Sunday, November 21, 2010

Blogging Wealthtrack - Nov 21, 2010

Consuelo Mack: Wealthtrack is fast becoming one of my favorite shows to watch on the weekend. This weekend, Consuelo had on David Einhorn from Greenlight Capital, a firm that made its name by shorting large firms during the fiscal crisis and made a killing doing so. Greenlight Capital is a hedge fund, and its investors have been quite happy with the returns. But while he is known for being short, Greenlight capital is about 1.5 long versus 1.0 long in terms of a mix of investments.

As for Quantitative Easing, Einhorn referenced the fact that the Fed is targeting inflation, but notes that there is a problem with it. The problem is that the inflation might come, but not where you expect it to. It may come in clothing, energy, food etc. These would be things that everyone needs, not things that are real luxury-type items that people are looking for to increase demand.

On Gold, to Einhorn, Gold is money. "The merit of gold is that given [the current crisis] is how we want our assets denominated." To Einhorn, "gold makes sense as a diversifier and is the type of money that Ben Bernanke cannot print more of."

All of these are insights that are quite exciting. I'm quite pleased on some level that I was able to read into these events correctly, at least according to Einhorn's statements, but the fact is, I wonder what the correct next step is; that is a real concern, especially for someone like an individual investor with only a modest sum.

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