Friday, November 22, 2013

Poor Hugh Hendry Capitulates


"I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years' time."

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."[...]

"Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending."
I'd rather lose half my clients than half my clients' money.


Taylor Conant said...

He makes two miscalculations:
1.) That his reputation was based on something other than fighting this trend.
2.) That he will have a reputation left after this savages him.

Very sad, indeed.

CP said...

Poor guy, I wonder if he was under a lot of pressure?

By the way, I've decided that Buffett (as a billionaire and not just a successful non-famous guy) is explained by: leverage, buy big dips, and no mark to market.

CP said...

Hendry is down 5.2% YTD in his main strategy (in Euro).

And down about 3% for the past two years combined.

That's obviously not great but not really that bad.

I don't think it would be wise for investors to pressure him to do something he's not comfortable with after just a modest loss.

CP said...

He's become quite a currency trader:

Taylor Conant said...

Your assessment of Buffett seems on point but doesn't it just beg more questions?

1.) Why do some people get blown up by leverage but Buffett excelled in its use?
2.) Why weren't other people around and able to buy the dips that Buffett bought?
3.) Why haven't other people discarded liquid investment vehicles in favor of fixed/permanent capital models like Buffett?

Anonymous said...

I guess "poor" can be understood to encompass "rich"...

As for Buffett, sure, of course. But really, to be a rich guy yourself all you have to do is buy low and sell high, right? What could be simpler?

I guess that points to another question: does anyone really do macro well?

John said...

A couple of comments:

- This shows it's extremely hard to consistently generate superior results when your investment decisions are based on top-down macro calls.

- Being right too early is same as being wrong.

- Can't remember who said it: It's always tempting to be bearish because it sounds intellectually more sophiscated.

- @Taylor - On leverage: Buffett doesn't get margin calls on the leverage he got from his insurance floats.

John said...

Oh, one more: When the last guys standing are capitulated, we are at the peak of the "bubble".

This reminds me 2000 bubble.

CP said...

WSJ: "Burned Short Sellers Adjust as Stocks Keep Rising"

"Funds that are dedicated to short selling are closing, and others are starting long-only funds"

whydibuy said...

With the fed back stopping the markets and feeding in cash indefinitely, only the truly silly would want to miss out on this market. It doesn't get better than this senario. Add in the still bearish cp and others fretting over doomsday and you have a bull market climbing that wall of worry.