Men det brinner ju ännu bättre med bensin!

Riksbanken kanske gör rätt trots allt – den är i alla fall förutsägbar
Som jag skrev i den senaste uppdateringen om svensk ekonomi den 7 februari i år så tar det nog emot hos Riksbanken att införa positiv styrränta. Mycket riktigt backade ledamöterna häromveckan från (de hypotetiska) planerna på att höja räntan, för att istället fokusera på att göra matinköp och utlandsresor dyrare för vanliga svenskar.

Vad ligger då bakom Riksbankens agerande? Hur står det egentligen till med den svenska ekonomin efter 10 år med extremt stimulativ penningpolitik, börser som rusat till nya all time highs, och synkroniserad global högkonjunktur?

Är negativ ränta och tillgångsköp det enda rimliga alternativet givet läget för ekonomin?

Vi tittar i tur och ordning på den senaste statistiken över arbetsmarknaden, ekonomins tillväxt och inflationen, men redan från början kan jag avslöja att det aldrig varit bättre. Om Sverige någonsin tänt på alla cylindrar så är det nu…

…Däremot är det fullständigt oförståeligt varför Riksbanken medvetet väljer att föra en överhettningspolitik,endast som enbart kan förklaras av politisk påverkan, eller en snarast hedgefondinspirerad permapessimism inför framtiden.

Med ovanligt hög tillväxt och helt normal inflation i ryggen är det snarast omöjligt att försvara något annat än en styrränta på omkring 4%. När då Riksbanken väljer en negativ ränta, samt tillgångsköp ovanpå det, innebär det en fantastisk (om än kortsiktig) gåva till alla som har möjlighet att ta risk…

Läs resten av krönikan här hos Vontobel

What ever happened to all the perma bears?

We all live in a yellow perma bull, yellow perma bull! Bull market in the sky with diamonds! …markets that grow so incredibly high…

All you need is bull
All you need is bull, bull

Bull is all you need

To cut the cheese, there never were any perma bears to begin with.

Yes, you read that right. No matter what you might have heard, there has never been such a thing as a perma bear. You’d better check your sources.

There are of course quite a few people using that term, as if it meant something. Those people typically fall into one of the following categories:

Perma bulls:just buy and hold the best companies forever” (at any price); these guys disappear with the next downturn never to be seen again. Some of them bought Broadcom, Worldcom and March1 on margin in the year 2000. Others had five mortgages in 2007. Yet others were all in the XIV ETF (inverse volatility)

Newbies: they are simply parroting a meme their broker, or similarly clueless friend, told them. They have no idea what they are alking about, what a perma bear or perma bull might be even in theory.

Failed short sellers, that failed because they didn’t do any real research or succumbeed due to sloppy risk management

The average retail investors have never even contemplated going short anything, although a few have dabbled in buying a few puts or selling calls to add some “Las Vegas” to their “portfolio” (of one single stock; either a 100m$ pre-revenue biotech company, or whichever stock is the most written about [Tesla, Theranos, Enron] or having appreciated the most (FANG stocks).

Normal portfolio managers in mutual funds aren’t even allowed to go short.

That leaves more or less only sophisticated and experienced investors on the short side. Most of them are hedge fund managers that already have successful investing careers behind them. Some, admittedly, might be rich brats that think “shorting the hell out of bad companies” is a better pick up line, than letting their zero maintenance dividend kings take care of themselves while going all in on hookers and E on a yacht.

Anyway, these sophisticated investors typically made their money mostly being long good investments, thus per definition can’t be perma bears. Or they are extremely good at sniffing out good clean shorts.

In any case, if they are that good at researching and investing, there is zero probability they will limit themselves to being short only, when there are so many more things to go long with less risk and less scrupulous opponents than when selling things short.

In other words, only smart people become short sellers. The idea doesn’t even occur to average people. And if it did, Joe would soon lose everything and give up, or re-emerge as first a cautious, later a raging bull (only to lose it all again of course).

The smart(ish) short sellers are smart enough to know there are two sides of every story, of every market. Hell, they are more or less the only ones who realize there are two sides.

I have yet to meet or even hear about a real perma bear, an investor who is forever and always only a seller of all things. That’t because they simply don’t exist. “Perma bear” is something n00bs and mostly perma bulls call people they don’t understand and are afraid of: investors with more money and experience than themselves that dare go against the crowd and look a little silly for a while, because they have good reasons to trust their mind more than the crowd’s blind stampeding.

It’s been a a hard bull’s night,

and I’ve been working like a bear

So, whenever you hearthey’re a perma bear,” check your and their premises. You just might pick up something important and useful.

Just remember that there are no perma bears; and experienced and knowledgeable investors who dare stick their neck out against the crowd, against CEOs, against the Fed and other authorities to reveal relevant information, put both their money and reputation on the line for no other reason that their superior vantage point allows them to identify a higher probability of making money going short than buying blindly.

