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Joel Greenblatt Owned Hedge Fund On Why Value Investing Isn’t Working Now
Acacia Capital was up 12.27% for the second quarter, although it remains in the red for the year because of how difficult the first quarter was. The fund is down 14.25% for the first half of the year. Q2 2020 hedge fund letters, conferences and more Top five holdings Acacia's top five holdings accounted for Read More
As I said to our Members this morning, I was up at 3am and I did our ususal pre-market skim of the news but I was so disgusted by the blatant manipulation going on at the Shanghai and in our own futures I decided to go back to sleep because it was simply too depressing to discuss.
I want to start this article by apologizing to the Bottom 90% because we’re about to steal your money again. The way we (the Top 10%) do it is that we already own a lot of stocks because, well, because we have assets and you don’t – because you are poor or, as Donald Trump calls it, “lazy“.
You have been too lazy to get a slice of “the pie” so, as you can see, we in the top 10% now have 78% of that pie (well mostly the top 1% because we have 38% but we like to pretend the next 9% are our friends to get them to do our bidding – even while the next 9%’s share of the pie shrinks as well). If you had wanted some pie, surely you would have gone to an Ivy League School and started your own business and gone public by now – so we assume you don’t like pie and we’ll have some more thanks!
Before the last crash, our slice of the pie in the top 10% was around 70% and you bottom 90% people had almost 1/3 of the wealth in your 401Ks and IRS and some of you even had businesses and equity in your homes (which we lend you money to buy). We wanted more pie so we created the illusion that the pie was growing (on paper – in reality, there was no more pie) and that made the bottom 90% feel richer. Then the top 10% sold some of their pie (mostly the stale bits) to the bottom 90% for very high prices and the bottom 90% went into debt to buy more pie, thinking the pie would inflate forever and they would get rich too. Then the illusion faded and the pie began to shrink as the paper gains evaporated and the bottom 90% lost most of what they gained – except for the debts, of course. Sorry about that.
Fortunately, we (top 10% Banksters) still had your money (and draconian changes in the Banktruptcy code made under Bush II assured us we’d get all of it) and we used that to buy all the pie you were forced to sell to service your debts. We bought your homes, your businesses, your stocks, your antiques – hell, we even contracted your future labor at very low prices as we cut benefits to the bone and THEN we cried for the Government to bail us (the top 10%) out – even going so far as to threaten to leave and go overseas with all our “job creator” skills – AND YOU FELL FOR IT!!!
The Government does this by borrowing money on behalf of the people (the 100%) but, of course, when the Government borrows it does so on a per capita basis, so ALL of the people are borrowing the money but then the money is only distributed to the top 1% of us while the rest of you just get the debt. Don’t complain it’s very fair – you don’t even like pie and we LOVE it!
I am very pleased to report that this program has been a HUGE success, growing the wealth of the top 0.01% by almost 100% since 2007 while everyone else lost ground). So much so that we are going to do it again. In fact, we are doing it again and pretty much the same way we did it last time – by suckering poorer people into betting on the assets we’re dumping as we inflate their prices (mostly stocks at the moment) and dump them for cash – leaving the little people to hold the bag.
This morning, for example, the Shanghai was pumped back up 2.5% after more than half of the stocks trading yesterday (some are still closed) were halted limit down (-10%). See how “natural” that upslope looks. It’s just a government computer program running the market up 2.5% for the day and they’ll do it again tomorrow to pretty things up into the weekend and then the rich people the government is bailing out will cash in again and then the Government will go more into debt on “the people’s” behalf and drive the market back to where it can be sold off again or, as it says on the bottle “wash, rinse, repeat.”
That’s BLATANT market manipulation. We look down on that because, in the US, Europe and Japan, we practice SUBTLE market manipulation. That’s much more civilized. Like today our Futures were lagging into Europe’s open so, at 3am, the Dollar was dropped 0.5% and that repriced the Futuers higher and even boosted gold back over $1,100 for a few minutes.
It was all totally fake, of course and now that we’re nearing the open the Dollar is rallying back to where it was (97.50) at yesterday’s close so net nothing happened, other than a whole lot of suckers were fooled – again. In reality, Caterpillar (CAT) had earnings last night and showed a 19% drop in Asia (on top of last year’s 30% drop and the 21% drop in 2013) which was dwarfed by the 45% drop in Latin America (hey, isn’t that near us somewhere?).
These are the kind of numbers that should be sending off warning signals re. the Global Economy but you wouldn’t know it from the MSM cheerleaders, who see every dip as an opportunity to tell suckers to buy more. We like CAT, by the way, for the long-term, but if the company hadn’t bought back 10% of their stock in the past year, earnings would be down 30%, not “just” 20%.
Why do companies like CAT spend $4Bn buying their own stock back and just $1Bn on CapEx? BECAUSE THERE IS NO DEMAND! The Global Economy is in a Recession/Depression and the G7 and their Central Banksters are doing their best to paper over it and, so far, it’s working. Over the long run, however, you have to believe that WISHING for a good economy will eventually cause a good economy, rather than all that tedious investing in infrastructure, education and training that has always worked in the past.
Of course, wishing and pretending lets the Government borrow money and transfer it up the line to their campaign contributors in the top 1% while spending on infrastructure, training and education sends money to people who need it. What are we, Communists? No way to that, right?
‘Merica – F Yeah!
Provided courtesy of Phil’s Stock World.
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