“Maybe there’s someone hiding in their basement who’s more bearish than I am,” says Mark Spitznagel, but I’m “the most bearish investment manager that you will find today.”
The billionaire founder of Universa Investments exclaims, “stocks are the side show of the world. They shouldn’t matter that much. They matter too much. They’re the realm of punters, the realm of hair-trigger traders, flashing, colorful lights, blips and bleeps of Bloomberg terminals… What does matter is investment in capital, investment in the the tools of greater productivity, of really the progress of civilization.”
Predicting the end of this bubble is impossible “because it’s entirely Fed-driven.. and you’re relying on liquidity,” what we don’t understand about markets is there’s a buyer for every seller, there’s a seller for every buyer, “the market doesn’t owe you liquidity.”
Some key exceprts…
“The beautiful thing about the business is when the markets get really rich, really overvalued, really distorted like today, the cost of insurance goes way down. There’s incredible complacency. People are selling (tail insurance). This is another one of those carry trades that are so popular today. We’re back to this Great Moderation. There’s a religious belief that the Fed is our savior. And it’s priced into the market.”
“We’re at an extreme point today. We’re as extreme as we’ve been n the last hundred years except for 2000. You can read into that what you want. (The year) 2000 was one of the great bubbles in human history. So here we are today just shy of that.”
“(Predicting when this bubble will end) would be impossible, because it’s entirely being driven by the Fed and we don’t know what they’re willing to do next. I don’t know what lever they’re going to pull next.”
“Giant liquidity holes are a part of market dynamics. If you think you’re going to lean on these buy orders (in order to get out) is the height of naivete.”
“Stocks are the side show of the world. They shouldn’t matter that much. They matter too much. They’re the realm of punters, the realm of hair-trigger traders, flashing, colorful lights, blips and bleeps of Bloomberg termnals…(awkward silence).
What does matter is investment in capital, investment in the the tools of greater productivity, of really the progress of civilization.”
And finally to FOMO, and the consensus, Bloomberg asks “If the ECB is buying, and trying to inflate the prices of risk assets, OWN THOSE RISK SSETS.”
Spitznagel: “Right, this is what the entire world is doing, what you’re describing. Don’t fight the Fed, go with the Fed. But, of course, the problem there is we’re relying on our ability to change our mind, change our position. Is there an exit to this idea for us?
You’re relying on liquidity, of course. What we don’t understand about markets is there’s a buyer for every seller, there’s a seller for every buyer. The market doesn’t owe you liquidity.“
