I’ll be the first to admit, I haven’t been able to understand or anticipate financial market moves since the fall of 2011, when I believe Central Banks and governments decided enough was enough, and more or less chose to fully micro-manage almost all market moves on a daily basis. One person who has been very astute throughout all of the madness is Bill Fleckenstein, who closed his short-selling fund right around the market lows and for the right reasons. Well he is now reopening it and calling it RTM 2.0, which stands for Revert to the Mean.
In a nutshell, he was waiting for the bond market to show signs that the Fed is losing control and that the lows in yields are in. He sees early signs of that happening.
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So far, Fleckenstein, who made his name shorting mostly tech companies, but who quit in 2009 to start an opportunistic long-only fund, is the first to go public with his plans.
“For four years and counting, there was no reason to think about shorting,” he told me. “I survived from 2000 to 2009, even when the market was going up, because I made what the Fedwas doing a key variable.”
On tapering fears, he points out, yields leaped from 1.6% to 3%. But the Fed didn’t taper and rates backed off, but just down to 2.7%. That’s a far cry from pretapering-talk levels.
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