Below please find a transcript of our free monthly letter sent to our readers earlier this week. If you would like to subscribe, you can do so here:
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Dear Friend,
I'm short. Been short for some time now - 3 months actually. It's hurt, kind of...save for the fact that anything with a hint of global growth hasn't really done well. So maybe the only thing hurt is my ego. But you know what? I got a flush on the flop and so now it's time to go ALL IN short and shake the other guys out. You see, in case you deleted the last letter, I am not a believer.
Global growth continues to be under pressure. This week's global manufacturing PMIs were a huge disappointment across the board. Jobs growth...ehhhhh, I guess if you don't care about wages. But hey stupid, that means corporations make more and your stocks go up making you feel richer. I told my handyman, personal trainer, and house cleaner that Bernanke is doing it for their good and that they should be happy their stock portfolios are rising. They agreed, but wanted to know first who was Ben Bernanke. I feel like telling them, why don't you just put $1 million in the market and make 10% per year, so you wouldn't need to clean houses or fix my shower! Savings accounts are for bozos - just ask the Russian Oligarchs.
I pray and hope the paper shufflers of 200 West and 270 Park will make it right again. Internet IPOs going up 500% on day 1, CDOs of CDOs of CDOs. The good old days were good for all! We'd tip well at Del Friscos and make sure to give an extra $100 to the girls at Flashdancers. Who said trickle down doesn't work?
And maybe, just maybe, Ben Bernanke has found the magic formula. If you make money unappealing it will force people to take on more risk. Why didn't we think of this brilliant idea before!?! Just print money and buy assets. Duh! The perpetual wealth machine. Now I understand why I didn't make it into Princeton's Phd program.
Despite these jabs, I do believe in something...I still believe in America. Cheap energy, cheap housing, cheap food. What else do you really need in life? I travel around the world and even after being harassed by Immigration, I always think to myself how much this country kicks ass. "Hello Fat American," I shout in glee!
But you know what, you can believe in America and not believe the markets sometimes. Markets are global. 50% of S&P500's earnings come from abroad. And I think it's pretty clear, I am skeptical of the rest of the world right now. "South Africa is the future of Africa," they tell me...even Mugabe laughs at that one. Russia has learned from the past and has diversified its economy away from oil. Sure thing, Oleg. Australia's future is secure - you can make $150,000 driving forklifts in the Outback...uh huh. There are more cranes in Toronto then New York and Miami combined, because don't you know, Toronto is where everybody wants to live!?! And so yes, the adjustment in these places will hurt.
But such adjustments need not change the longer term fundamental outlook for America. It's getting better, I promise. One day, when we have a new Fed Chairman who actually understands how the real economy works, and more importantly how real middle class people work, live, and prudently save, we'll finally let go of the Voodoo economics. More Teslas and Apples and less Goldmans and Morgans - we're getting there.
MM
Disclosure: I am short EEM.