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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (8488)	4/18/1999 7:29:00 PM
From: Paul Berliner	Read Replies (3) \| Respond to of 9980

Anyone notice that hedge fund advisors can't get it right for sh--? They have blown every major advised position related to global macro events over the last 12 months. 1. All firms recommended buying GKOs for a quick payday, as the US would surely bail out the Russians in order to ultimately avoid unfavorable political developments which may lead to the rebirth of the old soviet empire & a new arms race. They blew it - no bail-out. 2. All firms recommended shorting Venezuelan equities as the radical Hugo Chavez was favored to be elected President. All shorts (including myself) were in place when the alleged unstable gentleman was victorious in the elections, and over the next few days the Venezuelan stock market gained about 50%. 3. All firms advised that a devaluation of the Brazilian Real would have devastating effects for the entire western hemisphere, and all clients (and myself) were again positioned accordingly, massively short Latam bancos and telecoms of every available nature. All seemed to be going according to plan right after the long-awaited announcement of a Real floatation spread, as S&P futures immediately priced in a 3% drop on wall street alone at dawn. But the drop never came - Brazilian equities opened sharply higher and, in a spectacular rush of short-covering, the market closed up an unfathomable 30%. Wall street rallied in tandem. 4. Just this past week hedge fund advisory firms were again warning of unfavorable developments in Venezuela amid explosive ultimatums by Chavez that a national state of emergency would be declared if he was not granted special powers by the opposition-led congress. Well, by Wednesday congress had kow-towed and the Venezuelan market did not slide as predicted by the highly-paid posers. In fact, the index gained a handsome 20% over Thursday & Friday's sessions. A friend at Spear, Leeds, Kellogg mentioned that institutions had sold the firm a mass of VNT calls (VNT is the only Venezuelan NYSE stock) earlier in the week & the options firm had raked it in on VNT, as the stock had moved up $6 late in the week. I was also told that no VNT calls were purchased from the firm all week, i.e. not one institution had caught Venezuela's 20% move over that span. I think it may pay to be contrarian on the macro front for awhile until things return to normal (whatever that means). Thus, I'll load up on Indonesian longs right before their election.