{"id":38332,"date":"2013-05-17T00:37:43","date_gmt":"2013-05-17T04:37:43","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=38332"},"modified":"2013-05-17T00:37:43","modified_gmt":"2013-05-17T04:37:43","slug":"and-the-masters-of-the-universe-say-2","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/05\/17\/and-the-masters-of-the-universe-say-2\/","title":{"rendered":"And the Masters of the Universe Say\u2026"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

In my last article<\/a>, I noted that \u201cBig Money\u201d managers was wildly bullish on U.S. stocks\u201474% were bullish and only 7% were bearish.<\/p>\n

But what about those legendary masters of the universe\u2014the global macro hedge fund managers who, if their reputations are to be believed, hold the fates of companies and even entire countries in the palms of their hands?<\/p>\n

At last week\u2019s Ira Sohn Investment Conference, we got to hear the latest investment themes from some of the biggest names in the business, including Bill Ackman, Jim Chanos, Stanley Druckenmiller, and David Einhorn, among others.<\/p>\n

Some of these \u201csmart money\u201d guys haven\u2019t been looking too smart of late.\u00a0 Ackman has taken enormous losses in JC Penney (NYSE:JCP<\/a>); <\/b>at one point, his losses on the investment were over $500 million.\u00a0 He also appears to be on the wrong side of a very large short position in Herbalife (NYSE:HLF<\/a>).<\/b><\/p>\n

This year Ackman is recommending Procter & Gamble (NYSE:PG<\/a>),<\/b> even though it is sitting near 52-week highs and is trading at a substantial premium to the broader market\u2026after a long run in which consumer staples have outperformed.\u00a0 Ackman is agitating for management change.\u00a0 We\u2019ll see how Ackman\u2019s recommendation plays out, but I wouldn\u2019t expect market-beating returns here.<\/p>\n

Most of the speakers focused their comments on individual stocks, but there were some \u201cbig picture\u201d themes worth noting as well.\u00a0 Kyle Bass of Hayman Capital reiterated his bearish call on Japan, saying that \u201cthe beginning of the end has begun.\u201d\u00a0 I agree with Bass\u2019 view on Japan and recently called it \u201cthe short opportunity of a lifetime<\/a>\u201d here on the Trading Deck.\u00a0 I can\u2019t say I agree with Bass in his bullish defense of gold, however.<\/p>\n

Stanley Druckenmiller, a legendary investor and a former top trader under George Soros, had perhaps the most interesting macro perspective.\u00a0 Druckenmiller argued that the commodity supercycle\u2014the massive decade-long bull market enjoyed by most commodities\u2014is over.\u00a0 The primary culprit?\u00a0 A slowdown in commodity demand from China.<\/p>\n

I would take Druckenmiller seriously here.\u00a0 This is a man who enjoyed a 30-year run without losing money<\/a> and who is one of the best managers alive today.\u00a0 Druckenmiller sees the slowdown in China\u2014coming at a time when commodity production is being ramped up globally\u2014resulting in a supply glut and sharply lower prices.\u00a0 This is good news for companies with large raw materials costs and for countries that import large volumes of commodities, but it is very bad news for Brazil, South Africa and Australia, among other resource-rich countries.<\/p>\n

Still, you might want to take the words of all of these masters of the universe with a grain of salt the size of their egos.\u00a0 88% of hedge fund managers<\/a> underperformed the S&P 500 last year.<\/p>\n

Disclosures: Sizemore Capital has no positions in any security mentioned. \u00a0 This article first appeared on MarketWatch<\/a>.<\/p>\n

SUBSCRIBE\u00a0<\/a><\/strong>to\u00a0Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

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