We have previously covered Crispin Odey, his hedge fund and his bearish stance on the US Economy/Markets. According to Bloomberg he did not have a good October.
Considering the above, one would believe Mr. Odey is covering his short positions. One would be wrong.
Not only that, I firmly believe that the only people investors should be listening to right about now are the people who got 2000 and 2007 meltdowns right. Everyone else is just blowing smoke. Crispin Odey, the founder of London-based Odey Asset Management, is one of those people. He does not hold back….
“I just think that you and I have got grandstand seats here [to an imminent market shock] and my point is having found myself in the second quarter of last year selling a lot of equities and starting to go short, I found out just how illiquid it all was. You never actually see it until people try and get out of these things.”
That’s quite a powerful statement and I wholeheartedly agree. He goes on to say…
“For me, what I find very interesting is given the risk of recession, how is it the West stock market can be hitting all-time highs? History tends to be not very generous in this regard. If you get a recession in a low inflation environment it tends to impact the ratings of stocks dramatically. It was akin to “watching the markets take drunken bow after drunken bow. It’s amazing that nobody else is on the same page.”
Finally…….
We are in the first stage of this downturn. It is too early to see what will happen – a change of this magnitude means the darkness and mist is very great. We will make some mistakes but with our thinking we won’t make the major mistakes. The problem is where you stand – I am amazed to see so many are fully invested given that equities are already fighting the downtrend. Mid and smallcaps have moved into bear markets and much relies on large caps to keep the whole thing going and they are very exposed to international trade.
To summarize his view….
- He thinks equity markets will get devastated.
- Major economies are entering a recession that will be remembered in a hundred years.
- Bearish opportunity to short stocks looks as great as it was in 2007-2009.
The upcoming recession and the approaching stock market meltdown are so easy to see, no matter what the FED does, I am not sure why the 99% go on missing it. The attitude was exactly the same at 2000 and 2007 tops. Greed or stupidity? I am not sure, but it is amazing indeed.