Tell me that you want the kind of things,
That bulls just can’t buy,
I don’t care too much for bulls.
Bulls can’t buy me love.

Asset Allocation Ahead of the Algo Apocalypse

Gold, softs, small caps, hedge funds

Cutting to the chase, if I were a CFA I would recommend a portfolio with 10% in gold, 10% in soft commodities (agricultural products like wheat, corn, coffee, cacao, sugar etc.), 20% in a trusted global small cap fund, and 60% in a basket of different hedge fund strategies.

Disclaimer: Nothing on my site is to be construed as recommendations to buy or sell anything. All my writing is for educational and entertainment purposes, so be a responsible adult and consult a professional financial consultant before putting any money at risk, anywhere. Again: I don’t make recommendations. Never. Ever.

My own asset portfolio currently consists of an apartment, ten private companies, and various fixed income streams (loans and obligations). And precious metals.

Oh, and my girlfriend manages a little money for me, a portfolio that currently is exposed to, e.g., Spotify, Hennes & Mauritz, Gran Colombia Gold, Azelio and various soft commodity ETFs.


I’m often asked what to invest in. It’s a hard question to answer. It depends on who’s asking, how much risk they can take, i.e., if they’ll freak out if they lose 5%, 10% or 50% in the interim, what their investment horizon is, and not least how active they will be.

By the way, did you know I’ve learned everything I know about strategy and perseverence by Adrian at TQM? Okay, not everything, but he has added a lot of value regarding not least mindset through his 30 Challenges, newsletters and more (affiliate link – the reason I have one is that we approve of each other’s material).

There are several categories of answers, including the following:

  • Don’t invest at all. Just live it up as you get your hands on the money, or keep a buffer at the bank. The strategy is called: invest everything in your personal experience while you still have the time and energy.
  • Set aside a fixed amount every month and buy a global stock index for the money. Don’t look at the result for 40 years. Zero time and resources wasted.
  • Buy precious metals for 90% of your wealth. I’ll help you re-allocate when it’s time in a few years or so. Highly contrarian, zero income-generating, advice-contingent strategy.
  • Go for the Dogs Of Dow, with annual weight adjustments, i.e., a stocks only, slightly sophisticated strategy, with medium level maintenance
  • Invest everything in your own education, skills and business
  • Just buy a basket of hedgefunds and go back to sleep
  • Create and maintain a true asset allocation strategy with medium-frequent adjustments: stocks + fixed income + real assets (real estate, precious metals, commodities) + businesses (own, private equity).

The last bullet point warrants its own full text book, but I’ll try to break it down in just a few paragraphs.

Asset Allocation

First, some would advocate fixed weights for the various asset classes; 25% each if you choose four different pizza slices, 20% each if five and so on. I think you should be way blder than that. Risky assets like certain categories of listed stocks and private equity perform much better than the others during equity bull markets, as well as in total over time. Take advantage of that by on average allocating more than a “fair” share to equities.

Second, the weights shouldn’t be static, but dynamic and dependent on A) absolute valuation metrics, B) relative valuation metrics, C) recent performance (in particular stock market crashes that last 2 years).

Third, we are different, and thus there is no way you could invest the same way I do. I can make new assessments and investment calls every day if I’d like, and you don’t have access to information about when I change my mind.

When I describe a good portfolio allocation, I consider how I think the investor will manage the portfolio when I’m not looking, as well as how I think they’ll react to paper losses.

Fourth, as a general rule, over the very long term some kind of exposure to the general profit making part of growing economies is warranted. Ergo: over time most people should load up on stocks, perhaps even with a little leverage on average.


I hesitated over that last statement, since most people aren’t equipped to decide when to use leverage, what kind of leverage and how much leverage. Consequently, most people use too much at precisely the wrong time and end up permanently destroying their capital.

On an economy-wide level this tendency is apparent in NYSE margin loan statistics, corporate indebtedness statistics and not least buyback and insider buying data series. Loans, leverage, buybacks and insider buying always peaks right before serious market downturns.

That tragic historic fact aside, there are times to use smart leverage, and it’s right when the mentioned data series are near their lows. Unfortunately loans can be hard to get just when you want one, so you have to secure your loan earlier but hold off using the money until you get a fat enough pitch.

Alright, back to the portfolio allocation decision. This is what I told a friend earlier today:

  • 10-20% gold
  • 10-20% (soft, agri) commodities
  • 20% global small caps managed by a trusted and experienced PM
  • 40-60% a basket of various hedge funds with uncorrelated strategies

Why gold?

Gold and commodities are very cheap compared to stocks and the amount of currency in circulation, not to mention the vast quantities of outstanding credit and derivatives. In addition to all that government welfare promises require inflation or money printing of hitherto unheard of proportions.

If you own real stuff like gold, silver, uranium, real estate or a business, you only sell if the money you get in return will buy you some other real stuff you want in a reasonable quantity. When the amount of money in circulation doubles, you can expect prices on all tangibles to double too. Don’t sell for less, nobody else will.

