You are correct.
The US is not Japan.
Our private debt levels makes the matter far worse.
I have commented on this many times before.
Moreover I have suffered through comments like yours for years before I was proven correct.
Now, on the bases of your narrow view of things, not to mention a mere 5 month time frame in which you are ridiculously extending to 5 years without a full understanding (perhaps even a partial understanding), of the debt picture, you say I am wrong!?
Ironically, I never once said short this thing, indeed the company I represent is NEVER net short.
One strategy of ours, Absolute Return, is doing extremely well +21% this year and was never once in the red, even when the S&P was down over 20%.
There is a little something about risk management that guys like you just never seem to get. Risk is enormously high right now and I am happy to let pigs have whatever else is left of the rally.
Our other key strategy, Hedged Growth, is in the red by 8% or so and it is not because we are heavily short, it is because even when we were 2/3 long and 1/3 short (our bullish stance), the shorts were killed as garbage ran. Hussman and Rosenberg noted the same thing: this rally has been fueled by the worst of the worst garbage. Long-Short strategies in general have had a rough year. So be it. We post our returns publicly, on the record, unlike others.
Still our 4-year track record shows 10% annualized gains in both strategies, since inception, over the last 4 years.
95% of our assets under management are in one of those two strategies.
Much of the time we were extremely high in cash so our risk-adjusted returns are much higher.
Last year, without ever being net short, Hedged Growth was +13.7%
So all in all I would say I know quite a bit about risk management.
But if you think stocks are going to 1500 more power to you. Good luck.
The fact that you not understand risk, do not understand debt, and do not understand how this is a credit induced depression (not an ordinary recession) certainly does not make me wrong.
Finally, it is fair to say that my blog and replies such as this represent my thoughts not an official stance of Sitka, but at the same time I am willing to say we see no real value in being over-exposed to equities at this point without appropriate downside hedges. That stance can change at any time for any reason, without notice.
This reply is not a recommendation to buy or sell anything nor does it constitute any advice.
Mish |
