Q: Just signed up for your newsletter and read a few of your reports and I tend to agree with your position on equities being near the top. So where does the smart money go at this point?
J: I think most smart investors are simply keeping a bunch of dry powder by staying in cash right now. There’s no reason you have to be invested at all times. I believe we should only commit capital when we have a compelling reason to do so. Another way to think of it is we should only do something when there’s something to do. Cash is not the trash that CNBC and every financial advisor you’ll talk to will tell you. Longer-term I like gold mining stocks right now and shorter-term I think long bonds are good for a trade.
Q: Is it viable to use an inverse ETF to follow your China position, similar to your other short ideas, rather than rolling puts?
J: I haven’t found an inverse ETF that will effectively capture the specific trade I’m trying to put on. I also couldn’t get a borrow on ASHR to short it in the first place so the puts are the best solution I can come up with.
Q: Jesse, is this the wash out you have been waiting for? I saw that their was a 1B dumping of gold on the market. Interesting fred going to sell gold ETFs and buy miners.
J: I think so. This action lately feels very pukey to me and the gold haters are getting very loud. I saw a lot of hubris amongst the gold shorts last week. Anecdotally, that’s usually a pretty good sign we are getting near a turning point.
Q: Hi Jesse, I get your regular emails and really enjoy your work. I’m sure you’ve probably already seen this propaganda, but just in case not:
Stocks aren’t expensive: Fidelity
Keep up the great work.
J: I’ve written about why this thinking is so dangerous right now:
Having said that, when the success of your biz model is dependent upon positive investor sentiment it’s hard not to be biased.
Q: Mr. Felder,
I have been following your blog for some time and agree with your current bearish sentiment data-wise, but I feel one psychological element is missing from this bubble – excessive investor euphoria. I’m not saying there are no bulls, but there are a fair amount of bears in the mainstream financial industry. Furthermore, the Greek instability and continually delayed Fed rate hike has sparked a fair about of uncertainty among many investors.
Most bubbles, such as the current equity bubble in China, feature unbridled bullish sentiment among the primary injectors of capital, and we don’t see that in this market.
I wanted to ask you what your thoughts are on this matter.
Thank you in advance.
J: Here’s something I recently wrote on the subject: