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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (102051)	9/16/2009 2:39:05 PM
From: Elroy Jetson	5 Recommendations Respond to of 116555

If the Asia Crisis of 1997 is the model, you merely need a Nation X to act like the United States did with a central bank chaired by an Alan Greenspan. Nation X can create a stock market bubble followed by a real estate bubble in their nation to pull the United States and Europe out of our own version of the Asia Crisis. Of course this will devastate the economy of Nation X in the process, but that's the price of our recovery. Which country do your nominate to be Nation X? China, Brazil, Martians? .

To: SouthFloridaGuy who wrote (102051)	9/16/2009 4:13:20 PM
From: andiron	Read Replies (2) \| Respond to of 116555

meseems this move is a bull market and will remain so for some time. This doesn't mean the final chapter of the debacle is written yet... 1. All assets would go up as cheap money & low rates fuel asset bubble yet again. 2. This will make banks' balance sheet look good and they can function.. 3. Bond market yield will remain low w/ govt prop. However, 1. The cap utilizatio shows huge capacity out there that is deflationary. 2.Loan growth will remain dismal and w/ that GDP growth will be subpar..but stocks high p/e will be maintained perforce.. 3. Excesses in RE inventory in most countries still exist and have not been addressed. 4. Internet has become a dead utility sector and no new growth sector is on the horizon.. What is puzzling to many is how quickly fed's policy got traction that took most traders/investers by surprise. It is just amazing.

To: SouthFloridaGuy who wrote (102051)	9/16/2009 4:16:20 PM
From: mishedlo	6 Recommendations Read Replies (1) \| Respond to of 116555

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