Wednesday, November 13, 2013

Time To Go To Cash

"The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak." - Hussman

We are sitting at a 2006 moment here. There are no net nets, no distressed debt, lots of IPOs, lots of junk debt with bad terms being floated, expensive valuations, lots of leveraged speculation, etc.

Remember, there was a "Bernanke Put" in 2007 too.


Anonymous said...

Doesn't "look" like 2006 in this dataset.

Anonymous said...

With there were a screener that has overlay to filter out all results that have word "China" in the 10-K.

eah said...

"most hated rally in history"

Taylor Conant said...

So according to your commenters then, you've decided to look like an idiot before the peak.

Anonymous said...

Better rich than famous.

CP said...

These posts have been bringing out the permabulls the past couple years.

I'm fine with being an idiot now just like I was in 2006.

P.S. It's possible to screen out non-U.S. net-nets and the result is that there are ~0 U.S. net nets and haven't been any for a while.

Anonymous said...

CP, I think the takeaway might be better to move towards a "Workout" portfolio bias (liquidations, etc.) rather than a traditional "Buy and Hold" bias. SD

Anonymous said...


The (few) long-only funds who reported positive CAGR from the 2007 thru 2009 window were oftentimes long Fairfax, per the CDS that FFH held on their books.

In other trivia, one could have top-ticked WMT or MCD at the market top, and still had a positive CAGR (and very liquid portfolio) at the absolute bottom tick in March 2009.

Will be interesting if FFH, once again, calls it right - per their hedged book.

The valuations of MCD, WMT, AZO, and a few others were actually compressed in 2007 era - surprisingly, and then earnings growth even in the crisis was enough to eke out an IRR. Not quite sure if today have compressed entry points for these type of names.

There are a few self-liquidation asset situations out there, for example a name that is Australia traded -- where the distributions will likely be meaningfully in excess of current market cap, and there's a nice line of sight in the events and the numbers. This type of thing, in aggregate, perhaps is the place to hide if indeed are in a calm-before-the-storm moment.


Anonymous said...

Isn't ALCS a net-net? Shareholders recently voted down a buyout at $ at $10.50 now.

CP said...

I'm not sure you can find big cap equities that are going to do well in what is about to happen.

I'm fine with special situations. Are there any good ones out there?

whydibuy said...

Oh, so what is about to happen??

Permabears see apocalypse everywhere all the time.
ZH has had at least one chart a week for the last three years showing how we are about to peak out and plunge, as we climb to all time highs. This reminds me of those congressional hearings back in the 50s about how the market was about to crash again and what to do about it. With all the doubt in the market i know it is very safe to stay 100% long.
PS, when HASN'T hussman been bearish?

John said...

As far as I am aware, this is CP's only timing call on the broad market.
He clearly is not a "broken clock."
I think his call has a decent chance of being the best timing call of this decade