Where’s The Credit Opportunity In 2013?

Tags

CDOs, CLOs, Collateralized Loan Obligations, Colony Financial, Fed, income/dividend bubble, junk bonds, leveraged loans, mortgage hedge funds

Owning Colony Financial (CLNY:US) was v rewarding. I bought it as a cheap distressed assets play, but I suspect my gains actually came from income investors, who are now rushing into the stock. That got me thinking… And it hammered home a couple of lessons: a) Never under-estimate the desperation of income investors, and (more seriously) b) Don’t fight the Fed! Now, that may sound like a contrarian challenge to some – sure, sometimes it can prove v profitable to fight a rising tide.

Except surfing the big waves is simply far more rewarding most of the time. Do you really want to be the investor who faces down the Fed’s steamrolling printing press? Especially with a ravenous horde of zombie income investors chasing after it?!

But it’s becoming increasingly difficult to exploit those lessons. Look around, most yields are too low, most prices too high… Look at property REITs, mortgage REITs, MLPs, closed-end funds (esp. Pimco!), and other assorted dividend story stocks. Most are now sporting fairly nauseating valuations & leverage – while the dregs are simply Ponzi schemes, relentlessly issuing stock & debt to fund excessive dividends. But what’s the alternative – Treasuries?! Oh please, just stab me with a rusty fork.

Advertisement

Hitting The Century (VI – Real Assets)

Tags

agri-business, balance sheet, bank lending, churning, commercial property, de-leveraging, deflation, ECB, Fed, gold, inflation, natural resource stocks, portfolio allocation, residential property

Oh well, back to the grind..! Continued from here, and I guess here: I actually started writing this post the other day, but quickly got side-tracked into a different post – after all, one can’t really talk about real assets without first taking on inflation! For reference, here’s a reprint of my investment allocation pie-chart:

So, Where’s The Bloody Inflation..?!

Tags

baby boomers, banks, Bernanke, budget deficit, capital ratios, de-leveraging, debt monetization, Debt/GDP Ratio, ECB, Europe, European sovereign debt crisis, Fed, financial crisis, fiscal deficits, Flub-Med, GDP growth, Hunt brothers, income/dividend bubble, inflation, Japan, multiplier effect, Occupy Wall Street, politicians, quantitative easing, real assets, risk aversion, savings rate, stagflation, US, Volcker

I was beginning a new post in my recent Hitting the Century series (and here), and realized my next 3 investment allocations were to real assets – Natural Resources, Agri & Property. This v quickly got me thinking about inflation, enough to devote myself to this post instead:

Along the way, dear reader, you may have noticed my pronounced distaste for fiscal & monetary policy in the developed world. Particularly in the US... That’s not intended to be a US slap-down…and certainly not praise for Europe either! It’s simply a pretty inescapable conclusion if you compare the US & (the hard-core of) Europe over the past 4 decades. Jesus, I struggle to think of somebody with any real power in the US who truly gives a flying f**k about their accelerating debt burden, debt monetization, or the long-term external value of the dollar. In contrast, the ECB & certain Eurozone countries still actually exhibit a painful reluctance to take that road to monetary & fiscal oblivion – even in the face of a European sovereign debt crisis!

Whither the US, Europe & the EUR/USD..?

Tags

activist investors, austerity, Bundesbank, catalyst, CNBC, distressed assets, Edward Gibbon, emerging markets, EUR/USD, Europe, Event Driven, Fed, frontier markets, idiots, Japan, Japanese debt crisis, NAV discount, private equity funds, Red Bull, student debt, US

OK, I confess, this isn’t really about the EUR/USD FX rate. I was beginning another article, and my despair over the developed markets & their prospects just kept interfering..! But let’s try keep this somewhat brief – maybe I’ll return again after reading my Gibbon – and hopefully it will prove a good lead-in for my other article.

Despite the dismal performance in the US & Europe (why even talk about Japan..?) over the past decade, I just can’t get too hopeful from here. I sighed, and resolved again to just ignore the news, when I heard the growing swell of anti-austerity political dissent in Europe (and even fresh mutterings about EUR exit, and devaluation).