Fleckenstein was one of the very few of us who saw the 2007-09 financial crisis coming and prepared client capital not to lose with the masses, but to profit from it. Shorting has intense capital risk and is not recommended for the savings one can’t afford to lose, but his comments in this clip are interesting given that he sees similar downside today as at the 2007 cycle peak. Our own analysis concurs. That said, shorting is not the only way to benefit from extreme financial conditions. Positioning to avoid the losses and be liquid for the aftermath is also an incredibly valuable strategy. Of course, the long always financial crowd insists it isn’t possible, since most make their fees by keeping others thoughtlessly buying and holding no matter how horrific the odds of lasting success.
Noted short seller Bill Fleckenstein, who correctly predicted the financial crisis in 2007, says he is one step closer to opening up a short-focused fund for the first time since 2009. In the meantime, Fleckenstein says the entire market could be heading for calamity in the coming months.
“The market is uniquely crash-prone,” Fleckenstein told CNBC’s “Fast Money” this week. “I think the market is very brittle because of high-frequency trading, ETFs, a lot of momentum investors. I don’t think there’s going to be any painless back door.” Here is a direct video link
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