Hugh Hendry: Looming Crash Will Give Investors Opportunities of a Lifetime

Wednesday, 18 Jul 2012 09:50 AM

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Hedge-fund manager Hugh Hendry believes investors will soon be presented with opportunities of a lifetime, as financial markets are single-digit years away from a crash.

“Bad things are going to happen and I still think the closest analogy is the 1930s,” Hendry told the Financial Times.

Hendry, a hedge-fund manager at Eclectica Asset Management, said politicians still have not realized the scale of the global debt bubble.

Editor's Note: The Final Turning Predicted for America. See Proof.

“We have reached a profound point in economic history where the truth is unpalatable to the political class — and that truth is that the scale and magnitude of the problem is larger than their ability to respond — and it terrifies them,” he stated.

Though often referred to as a contrarian investor, Hendry himself described his management style quite differently.

“Our ideas are harshly disciplined by market trends,” Hendry said. “You will never see us pursue a homegrown idea when it is to the detriment of the prevailing trend.”

To that end, Hendry is shorting the equity of Chinese state-owned enterprises and holding long positions in Asian non-discretionary consumer stocks. In addition, he is using credit default swaps to bet against the debt of financially leveraged Japanese companies, such as Toshiba, because he believes they are especially exposed to a slowdown in China.

While U.S. government bond yields are at record lows, Hendry believes these yields will continue to fall. Moreover, he is optimistic about the United States and is “long the debt-saddled west and short the vastly over-vaunted and over-owned” BRIC countries — Brazil, Russia, India and China.

Others agree that the U.S. economic outlook isn't without some hope.

The United States will avoid dipping back into a recession despite cooling economic growth rates, Abby Joseph Cohen, Goldman Sachs’ chief equity strategist, told CNBC earlier this year.

"All you need to believe is that we will avoid another recession over the next couple of years," Cohen said. "And that is indeed our forecast, even though we see growth has slowed somewhat."

Editor's Note: The Final Turning Predicted for America. See Proof.


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