To my knowledge his main play on water was the almond farms which have presumably skyrocketed along with farmland prices and real estate generally. Hard for me to know if that was his intention. You are right he might have done better in the S&P but remember Mike looks at risk-adjusted returns. I can't find it now but there was a graph in Yahoo finance comparing the S&P with the size of the Fed's balance sheet since the crisis and the 2 almost match. A very poor return indeed on a risk-adjusted basis..
Thanks for the link of which the following struck me:
The zero interest-rate policy broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough. And the interest the Federal Reserve pays on the excess reserves of lending institutions broke the money multiplier and handcuffed lending to small and midsized enterprises, where the majority of job creation and upward mobility in wages occurs.
- It really does seem to be a credit bubble of the mega-caps this time (ignoring real estate for the moment), companies like MDT, VRX, AGN, <insert your favorite blue chip here>.
Meanwhile, the Fed’s policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington.
- Trump vs Hilary ?:)
Debt. The idea that growth will remedy our debts is so addictive for politicians, but the citizens end up paying the price. The public sector has really stepped up as a consumer of debt. The Federal Reserve’s balance sheet is leveraged 77:1. Like I said, the absurdity, it just befuddles me.
- China has the growth now although they're probably inflating it. We're anemic and yet have unprecedented leverage - MUCH higher than pre-2008.
What I started realizing studying the credit cycle was 08-09 was just a harbinger - a bit like a TIA precedes a stroke. Easy credit always produces bad decisions and viewing the 90s-00s as some sort of rare deviation from basic human nature seems flipped to me. New unemployment applications just reached their lowest level since 1973. 1974 anyone? Since I can't short the bonds I want I'll just continue holding my puts on MDT/ VRX/ URI and hope they'll offset my losses if we have another August-type event. I don't really have any reason to think the bear market in commodities will abate before the the bear market in stocks does but I'm in TGA at present since they are in play. |