Liqudity sloshing

So far mainly stocks have been on the receiving end, but the liquidity sloshing around the system is bound to reach metals and food sooner or later.

In any case, most governments have taken on more debt than they can handle with the current monetary system, and when they perform a re-set, it will most likely be against a basket of various moneys — including gold. It’s around that time, shortly after the re-set, a gold owner makes the switch from gold to stocks.

However, since you never know how far a bull market can go, or how far the madness of central bankers can push the system to avoid a crash on their watch, you’re more or less forced to hold some stocks at all times.

Right now, I advocate a minimum of stocks in relation to your average strategy, since we are within the 5% most expensive, euphoric, overbought and long-lived bull markets of all time. For some, like me, that means close to 0% listed stocks, or even outright net short stocks! In practice, however, I’m actually around 1% net long listed stocks. In addition, my private equity holdings amount to maybe 50% of my net worth, although it’s pretty hard to estimate their value at this point.

And then there is gold/silver, loans and real estate.

Well, that’s me. And you’re not me. Neither is my friend. I told him I like (Swedish) Robur’s global small cap fund that’s managed by Jens Barnevik. And as a basket of hedge funds I always mention Brummer Multi Strategy with 2x built-in leverage.

I have all my private pension money in BMS2xL, and I estimate that alone would be enough to carry me from retirement to the grave in a reasonably comfortable way.

However, that’s how things look now, when gold and commodities are cheap, P2P loans yield 7-10%, some corporate bonds even more, not to mention my private loans where the range is truly huge, and stocks are at their most expensive in 200 years right at the top of a record long expansion and the build-up of more leverage than ever at record-speed.

Algo-apocalypse or U-zombie

After what could either be an algo-apocalypse, a 75% crash in record time, or a drawn out, slow zombie death by a thousand cuts, U-formed profit recession, the tables will most likely have turned completely.

In the latter case, imagine impotent but vengeful central bankers spewing helicopter money over everone and everything they can shake a stick at, while companies fight tooth and nail to make their bond holders whole, and consequently having to cut back on investments, employees and growth. One company’s cutbacks and slow growth means less sales for another.

Thus the zombie disease of investment cutbacks spreads to the whole system. Nervous bond holders keep counting coupons and return of capital, while business owners constantly stare Chapter 11 in the face.

When stock market valuations have normalized, started to normalize, or possibly are going through a period of undershooting, it’s time to overweight equities, while underweighting all other asset classes. Maybe you should even go as far as consider going more than 100% long equities, if you have access to controlled and reliable financing and are dead sure of a secure line of income.

But which equities? Well, once again the Dogs Of Dow could be a place to look. Or stalwart cyclicals. Banks usually perform well after a (financial) crash. But beware of highly indebted companies, if I’m right that the downturn will be drawn out. Some of the latter might default given long time enough to recovery.

Too hard

If you realize this simply is too much work for you, perhaps somebody else should manage your money for you. Or you should aim for one of the simpler strategies.

That’s why I always come back to a portfolio of gold, fixed income, stocks and hedge funds.

Gold is your insurance against systemic risks and rampant inflation, and your source of purchase resources after a stack market crash. Fixed income takes care of your most urgent everyday needs. Stocks makes sure you get some of the upward drift of the world economy (although I really think everybody should try to at least perform some market timing, like buying much more after two negative years, or sell most when stocks are 100% more expensive than the historic average).

And finally, a basket of hedgefunds puts hundreds of brilliant absolute return focused asset managers to work, doing their best to create decent performance in both bull and bear markets in a wide range of uncorrelated asset classes. If you want risky assets-like performance but don’t want stock market crash-like downside, products like Brummer Multi Strategy (2xL) should form the basis of your portfolio.

Please note that I used to work at Brummer & Partners (2000-2014), but don’t have any affiliation with the group today. I just happen to like the product.

So, where did all of this put us?

Avoid stocks now and focus on gold, agri and a diversified basket of hedgefunds. Be prepared to allocate your money the other way around after a crash, but keep in mind it might be a U-shaped recovery that takes more than the usual 2 years before a clear uptrend is established. Look to Japan and some European indices for guidance. How should you best have played the Nikkei between 1990 and 2010?

Make sure you sleep well. The point of all wealth is well-being

Loans, including P2P loans, will probably be honored over time, which at the same time will be an important reason for the slow recovery. Size your exposure intelligently so you can sleep well at night when thinking about the individuals that might or might not be able to meet the payments due to you. Just don’t rely on them to provide ample liquidity when you want to go levered long the stock market in 2026. For that you’ll need gold.

P.S. Remember that guy Adrian at TQM that I mentioned above? Check out his 30 Challenges here (affiliate link), if you’re interested in a method to establish surprisingly effective habits. As an investor you’ll need it, since your hardest job is keeping yourself in check.