From Richard Benson
prudentbear.com
We predict that before the spring of 2005, the vast majority of investors and hedge funds will be hitting the sell button. The average investor is constantly told by Wall Street that he is an investor but it is becoming clear, in this market, that there are only speculators. Meanwhile, investors such as Warren Buffet are already sitting on over $32 billion in cash with at least $12 Billion in foreign currencies that benefit from a falling dollar. Why is it, then, that some of the biggest and smartest money managers are already in cash? Don't they know that with Japan buying our 10-year Treasury yield down to 3.75 percent, the United States will have another mortgage REFI boom and there will be great corporate earnings released this April? We expect that Wall Street will be hyping stocks as cheap to the investing sheep.
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The big money players in the “carry trade” aren't known for being totally blind or stupid. These big owners of Treasuries and GSE bonds will want out! The carry trade will have to test the “Greenspan put” and we do not intend to be long stocks or bonds when the test comes.
Indeed, this spring would be an opportune time to go to cash using any rally to get liquid, and out of margin debt. Going short on some of the “flying pigs” is greedy, but tempting, because if the markets go down with a thud and we are not positioned properly, it could be devastating to our ego. However, for the average investor who is risk adverse and for any investor who considers losing a dollar, worse than making a dollar, our advice is to get into cash and be prepared to wait until early 2005. Good hunters know how to wait and good things happen to those who are patient, like buying what they like at half price!
But remember, you can only afford to buy assets at a discount if you have the cash. If you understand this, you can truly appreciate Warren Buffet's greatest secret - having the patience to sit on cash earning little but losing nothing, until the great deals come his way! Nothing beats cash and patience in the long run. |
