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The International Investor

May, 2016 Archives

Da Vinci’s Sapere Vedere

By Benjamin J. Butler

 

Airport Lounge, Seoul, South Korea

 

Last year I had a lost in translation moment when briefing a Sovereign Wealth Fund on my thoughts for the future. After I said something about the global economy and the likely moves of the Federal Reserve, the investment manager quizzed me: “So you are analyzing some data that the Fed doesn’t have?” 

 

Having become independent many years ago (it was the only way I could be 100% authentic and creative) and no longer working in the trenches of the banks/investment management community, I had forgotten the degree to which people emphasize data. There is almost an obsessive need for more and more data, as if the person with the most data wins.

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The New Silk Road

By Benjamin J. Butler

 

I must admit I am getting tired of being bearish. Nevertheless, global markets seem to be under pressure from more confusion over central bank policy (this time hawkish minutes from the Fed).

 

In 2007 and at other times when I made quite cautious calls on various markets, I was comfortable in the sense that if I was right, it would just provide a wonderful opportunity to invest. If I was working for someone else, of course there was the risk of being fired, but I was always relatively confident of getting another job. It was getting my first ever job on Wall St. that was the toughest. After that, thankfully, I never had to apply again.

 

This time around, I have been fearful of societal breakdowns, civil unrest, terrorism and regime change.

 

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Concerns Mount

By Benjamin J. Butler

 

Hotel Lobby, Hong Kong

 

I always thought that markets were like supertankers. This one has been taking a long time to move around. I guess I was early in the last cycle as well. Thankfully on that occasion I didn't start shorting in 1Q of 2007 when I started getting quite worried about the US housing market.

 

We have been going sideways for a year in the S&P 500. But other asset classes have performed badly or had bouts of volatility. To me this is all consistent with the last stage of the cycle -- a major top in financial markets, which will converge with the political cycle. Some very bright macro minds seem to concur with me, including George Soros, Stan Druckenmiller and others who were right about the Global Financial Crisis (GFC).

 

I always thought that markets were like supertankers. This one has been taking a long time to move around. I guess I was early in the last cycle as well. Thankfully on that occasion I didn't start shorting in 1Q of 2007 when I started getting quite worried about the US housing market.

 

We have been going sideways for a year in the S&P500. But other asset classes have performed badly or had bouts of volatility. To me this is all consistent with the last stage of the cycle -- a major top in financial markets, which will converge with the political cycle. Some very bright macro minds seem to concur with me, including George Soros, Stan Druckenmiller and others who were right about the Global Financial Crisis (GFC).

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Regime Preservation

By Benjamin J. Butler

 

American Club, Hong Kong

 

As some readers might know, I embarked upon a nearly 500 km hike -- I prefer to call it a pilgrimage -- around the Korean island of Jeju. It's a stunning volcanic island with fascinating flora, fauna and cliff formations that can only be found in a handful of countries in the world. Its forests have both tropical and polar trees and vegetation, and I am told that this is the only place in the world where they coexist. It's no surprise that they won three UNESCO awards pertaining to the environment. The island is also home to one of the last indigenous peoples in the world, and recently many writers and filmmakers have made visits. I am even considering making this place home or at least having a “summer home” here.

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