I have always felt semi exalted in the company of hedge fund friends, akin to the glamourous feeling of hanging out with the Olympians that makes you feel like a winner too.
The heroic trades of the year will not be mentioned here except that its been quite an exceptional year for him.
Over wine, satay, mee goreng and chicken wings under a nice full moon, he gave some golden insights into how he sees the world in the next 3-6 months.
It is going to be a transitory world and Japan will be slow which will frustrate many a hedge fund who have already run some miles ahead in the race for the BoJ liquidity. Growth will be slow and results will be disappointing even as the market continues with unshakeable trust in central banks.
For the next 3 months, he has parred down all his bullish bets and is legging in some defensive bets slowly. For him, the Russell 1000 Index (RIY Index) and DAX are obvious sells on head and shoulders or double top formations. Asians are no go’s and he would tend to the Mexican and Chilean pesos for beta plays. Gold has to hit 1500 before he sells.
He thinks that its a new norm unfolding right now as the market comes to terms with BoJ. There will be no immediate gratification and it is better to sit out the Spring Break once the euphoria dies down and volatility takes over markets in confusion.
I tend to agree with him, in his typical confident hedge fund candour, viewing us as ants from his world of dark pools and high frequency trading.
Zerohedge defined this new reality as this.
But we fell for it anyway.