Fidelity's Bolton Says Markets Ready to Fall, Shorts Shares By David Clarke http://www.bloomberg.com/apps/news?pid=20601087&sid=aY4u7jYFObWI&refer=home May 15 (Bloomberg) -- Fidelity International's Anthony Bolton, who has called bear markets successfully on two previous occasions, said stocks may be about to fall because there's too much risk in financial markets. Too much money is being spent on mergers and acquisitions, Bolton said at a dinner in London last night. Specifically, buyout companies are overspending on takeovers and are getting loans with few safeguards from banks, he said. Mergers and acquisitions for 2007 reached the $2 trillion mark today, 60 percent ahead of last year's record pace, according to data compiled by Bloomberg. Buyout firms have led a record $367 billion of takeovers so far this year, almost double the $187 billion of deals announced in the same period a year earlier. ``You are seeing mergers and acquisitions tittle tattle that makes me concerned,'' Bolton said. ``I can't tell you when it's coming but I can tell you the precursors are there'' for a stock market slump. As a result, Bolton said he has taken out short positions in the 3.2 billion pound ($6.3 billion) U.K. Special Situations Fund, which means he's betting on the declines of some shares. ``My views are based on behavior and sentiment,'' Bolton said. ``You can draw conclusions about what I am doing.'' Bolton also said last night he'd picked Sanjeev Shah to take over the Special Situations Fund, as he's stepping down from overseeing funds directly. Bolton, Fidelity's first fund manager in Europe, has previously anticipated stock-market declines. The 57-year-old dumped his holdings of telecommunications stocks, including Vodafone Group Plc, in the first quarter of 2000 at the height of the bull market for technology shares. Vodafone, the world's biggest mobile-phone company, fell 80 percent between March 2000 and August 2002. Bolton's closed-end Special Values Plc fund in March last year bought options to provide protection in the event of a drop in stock markets and also reduced borrowing in the fund to cut back on the risk of shares falling. Between April 21 and June 14 last year the U.K.'s FTSE 100 Index fell 10 percent.
I don't remember where I saw this, but credit derivatives have gone from $623 billion to over $34 TRILLION. But I'm sure everyone is hedged just fine, so don't worry.
I'm waiting for the building/lending market to finally start to "re-slump" which I think we're on the verge of seeing. This bounce back for the HB's and lenders has been a move of idiocy on buyers...I don't see how fund managers were buying these things back up. I've got puts ready, some are deep in the money leaps and I think when we see things fall apart in builders/lenders we'll see the rest of the market start to fall. That will be the re-realization. Home Depot and Wal-Mart's reports today should have been the wake-up indicators...we might see their real effect after options expiration this week.
Contrarians still smiling As long as there are people cite Faber, Tice and the earnings on the whole are coming in good, its clear sailing.
It will take some event to turn sentiment. Probably something not even on the radar screen right now. Markets dont fall from over valuation alone.
bolton looks mainly to find value rather than follow the trend.his track record is excellent. however,you must consider the rate of return on fidelity special situations mutual fund.starting in 1976/approx 30 years ago the fund has increased approx 1300%.ie £1000 invested then is now worth £130,000. now consider this,a mews house which i bought in hampstead/london.purchase price £26,000.in 1976.my input was £3000.mortgage was balance of £23,000.selling price now is over £1 million.so for my £3000 i got an asset worth over a million 30 years later.you must decide which has the better return.incidentally,my sharer at the beginning as philip green now sir philip
as you can see real estate has had the better return over the 30 years in question.only because you can gear up/leverage.thei does not mean that returns will be the same in the next 30 years
you can gear up/leverage with stocks and other financial markets. you're apple/oranging your argument.
boltons methods are treated with great respect in the uk.however,all i am saying is.that if you rolled up and bought a reasonable piece of real estate around london youre money would have outperformed his investment strategies.ie my £3000 cash is now worth over a million,even discounting the mortgage.also it is tax free in the uk. £3k invested in 1976 in his fund is worth approx 390k,minus 40% tax.. approx 600k diifference