tag:blogger.com,1999:blog-6798074091942701235.post6620030114709184102..comments2024-03-29T01:35:09.550-04:00Comments on Can Turtles Fly?: Hugh Hendry November 2009 commentary - The deflation argument [very long]Sivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6798074091942701235.post-1671603652716856262009-11-30T05:26:09.000-05:002009-11-30T05:26:09.000-05:00Rogers has said himself he's out of stocks and...Rogers has said himself he's out of stocks and has no investments in commodities. He strikes me as someone who is going through a mid-life "reinvention". Moving to Singapore. Denouncing the world's only economic superpower (US) as a has been (although its consumers strangely account for almost 20% of world's GDP)...convinced the world is going to start speaking a language most Chinese don't even understand (Mandarin). Sure, he was right about commodities in 2004 as China was embarking on a massive boom. But I think the problem in the longevity in his thesis is that he ignores the fact that China is purely a currency manipulation story that is soon going to be very abrasive to its neighbours.<br /><br />Their massive exports have been replaced with stimulus spending in the form of credit expansion. What happens when this dries up? Rogers et al would have us believe that suddenly the Chinese consumer will replace the US consumer and all this huge over capacity in China will be redeployed to local consumers.<br /><br />Hugh Hendry once described China as a deep out of the money call option on US consumption. This year, we have seen US households reduce debt for the first time since 1954 and they are saving at a rate of $500bn + annualised (greater than the Chinese surplus bonanza, I believe). So what does this mean for Chinese over capacity? Rogers does not see this as an issue because he's so one eyed in his belief that China will somehow rival or replace the US.<br /><br />I like EEV (Ultra short EM on Proshares) but the Ultra short Xinhua 25 is a good proposition. Risk will be re-priced once governments start to default and the second leg of the GFC takes grip. Ultra short SP 500 (SDS) is also getting quite attractive; stimulus spending has had no impact on stemming the unemployment issue. Again, what happens when the stimulus programs wind back.<br /><br />This is a great time to be making money - Henry's fund will have a stellar year in 2010. I'd put money in it. Dave Bnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-63629507471233579462009-11-28T13:27:30.000-05:002009-11-28T13:27:30.000-05:00Thanks for the compliment...
Yeah, Hendry is hila...Thanks for the compliment...<br /><br />Yeah, Hendry is hilarious at times. I can't think of anyone else eating a banana in a tv studio--refer to the 2nd clip in my CNBC Euope post if you don't know what I"m talking about. Hugh Hendry does fit the stereotypical notion of a contrarian--contradicts the consensus, not scared to say something, top-button loose on his shirt, geeky glasses, etc. I'm not sure how much of that is for show but he does fit the type of personality that can work for this type of investing. It's always good for contrarian to have a sense of humour because things will go wrong--in fact, one may be against world consensus for a long time.<br /><br />The concern I have with Hugh Hendry is that his recent strategies--the asymmetric bets--are closer to gambling than a macro or fundamental bet. I have thought about buying options on TLT (20 yr US Treasury ETF) and I just can't get a handle of how to price that.<br /><br /><br />As for Jim Rogers, I respect Rogers because he was right on commodities long before anyone even knew what they were. I remember him being very bullish back in 2004 and his thesis has been correct. Although who knows what his actual performance or holdings are, I do think think his major macro bets were correct. I think he is still invested but perhaps only in commodities or Asian shares (I have no idea.)<br /><br />However, as you allude to, Jim Rogers is not transparent and some of what he says is completely misleading. For instance, he has been "getting out of the US$" for, what seems like, the last 10 years. Are you out of the US$ or are you not? I think someone blindly following Jim Rogers will probably lose more money than, say, reading my blog ;)Sivaram Velauthapillainoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-42895538635772446162009-11-28T02:40:57.000-05:002009-11-28T02:40:57.000-05:00I like your article and - if anything - Hugh Hendr...I like your article and - if anything - Hugh Hendry does attract good debate. He is very amusing on the screen, as well.<br /><br />I am not sure I would include Jim Rogers in the camp of credible investors. Credible self promoters - yes. Credible from his former association with Soros - sure. But Rogers, as far as I understand, has pulled all his money out of the market a while back. I tend to think that if you choose to rant, a pre-requisite to being granted air time is to put your money where your mouth is. Hendry does (roughly half the capital of Ecclectica is his). Rogers doesn't. Dave Bnoreply@blogger.com