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Tao Long

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  • Macro History And Reforms Could Drive Chinese Stocks Higher [View article]
    Hi Mike, I totally agree that walking the walk is much tougher. However, I am making a bet that for our trading horizon, talking right is good enough (60% market rally in 12 months as argued above). Reagan did just that in early 1980s; Abe did it last November. This initial stage rally depends more on cheap valuation and a confidence boost from new leadership.

    A long-run bull market does require walking right. The more I read Ray Huang’s book, the more strongly I feel that Beijing is walking the walk. Huang wrote:
    “The historical experience of several developed nations indicates that modernization is always accompanied by economic growth and expansion. Not all the steps can be planned beforehand. On the whole it comes as a result of the convergence of internal and external pressure. Once a breakthrough is reached, furthermore, the established pattern will work out its own future path. Government guidance and assistance, while still needed, will take a secondary position. The features of a pluralistic society will emerge as a byproduct of economic diversification. This is to say that a great deal of spontaneity will accentuate the process. The prerequisite of such a breakthrough is the removal of all existing obstacles, not the introduction of ideal solutions for hypothetical problems. For all we can see, China has already passed this crucial point.”

    A side note on Abenomics: it seems the third arrow is much harder to pull off than Abe thought. More pressure will be on BoJ to manufacture another leg down on JPY. Staying alert here.
    Oct 31 12:59 AM | Likes Like |Link to Comment
  • The Hog Cycle And $70 Oil [View article]
    Hi Randal, thanks for sharing your father’s real-life experiences of hog cycles. As flash9 points out, the market majority is bullish: this trade might be too early; without trend-followers on board, the crash bonus will be hard to get. But given the asymmetry of the payoff profile, I think it is worth pulling the trigger now.
    Thanks for all your comments.
    May 6 09:25 PM | Likes Like |Link to Comment
  • Trends In The Cost Of Energy [View article]
    Great article and comments. Can we make a bearish case for oil, given the above?
    Apr 6 09:22 AM | 1 Like Like |Link to Comment
  • Renewed Euro Crisis, Rising Inflation To Push Precious Metals Higher [View article]
    After a 12-year rally, long gold right here right now is like buying insurance--it pays off big time in turbulence, but you pay the premiums otherwise. It seems prudent to have an insurance for the finale of global currency wars ahead, but a difficult trade to hold on for speculators given the premiums to pay before the hard-to-time storm.
    Mar 17 11:16 AM | 1 Like Like |Link to Comment
  • How Gas Really Gets Priced [View article]
    A great primer.
    Mar 15 03:01 PM | 4 Likes Like |Link to Comment
  • Trade On Abenomics [View article]
    Ben, both are reasons to doubt the ultimate policy success of Abenomics. As Svensson argues in his NBER paper (see link above), the centrality of yen lies in its role in manipulating inflation expectation. Consistent with your observation, research has indeed shown the declining sensitivity of the Japanese trade to yen.
    Feb 28 05:25 PM | 1 Like Like |Link to Comment