Source: Bloomberg
A great interview was recorded by Bloomberg last week with one of the greatest market investors of all time - Stan Druckenmiller. Holding an amazing record in investing for decades (not without mistakes thought), Stan worked with George Soros for a good part of his career before going at it alone. I thought it would be great to post it here for those who have not seen it yet. The gentleman discusses global debt issues, world politics, market investing, central banks, money printing (currency devaluation), the economy and so on. A must watch!
p.s. A quick update regarding the equity markets in the US: I was surprised by the recent NYSE Margin Debt figures, as I saw a $30 billion increase in a single month. Speculation is rising almost vertically now, similar to early parts of 2007 (chart below). Interestingly enough, Bloomberg also wrote a separate piece today (just as interesting) showing that short sales, also known as bearish bets, are at the lowest level since the market peak in 2007 (link here).
Chart 1: Speculation in stocks is becoming very frothy!
Interesting your compare the spike in margin debt to 2007. Cycles suggest equities will peak this summer and then roll over into a multi-year cycle decline. I suspect stocks will drift lower in 2014, then we get another major autumn crisis with a crash.
ReplyDeleteThanks for the commentary. love reading your blog. any thoughts on the JPY?
ReplyDeletesome really good charts:
http://www.businessinsider.com/wall-streets-most-worrying-charts-2013-3?op=1
Good video... as usual. Thanks for keep posting these articles, videos and market analysis!
ReplyDeleteLooks like the S&P can go even further.
ReplyDeleteTiho,
ReplyDeleteExcellent video. He is one of the few whose opinions should be heeded. He doesn't speak publicly very often. When he does, it's because he believes that he has something important to say.
Personally, I am starting to reduce my long positions and have added a small bit to my existing short positions. Could be early. But I would rather be early than late. Never like to be the last man standing or should I say, the last one to exit before the storm arrives. Arrjd
And you thought the US had a housing bubble:
ReplyDeletehttp://business.financialpost.com/2013/03/05/its-like-walking-into-a-forest-of-skyscrapers-but-theyre-all-empty-see-for-yourself-chinas-ghost-cities/
Tiho,
ReplyDeleteWhat is the stop on your S&P short? Your long silver, short equity trade keeps getting uglier by the and you got no stops!
Hi there. Two questions to answer, first regarding stops and second regarding the relative long / short trade:
Delete1. I do not use stops. I never have and most likely never will, that is my style of investing. I do not trade, I invest and without leverage too. Therefore, when I enter an investment, be it long or short, I let it run and I am prepared to loose 50% or even more of capital placed in the investment. I never put capital in which I am not willing to lose in the first place. We all have our own styles of making or losing money in the markets, and that is mine. It is very unorthodox to some I guess, but it has served me well. There are times when I use leverage to enter a technical trade, at which point I will use a tight stop to exit if the market price of the security doesn't do what I envision. But I trade very irregularly and only on certain technical step ups like triangles.
2. I do not think in minutes, but rather in months, quarters or years. So it doesn't really concern me what got uglier from minute by minute. Regarding the fact that the trade is getting uglier overall - I have to disagree with that opinion. The long Silver short US equities trade is can be seen here (Silver vs S&P 500 chart) and here (Silver vs Nasdaq chart). Regular readers of this blog can easily recall from previous posts that I purchased SIlver on the last day of December 2011 and on 2nd of July / mid August of 2012. Specifically regarding majority of my shorts, they were established in August and some in September of 2012.
Two charts above are facts proven by relative price action. They show that long Silver vs short S&P or Nasdaq is not performing ugly at all, especially for someone with August 2012 entry. I understand that it is not making me money, but I am happy with the conditions of an extremely euphoric and overbought stock market and extremely pessimistic and panic plus oversold PMs market. I am happy to wait for months, quarters and even years until Gold reaches at least 3 times the value of S&P 500 (currently at 1 times value). I am sure Silver should do even better.
Hope that answers our questions and clarifies some misconceptions.
Thank you Tiho!
DeleteExcellent answer Tiho.
Deletei completely agree with you and have put on Short S&P/Long Gold trade a few weeks back and am waiting for it to play out
however what is your opinion about likely of deflation taking both silver and s&p down with it (like in 2007/2008) period.
Thanks,
A
Doc - thanks for interesting view.
ReplyDeleteArrjd - And the storm will definitely arrive.
Anonymous March 6 @ 12:11 PM - I have not made a call that US has housing bubble. I have definitely made a call that China has a housing bubble, but that is obvious to all. I did make a call that US Housing Stocks are extremely overbought and overvalued right now, so I strong correction is in the cards.
Hi Tiho,
ReplyDeletei wasn't implying the US presently has a housing bubble - just that they had a one and the Chinese version is somewhat larger!
Anonymous March 6 @ 12.11PM.