Comments on: REVIEWING OUR 2009 INVESTMENT PREDICTIONS

By: Frederick

Frederick — Wed, 23 Dec 2009 00:50:57 +0000

TPC: Thanks for all your work. I appreciate your attention to risk and constant empahsis on risk adjusted return. This was an exceptionally difficult year to ever be ‘all in’, and there is no shame whatsoever in not capturing 100% of the available return in the stock market this year after the phenomal 2008 you had by missing all of the downside. (I believe your returns were actually quite positive in 2008, right?)

Your site really helps me. Thanks again.

By: Gordon

Gordon — Wed, 23 Dec 2009 00:16:38 +0000

Your comment in point 10 about corruption in Russia may be valid or not, I don’t know. But from all that I read, the levels of corruption in corporate and legislative USA now surpass anything seen before and must eventually have some dire effect. Will this influence your next predictions for the domestic scene?

By: Naa

Naa — Tue, 22 Dec 2009 19:36:44 +0000

Great work, TPC!!!

I am still waiting to see if you plan on having a model portfolio on your site – which will be helpful in executing these macro themes.

Thank you once again for all the hard work you put in.

By: Octopus

Octopus — Tue, 22 Dec 2009 17:38:43 +0000

Power of reflation trade was almost impossible to gauge. I’t's good enough if you had a decent performance in 2008 and were able to catch a part of 2009 move.

By: TPC

TPC — Tue, 22 Dec 2009 16:47:47 +0000

The power of the reflation trade truly took me by surprise. We have never seen this amount of money poured into a problem. We will not see the underlying weakness of the economy until the stimulus ends and that might not occur until mid to late 2010.

By: TPC

TPC — Tue, 22 Dec 2009 16:46:21 +0000

Therein lies the problem. I am rarely unhedged. Going all-in always looks like the better option in retrospect, but as I often say, it only takes one black swan to ruin years of work. I am perfectly fine getting some of the upside so long as I can avoid most of the downside.

By: TPC

TPC — Tue, 22 Dec 2009 16:44:26 +0000

Thanks for that. Time to hire an editor!

By: TPC

TPC — Tue, 22 Dec 2009 16:43:46 +0000

I thought the government’s efforts would begin showing some signs of inflation by now and that the Fed would be pressured to raise rates. That is clearly not the case though.

By: Anon

Anon — Tue, 22 Dec 2009 15:03:00 +0000

The reflation trade is puzzling to me too – there have been almost no signs of inflation. This shouldn’t be surprising as even the huge amounts of money thrown at the problem pale in comparison to the amount of credit being withdrawn. What has really happened is that inflation is likely being exported to China and other emerging markets as hot money flows. If the Japanese experience holds any water as an analogy, inflation may not be a problem for years. That’s not to say that it won’t eventually rear its ugly head, but in my view deflation will remain the chief concern for many YEARS (not just months).

Ironically, I think the success of the reflation trade may be its own undoing – pressures brought on by markets raising the spectre of unanchored inflation expectations may force the Fed to withdraw liquidity faster than they want and also foreclose the possibility of additional fiscal stimulus. If this happens in the back half of 2010, that would be right when the economy is most vulnerable, as the natural inventory bounce tapers off and the mortgage reset problem hits hard again.

While I view that scenario as a long-term positive in that necessary deleveraging will occur with faster pace (with caveats – we clearly need some sort of safety net in place to prevent a panicked downward spiral), in the short term the consequences may be more like the 1937-38 deep recession.

By: Ken

Ken — Tue, 22 Dec 2009 14:28:16 +0000

Great job……look forward to your 2010 comments if not already out yet…