Wednesday, November 30, 2011

Money For Nothing and Risk For Free?

Love days like today. Those hopeless shorties at Zero Hedge are fuming after world central banks decided to pump up the jam. I've been warning them, don't mess with banksters, not only do they get secret Fed loans, they borrow for free on the short end, lock in spread by buying bonds, and invest in risk assets like high beta stocks, EM stocks, commodities, commodity currencies and high yield bonds.

Lots of money managers underperforming their indexes. Both long-only managers and hedge funds. They need a mega beta boost, which is why I'm positioned for La Dolce Beta once more (click on each image to enlarge):

When people ask me what is the biggest tail risk I see, I tell them, "a meltup unlike anything you've ever seen before." Forget Europe, it's just a lot of noise and in the end, Germany will cave to demands of financial oligarchs and back a eurobond market.

There will be profit taking along the way -- there always is -- but if you focus on the right stocks and right sectors, you'll profit from the mega beta boost coming our way. In a zero rate world where banksters get money for nothing and risk for free, don't be left behind. Just remember to stay nimble, take profits, and don't be surprised if these markets heat up all over again. When things really heat up, it will be unlike anything you've experienced before.

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