http://www.bloomberg.com/news/artic...-december-fed-hike-likely-but-not-a-done-deal El-Erian is 30% in cash
Bought a 1.8% position on GREK, will exit if it breaks lows on a closing basis. Unless its there because there are rumours of a EU exit, in that case I will just wait and hope they actually do it
There is some prescedent for a 'immaculate' recovery for Greece. On Bernanke's book (not the recent one but the Essays one), he has a lot of data of countries in and out of the gold standard in the 30's. He shows that leaving the gold standard boosted wholesale prices and industrial output (among other things) but even the countries that stayed in the gold standard, they eventually rebounded. I'm sure they were helped by the neightbors (who left the gold standard and boombed) which doesnt look like Greece's case (since everyone around them is stuck in the EUR, which is like a gold standard) but its good to know that it can happen. If any of the Greek's trading partners booms, that should help them. Its like owning a cheap call option in a bunch of countries
As a matter of fact, its like owning a cheap call option on the ECB dovishness. Of course, they aren't going to go very dovish anytime soon (as their lunacy doesnt seem to end) but at the same time, no one expected Abenomics, and look at what that did to Japanese stocks. If one day there is ever something like that in the EU. Greek stocks are an easy triple
Here is a fun fact, if you ajust for the splits in the 80s and 90s Brazil's Bovepa index is up from 100 in 1968 to 640 million today (640,000,000.00) A nominal compounded return rate of 38.61% (~7.5% real) And there are people that doubt that stocks can protect you from inflation I'm even considering buying some black swan calls in the Bovespa just in case hyperinflation happens again. It wont, but boy, if it does, the calls would go ballistic
This is also why they are/were an opportunity, in a inflationary economy, stocks rise. Its that simple. The fact that they were hold down for years (even in nominal terms) suggests they were getting cheaper. Its kinda like a volleyball being put underwater, when you let it go, it jumps to the upside
http://tinyurl.com/zzm38sq New Drobny book coming next year. Although judging by the 2 first interviews (Bass and Chanos) it wont be a good line up. These two guys havent made any money in years all because they were too bearish But it should be worth it just for the Leitner and Drobny updates
Here is another fun fact, from 1980 to 1992 Brazil had its worst fiscal crisis ever, it was so bad they had to print money. There were 5 currencies during this period (they all went to zero or close to it). It also had 3 sovereign debt crisis. Yet stocks averaged a return of 12.3% a year in USD terms. So, something like 9-10% real Yet Brazil's biggest and most sucessful money manager is afraid of stocks because he is worried the government cant pass all the reforms. That sounds pretty ridiculous to me
I stopped at 1992 to negate the effect of the optimism that started in 93/94 when people started to see that hyperinflation was going to end. From 92 to 93, stocks doubled in USD terms. So I'm being conservative