during the subprime collapse were in essence 'naked' short bets. Again it is my understanding that it may be weeks before the system unravels what bets were placed where and that the total could easily be several TRILLION dollars!? Any clarification?

Sat, 03/10/2012 - 10:51 | 2242996 ZeroPower
ZeroPower's picture

Correct about not needing to own the underlying of the derivative. Same goes for something as vanilla as calls/puts, to swaptions, to vol products, CDS, etc.

Fri, 03/09/2012 - 18:17 | 2241581 Mark Carney
Mark Carney's picture

LOL, who the fuck is junking every comment??MDB.....

Fri, 03/09/2012 - 18:20 | 2241589 SheepDog-One
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Someones grouchy.

Fri, 03/09/2012 - 18:22 | 2241599 ACP
ACP's picture

Yeah, noticed that...junked the first 14, then came back for more.

Trolls begone!

Fri, 03/09/2012 - 18:22 | 2241600 Temporalist
Temporalist's picture

Either Venizelos or Papademos...or maybe it was Mr. Pappagorgio.

Fri, 03/09/2012 - 23:18 | 2242343 UP Forester
UP Forester's picture

Mr. Poppadopoulus?

Fri, 03/09/2012 - 18:25 | 2241607 devo
devo's picture

I'm still trying to figure out the best way to short US treasuries.

Fri, 03/09/2012 - 19:29 | 2241764 shuckster
shuckster's picture

Try a jan 2013 or 2014 expiration put option on TLT 

Fri, 03/09/2012 - 21:12 | 2242040 MrSteve
MrSteve's picture

just buy gold, keep it simple. This is a monetary problem and gold is the monetary solution.

Fri, 03/09/2012 - 18:35 | 2241636 mkanterm
mkanterm's picture

Except for the threat of margin calls by being short whereas you don't have to lever and thus face no margin calls on apple.

Fri, 03/09/2012 - 19:04 | 2241700 lolmao500
lolmao500's picture

So now how do we short Japanese, UK and US bonds?? Thanks

Fri, 03/09/2012 - 19:05 | 2241701 The Swedish Chef
The Swedish Chef's picture

Yeah, if I had money in a hedgefund that only returned 86% per annum I´d totally say: "But I read online it was more profitable to short Greek bonds!" When the anti-Tilson fund, as it was very amusingly called, returned what I recall was the very same percentage it was held out as the greatest money managing achievement of 2011 but all of a sudden 43% IN SIX MONTHS is something to belittle. Because by finding one of the few truly profitable bear positions since last fall we can all tilt our heads and say "Sure...but!"

Going against the bearsih groupthink here and elsewere netted you a nice 43%. I don´t like central bank intervention more than anybody else but central banks can intervene for much longer than any bear can stay solvent. 


When commenting on macro and politics I find the bearish stance correct and interesting. In actual day-to-day I´m starting to find it tiresome and inpoverishing. God only knows how much money ZHers have given away to other market participants because of groupthink.

Fri, 03/09/2012 - 19:45 | 2241798 TooBearish
TooBearish's picture

Calling bullshit on this trade tyler- no one is short greek debt at this point...these are faux quotes vs CDS, which is another matter altogether....

Sun, 03/11/2012 - 14:30 | 2245213 theta
theta's picture

"the grand prize of course is the full confiscation of the Greek 100+ tons of gold"

So your theory is that they spent 100+ billion EUR and keep spending billions more, in order to eventually confiscate 5 billion EUR worth of gold? I don't know what you are smoking but it must be good.

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