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Martin Vlcek
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Martin Vlcek is a full-time investor and analyst who has been actively investing and managing money for more than 15 years. Martin has an Economics degree and he is currently a CFA program Level II candidate. His primary investment focus is on undervalued small-cap stocks with favorable... More
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  • The Next Market Crash? I Think Stocks, Real Estate And Gold Will Have A Panic Buying Rally First

    I don't waste time predicting the timing or the exact method of the next crash. But if I had to make a guess, markets can stay irrational much longer that we can stay solvent. Almost by definition, markets have to crash when most people are bullish and not expecting the crash.

    There are still plenty of bearish crash articles, so the bull has no other choice but to run higher. I also think there will be one last massive panic buying squeeze when truly every mom and pop investor realizes that the states around the world through coordinated central bank policies of negative interest rates, try to redistribute wealth and savings.

    Because other ways have failed or are impossible: raising taxes is a political suicide, so no party will propose that really. Trying to inflate the debts and inequality away stealthily every year through reasonable inflation has failed, precisely because when people sense someone is trying to instill inflation and have low future visibility about jobs prospects and retirement benefits level, people naturally get cautious and defensive, causing deflation and more cash hoarding.

    When this cash hoard truly starts to move from fixed income investments due to even more negative interest rates, that will be the time to sell bonds (or perhaps too late:)) but keep stocks as some of the money will move to higher yielding assets such as stocks, some to real estate, some to physical gold and most just to cash, depending on whether there will be a risk-on or risk-off environment.

    I am trying to position my portfolio in a more or less market neutral way, combining independent long and short equity positions as well as trying to hedge other factors, such as inflation and risk on/off). However, I am keeping an overall long market exposure and even own some U.S. Treasury (NYSEARCA:TLT) as they are some of the best paying government debt in the world when adjusted for risk. I even own the high yielding, relatively short duration but high risk junk bonds (NYSEARCA:JNK) as I believe this is one area where the final rush for yield may be directed. I keep buying tiny physical gold exposure as an insurance.

    Tags: tlt, jnk, gld
    Apr 27 7:22 PM | Link | Comment!
  • My Take On Greece - GREK Is An Excellent Long-Term Buy Opportunity

    I may be a contrarian but I see Greek debt in the long run as a non-issue not only for the EU but also for Greece. Only liquidity (short term ability to pay) is the real problem. I believe Greece does not have a solvency problem (long-term ability to pay off debt), especially given the fact that I believe debt should be paid down using property (privatization) similar as to when a private company bankrupts or is restructured. At least some property needs to go to the creditors. Corruption, tax-avoidance and expensive social programs are the real problem.

    If you compare Greek real debt/GDP at current lower prices of the debt which sell at perhaps half the nominal prices or less, the debt/GDP is not the highest in the world, and not much higher then in the rest of Europe. So any further giveaways to Greece make no sense and would not be fair to other EU countries that have lower GDP than Greece. Greece has twice the GDP of some poorer EU countries. Greece has much higher average wages, higher minimum wages and much higher retirement benefits and social security benefits than many other EU countries which are supposed to give away more money to Greece.

    Greece doesn't have a solvency problem (long term ability to service debt). Greece just has a bloated public sector, expensive populist leftist policies which kept increasing debt. Many other EU countries have a similar or worse problems, markets just don't talk about them for now. Instead, Greece has a problem that almost nobody pays taxes, Greece has some of the highest differences between the rich and the poor. Greece needs to tap these inside sources of liquidity before asking for more external money or debt forgiveness.

    Greece only has a liquidity problem (short-term cash flow problem) due to creditors finally not willing to roll the debt any longer unless Greece gets real and starts to get their spending in line with the rest of other EU members which had to make tough decisions and sacrifices or didn't live beyond their means for decades, even centuries.

    In conclusion, I see Greece as a non-issue. Almost entire debt is held by supranational institutions and the debt is a drop in a sea in relation to the EU economy (probably only one-time cost of 1% of the 1 year of EU GDP). Greece has ~10M inhabitants, or ~0.5% of the EU total. Every year, almost 1M migrants come to Europe so even if all Greek people became totally dependent, had no place to live and nothing to eat, the situation is easily manageable. It's a non-issue in the grand scheme of the EU economy. In case of default, there would be a few days of turbulences at most and Greek stocks (NYSEARCA:GREK) currently present a great buying opportunity in my humble opinion. The weighted probabilities of outcomes point to a much higher expected value than the current GREK price. So the risk/reward is great despite the fact that there is a certain chance of great or total losses.

    Tags: GREK
    Apr 26 11:24 AM | Link | 2 Comments
  • What To Do In Frothy Markets

    My take is that markets may stay irrational much longer than investors can remain solvent. In other words, you will go broke if you short the markets too much in the long run, if you bet on a recession or a collapse of anything.

    Markets are about supply and demand. If central banks are willing to buy and do "whatever it takes", it is not smart to fight them, no matter how much you think the markets are overvalued or in a bubble.

    BUT, there are plenty of overvalued stocks, especially in this frothy market. So it is very easy (and prudent I would say) to have a more or less market neutral portfolio at the moment in stocks (long-short equity strategy).

    Plus a truly diversified portfolio that includes many asset classes (some real estate, some U.S. Treasuries, some gold and various other asset classes and diversified strategies) goes a long way in the long run.

    Tags: SPY, TLT, GLD
    Apr 12 2:59 PM | Link | Comment!
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  • Also some liquidation of long $TLT U.S. Treasuries, partly flowing into U.S. stocks, mostly Russel 2000 $IWM but also S&P 500 $SPY.
    Jan 26, 2015
  • I see liquidations of short $EUR and GBP positions but the money seems to be flowing to short YEN and CHF, so no end to long $USD trade
    Jan 26, 2015
  • Futures up almost 1% after a surprise rate cut by India CB. China surprise rate cut came last year at the same level of S&P dipping below 2k
    Jan 15, 2015
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