Biggs is usually very bullish (last year he turned bearish for about 15 minutes reducing his fund's exposure. After a quick bounce in the equity markets he turned around and increased his bullish bets. He was right), so, bringing arguments contrary to my structural fundamental view on the global economy.
Again he has valid points and acknowledges important facts: US housing double-dip and EM inflation.
His take: the recent meltdown is actually bullish for stocks as it helps policy makers fight inflation.
And I agree 100% with him.
His multi-year experience in "structural fundamentals x corporate earnings" is very important to any investor, one that I have to work on.
Tail risks are to be hedged. Not to be bet on (unless asymmetry is hugely positive, with expected return barely around 0/positive). On the opposite side of catastrophic tails resides politicians, Governments and their Treasuries with their printing presses, powerful industries and Central Banks. Always there to structure the bail-outs.
2011 05 10 - Itaú Global Connections #41 - Barton Biggs, Traxis Partners
*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com