The Founder of one of the world’s largest asset managers, the $30 billion hedge fund Blue Crest Capital, Michael Platt, spoke to Bloomberg yesterday about why present conditions are “worse than 2008” and why he is out of risk assets and prepared for the likelihood of a renewed credit crunch in 2012:
“The most important thing to remember about crises is you do not make your money going into the crisis. When you go into a crisis such as 2008, markets trade against positions. People have positions on and people need to get risk off. All the things that people thought were a good idea start going into reverse. The big money you make in trading is more in the aftermath of the crisis…No buy and hold”.
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Danielle, do you agree with Platt?
numbers dont lie great interview the worst is yet to come preserve capital is the mantra
Yes. At our firm we follow a very similar approach and are positioned very similar to what he describes in this clip.
Thanks.
I have never been 100% in cash for my entire retirement accounts. But after viewing Ms Park’s interviews from the Money Sh0w’s Kate Stalter (wasn’t she with IBD?) I did some back-testing on past commentaries dating back to the 2008-09 fiasco’s and realized that Danielle seems to have a good grip of the grim situation ahead of us.
Thanks Danielle. I’ll patiently wait out this Bear. Thanks again for all your great work. Much appreciated. Merry Christmas to all.
The reason 2012 may be worse than 2008 is that 2008 was essentially a liquidity problem where banks stopped lending to each other. Today, we have massive sovereign debt problems, and debt cannot be made to disappear. Someone once said that debt always gets repaid: either by the debtor or creditor. In a structured corporate bankcruptcy, debt is converted to equity, and the existing shareholders get wiped out, and the company re-boots and starts again. Unfortunately, you can’t do that with governments, especially since debt never gets re-paid anymore; it simply gets rolled over. This is quite a fascinating experiment of capitalism gone wrong; and of course, the final outcome is quite unknown. But extreme outcomes of either hyperinflation or a deflationary depression cannot be ruled out. What a mess.
Very well said, Trevor.
Hi Danielle,
I am now 100% cash. I guess my question is how do I ensure the safety of this cash. Should I be solely in GIC’s and, if so, what time frames? Am I safe to hold some of my cash, especially in my non-resgistered account and TFSA, in high interest (at least that’s what they call them!!) savings accounts. Of course, one has to keep in mind the rules for Canadian deposit insurance. The question may sound naive but my concern, of course, is that if things go to hell in a handbasket safety may become relative.
I am so grateful for the heads up in 2007. I’m hoping to weather this coming storm as well.
Merry Christmas to you and your family.
Paula