Yeah, certainly could very well be... He certainly sounded p1ssed off at Ackman in the release. I do agree with Icahn, though, in that Ackman's obsession cannot be a good thing.
So, about that GDX... The idea behind my bullishness on gold has to do with the view that people will be chasing that meal in this period of record Central Bank intervention, global debt (leading to financial repression ala Rogoff Reinhardt), war on cash, etc. The global fiat money experiment has been around since the 70s and by and large what we have now (CBs balance sheet levels and record low nominal and real interest rates) is uncharted territory, the uncertainty of what will happen next TENDS to be positive for gold. This didnt happen since 2011 as gold kept getting wacked (in USD terms) but this year this changed. So the price action joined the fundamentals.. The thing with the equities is that they can provide a lot more upside for the same level of risk. People dump then with abandoment during unfavorable periods and chase them like madmen in favorable periods. So risking the same amount of $, you can get more bang for the buck. At least thats the thesis I wish I had bought some earlier in the year instead of only using GLD. They are up huge (I imagine the juniors are probably up even more). I'm doing the next best thing though, which is to buy the first significant pullback in prices I would consider bailing out of this trade if the price action on GLD were to change materially (like in 2011/2012/2013 where big pops were getting sold and the chart had a number of lower highs) Otherwise I'm expecting gold and gold stocks to keep uptrending for years and maybe even parabolic at some point
In the current enviroment Gold is probably one of the best hedges against US economic weakness and a recession, the Fed has already promised to do more QE and even expand the menu of items that they buy (corp bonds? stocks?). So I believe that in the current macro enviroment it makes sense to be long risk in moderate amounts (20-50% allocation max) with things like stocks (I'm in mostly the Ackman fund, Brazilian equities, BRKB, OAK ) and some HY bonds and use gold and gold stocks as hedges. In the beginning of the year we saw US stocks collapsing, economic growth concerns and yet gold did well My thesis here is that I got positive expectation in both sides (risk and hedge) but they tend to negative correlate in the short-term. This is the ideal scenario Addional hedges are the USD (particular to me because I'm a non-US trader), long bonds (I got a moderate exposure there) and ocasional SPY shorts (though the current one is not looking good, I will exit next week if it continues to creep higher)
The only thing that could smack this portfolio hard is if the Fed comes out strong in the hawkish side. In the past I would hedge that out bit with Fed futures but I'm now considering that a hawkish fed could be a good thing. It would throw some sense in the global trend of compressing risk premium in stocks, bonds and real estate. Short-term it would be painful but long-term it would be good Still, I will short Fed futures if I believe it makes sense. I covered my small short this week as I think they are fairly valued. They are already tough to make money on, when I get something, I take it and run In the old days they were a cash machine, these days, everyone got a pretty good idea of what the Fed is up to
Another strategy worth that I believe fits the current macro landscape well is covered call writing (or its equivalent, put selling with cash to back it up). Its a way to get long exposure while at the same time limiting drawdowns. Yes, it can lose a lot in case stocks fall off a cliff but you would lose even more by just going outright long. This strategy will cut some of your downside while giving up some of the upside I'm applying it on BRKB.
Why not be more aggressive and load up on risk with 70-80% or more of capital? Because risk premiums have been compressed a lot, the combination of valuation (high), sentiment (complacent) and risk factors (Fed removing liquidity, China, EU desistegration) creates a good chance at some point we will see risk premiums expand. If one is loaded up on risk, you will be facing a significant drawdown and at the same time, having little or no cash to deploy in an enviroment where higher returns can be achieved. For that reason, I prefer a more cautious risking taking allocation
I'm also considering buying some of GDXJ. Its similar idea to GDX, but these are the juniors. They will be even wilder. If gold continues to uptrend and reaches $1500, these things are likely to go up huge