How I Got It Right - Investment Thesis

To call “The Great Depression Part 2″ half a year before the media and government took action has been a highlight of my blog.

I called for government nationalizations in February. At the time, I had a chance to ask Jim Cramer what he thought about Fannie and Freddie. He actually said to go long both. I almost laughed after hearing the response. As a matter of fact, I was harping on nationalizations before Bear Stearns.

On interest rates, I called for 1% Fed Funds rate before summer end in February. Although I got the timing about one and a half months off, I was calling for rate cuts before the Fed Funds went below the rate of inflation. No one thought this was possible.

On currencies, I called the rise of the Yen before people were thinking about about the Eurozone slashing rates.

On the equity markets, I accurately called a market bottom on March 7th on March 6th as the market tip toed with 12,000. I also said that the next time the market touch 12,000, it would crash through.
On Apple (AAPL), I called its agressive move into gaming and sky rocketing sales. However, I have been short the stock understanding that technical reasons are more important in today’s market.

How did I see so much coming? It is important that everyone who invests develop an investment thesis.

If you look at all of the above predictions came from correctly gauging the gravity of the crisis and government intervention. I presented plenty of evidence on why this crisis was unprecedented and global in nature. Bernanke is a student of the Great Depression. He has written about how absurdly far he would be willing to intervene in order to avoid a Great Depression. With a maniac at the helm, you expect drastic action. That means 1% interest rates and government nationalization. That means reversal of carry trades, international cooperation, and most of all deleveraging. Where positive and negative aspects of the thesis interact it is important to determine the dominant factor to gague the dominant trend.