April 18, 2007

Financial Times: Fund issues dire equities warning

We all know markets can stay irrational longer than you'd think, but some of the smart folks in the room are heading for the exits even as the market hits record highs. I think it was Buffet who said the key to investing success was to always sell early.

And since cash will be king during any unwinding, let alone The Great Unwinding (read Manias, Panics and Crashes), that means both illiquid (houses) and liquid (stocks) will be involved, not just the former.

A leading UK fund manager has sold off about half the equities in the portfolios he oversees in anticipation of an imminent and severe market correction.

Ken Murray, the founder and chief executive of Blue Planet Investment Management, has revealed he has offloaded equities and cut the gearing on the firm’s portfolios to zero in the belief a US economic recession is set to wipe more than 20 per cent from the value of global stock markets.

Blue Planet, a specialist investor in the financial sector with $350m of assets under management, operated three of the four best performing financial funds in the UK last year, according to figures from Bloomberg. Its Worldwide Financials fund was the best performing investment trust in the UK and the world over the last three years. About 25 per cent of Blue Planet’s portfolios are now in cash.

Mr Murray warned the impending market correction was likely to be considerably more severe that either of the two most recent downturns that began in February just past and in April last year.

Mr Murray, who began the share sales two weeks ago after the latest downturn, said a consumer spending slowdown was already under way in the US. Combined with rising inflation and a slowdown in corporate earnings, this would drag the world’s largest economy into recession.

“People don’t want to believe bad things will happen but the market will correct very sharply,” he said.


Anonymous said...

yep....the "inflection point" is near. Whatch out suckas..

Ben Franklin said...

Hmmm, how could consumer spending be effected by a housing slowdown, you say? Crazy bear talk?

If you believe that, then ask yourself how the stock of a sporting goods chain (Big Five) could be downgraded, based on it's stores being located primarily in areas where sub-prime loans were more common:


Anonymous said...

Murray is one sharp dude and obviously an HP reader.

Private equity is in a bubble right now, just like the housing bubble.

These "I don't see a bubble cheerleaders" are going to sound like the passengers on the Hindenberg...

Anonymous said...

Dow near record territory as companies report better than expected earnings....

And it is ALL about the earnings

Marky Mark

Anonymous said...

DOW 8:02 Phoenix Time:
12,765.48 down 7.56.

Looks like the spike is ready to melt.

Sell Captain Panic, save yourself before it's tool late!!!

Anonymous said...

Faber, Rogers, now this guy.

Doesn't seem to matter much though.

Goldilocks economy and all.

How about Bob Pisani's housing article last year about how the job market was strong so "there wouldn't be any foreclosures"..."Why don't the bears get this?".

Wish I could find it online.

anonymous wimp said...

Are you calling Keith or the fund manager Captain Panic? Or both?

For the bulls: please help me understand why I should invest my beloved pile of cash right now at the all-time high of the Dow?
I thought the mantra was BUY LOW and SELL HIGH.
So according to you I should BUY HIGH..........??? Then what?
That goes for housing, too. Prices near their all-time highs, so unless it is true that house prices never go down [cough*bullsh@t*cough], then I would be buying high and selling..............??

Please, educate us poor bears in our bear cave filled with cash, gold, CDs and bonds. Is now the "buying opportunity" I've been waiting for?? Or is it March 30, 2000?

TaZ said...

This is about one generation feeding off the other…the USGOV currently is leveraging against generations that won’t be born for 20 years…LOL.

In addition, it is also about the government hegemony feeding off everyone and blaming the victims of the fraud.

No politico wants to REALLY help their constituents (i.e. tax slaves) with money they could be using on more productive things like keeping the rotting corpse alive for the Global Banking Elite Empire™, financing the PPP (Plunge Protection Team) for the FED RESERVE and/or invading oil rich countries for BIG oil.

They’ll annex what turnip blood is remaining for parading about like royalty, crooning before the serfs like TV evangelists and building monuments to themselves and their cronyism.

DM1976 said...

I cashed out except some Gold, Silver and I'm short on a few things. I also have some oil, but that's just there waiting on hericane season... I'm willing to gamble a little...

My broker keeps ribbing me though every time the dow goes up... He sayes he's hoping I'm wrong because he and his clients will loose alot of money. He later said he see's how it's possible that I could be right, he just doesn't think I will be...

I just keep thinking about Rober Kyosaki's line "Why do they call them brokers? 'Cause they're broker then you..."

Anonymous said...

"And it is ALL about the earnings"

Try getting your head out of your ass...

It's ALL about the mergers... Geeesshhh... I sure hope people dont PAY you for investment advice.

Anonymous said...

Pisani's commentary...


Hayley said...

Hey I was just about to read Market Ticker's article on Washington Mutuals worrisome conference call with analysts when Cramer comes on and says he went over the call "with a fine toothed comb" and the shorts are just at it again yelling fire in a crowded theater.

So I guess I am just letting everyone know there's no need to worry.

What is the missing piece here though. The HELOC push is still clearly on, I'm still seeing ads for $500,000 mortgage, $1,500 per month ...I just can't figure out what the precipitating event will be that changes the consumer psychology.

Or is it just true that 90% of us are basically financially sane and 10% of the population is beyond solvency.

HP'ers are stupid said...

You are all SHEEP! How you heap scorn on the masses calling them "sheeple" yet YOU listen to one single "economist" buffoon and follow him like Brigham Young. You CULTISTS!
Learn you fools; How many economists of yore made predictions that never panned out or even if they got it right, were subsequently relegated to the 15mins of fame category, never getting it right ever again?
There are plenty and this nimrod is one of them. Go ahead follow him like SHEEP you morons.

Anonymous said...

You can buy oil easily with symbols USO or DBO.

For silver buy SLV, SLW, HL, PAAS.

For Gold buy GLD, GDX.

YOu'll be rich soon!!!!!!!

Also sell $US and buy Euro's through Everbank.com.

Anonymous said...

Yeah, well check out the date on Pisani's rosy prediction in that link: Feb, 2007.

Jeez, that's like ancient history, at this point, as that was BEFORE the Stock Market tumbled following increasing awareness of the sub-prime meltdown, reports of contagion to alt-A, etc. Why not pull up a post from the NAR, circa 2005, while you're at it?

Pisano's latest entry a month later on msnbc is decidedly not as bullish, as he mentions the factors that have caused even respected analysts from Credit Suisse to think twice back then after the Stock Market took a hit:


Dunno what date it is in YOUR world, but it's April, 2007 here.

Notice the link Ben Franklin provided above, which suggests concerns about sub-prime ARE spilling over into the retail sector. That's right: analysts are anticipating wider bad effects on the economy that'll slow sales.

Anonymous said...

wonder if the dow will get an inflation adjusted high this year in relation to purchase power of the dollar compared to the last highs??

Anonymous said...

probably not as there are to many sheeple aboard