Print
Hits: 2791

Something to benchmark this blog to. From the WSJ :

Sometimes, a grim view of the economy can cramp your style. During a recent first date, says David Tice, manager of Prudent Bear Fund, he made the mistake of sharing his bleak investment outlook at dinner. No second date followed. "You can almost feel the energy go from the room," Mr. Tice said about when he offers his take on the economy.

But as an investor, Mr. Tice is on a roll. By selling short and maintaining a relentlessly downbeat look at the market, his $1.2 billion mutual fund is up more than 15% in the past year, almost 20 percentage points ahead of the market. His bad-news-bear approach is just getting started: He argues the U.S. is entering a multiyear bear cycle.

His views haven't always been winners. During its first three years, Prudent Bear lost almost 19% on average annually from 1996 to 1999, according to Morningstar, when the bull market was steamrolling bears like him. "We never said we would always make money," said Mr. Tice, who adds that his fund isn't intended to be anyone's core holding...

Since 1982, we've been in a long-term bull market, which means your bearish view hasn't panned out. What do you say to skeptics?

We essentially missed the extent to which policy makers would go to keep the economy going and how much credit would grow, especially to the lower-end borrower.

What do you make of the comparisons between the U.S. and Japan's lost decade in the 1990s?

In 1989, the Nikkei was at 35000. Now it is [below] 13000. They had a humongous real-estate bubble there, but they were different in that they loaned money to themselves. We have depended on foreign creditors, so I think it could be worse...

So what are you shorting these days?

We're widely diversified. We don't take more than a 1.2% position in any stock and are investing in larger companies to dampen volatility. We're playing in consumer-discretionary names, banks/brokerage firms and technology names. Last year, tech was represented as a safe-haven area away from carnage of financials, but there is a huge consumer sensitivity to lot of technology...

What about retailers?

We moved away from some of these names in January because so many hedge funds were short those stocks, and it got crowded. We're also not in housing but more housing suppliers.

What stocks do you own?

We are still long precious-metals stocks -- gold, silver, uranium. We like several Canadian companies -- like Silverstone Resources -- with market caps between $50 million to $5 billion. We're trying to identify companies that are still under-recognized and have operating leverage. We are also invested in copper company Capstone Mining, which we have seen a 10-fold profit in but still like...

Where do you see other bubbles building?

China, emerging markets, the spread between the two-year bond and 10-year, the art market.

What would have to happen for you to become bullish on the U.S. market/economy?

I want to get bullish again, but I think these excesses and imbalances are going to take a while to play out. This is probably a once-in-a-100-year cycle. We will have to have a 40%-plus decline in the U.S. stock market, plus a massive adjustment to the U.S. economy, away from consumption towards saving and investment, resulting in massive closures of various retailers and a dramatically reduced current-account deficit.