Trading The Chaos: One Hedge Fund Manager’s Strategy
By Chris at www.CapitalistExploits.at
Today I have for you a recorded conversation with Harris Kupperman (Kuppy), a friend of mine who manages Praetorian Capital, a Florida-based hedge fund. Kuppy is one of a clutch of guys who I call on to stress test my views and vice versa. Sometimes we disagree, though more often than not we don’t.
Either way, Kuppy’s views are always, always valuable to me.
In this conversation we discuss, among other things:
- What Kuppy bought the weekend after Brexit.
- A trade you can still put on to profit from the Brexit fallout.
- Kuppy’s current views on emerging markets.
- What asset Kuppy thinks is “gold on acid”.
- How he’s positioned and has been playing repeated crisis events.
(click on the image to listen to the podcast)
In addition to the above, I’ve got some thoughts on the failed coup in Turkey and why a coup in a land run by an obvious IS supporter and dictator and where people wear funny hats and eat chicken for desert (tavuk gö?sü) matters.
Turkey is important for a host of reasons but let me just mention the most obvious one today.
A global and rapidly increasing risk to liquidity is here. Coups (failed or not), regular shootings, and terrorism, as I discussed last week, are all net negative for liquidity. And liquidity, my friends, is what our central banker friends have been so desperate to sustain.
Global capital flows will continue to shift and, in fact, accelerate as capital searches for liquidity, because liquidity provides safety even if it is being sought in asset classes which are ultimately flawed.
Understanding what is happening and why it is happening is all that matters because like it or not, we have to deal with the world the way it is, not the way we want it to be.
Consider how portfolio managers from Manhattan to London and in-between are currently restructuring portfolios, many of which are mandated to invest only in certain asset classes which themselves are selected based on a number of criteria, a deciding one being volatility ratios – ratios which are now blowing out. If we get a Brexit, a coup, or a terrorist attack every week, we’ll be experiencing entire indexes gap every day.
Here are some things that you as an informed and intelligent investor may want to consider:
- What do you think Brexit, terrorism, and coups do to the psyche of an investor?
- What do you think they do to the businessman deciding whether or not to increase or decrease capital expenditures in his business? (Hint: it’s not positive)
- What do you think they do for the 26-year old entrepreneur trying to raise a series-A for his company SnipSnap-FlapJack which, unbelievably after hundreds of millions invested, doesn’t make any bloody money? (It was all about growth, remember?)
- What do you think this does for the CEO of Smart As Shit Ventures, a Silicon Valley venture fund on the other side of “Mr. Series-A” mentioned above, who’s just had to mark-to-market (downwards) his latest investment in FlimFlam-FlipFlop (or some equally snazzy …read more
Source: Trading The Chaos: One Hedge Fund Manager’s Strategy
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