SMSF’s & Billionaire’s Crash Bets
We’ve recently written of Wall St legends Druckenmiller and Soros, and investment banking giant BofA Merrill Lynch all warning of a major crash soon.
Another Wall St giant, Carl Icahn of Icahn Enterprises (a $5.8b fund that he personally owns 90% of, making him one of the world’s 50 richest people) has just positioned himself for a major crash. His themes are similar to the above. He talks of companies addicted to debt and financial engineering to artificially make profits look bigger on paper. He also reinforces the belief that all this cheap and printed money by the Fed simply inflated financial markets and not the broader economy. He sees how this experiment will fail:
“I've seen this before a number of times… And I think a time is coming that might make some of those times look pretty good.”
Only one quarter ago he was already very bearish with his fund carrying a “net short exposure” of 25% on shares. Simply put he has 25% more short (betting, and profiting, on a drop in markets) positions than long. That is pretty bearish. But last quarter’s report, recently released, shows he has increased that short position by 600% to an incredible net 149%! In his words
"We’re much more concerned about the market going down 20% than we are it going up 20%."
Such drops on Wall St almost certainly will be reflected here in Australia. Now you may well be relaxed about this as you are ‘out of the sharemarket’ and own some gold and silver personally. But what about your Superannuation? The reality is most super funds are still very heavily invested in shares… it’s all they know how to do.
For some reason many people don’t give much thought to Super. It’s something that just happens in the background and, besides, retirement is a long way off. Wrong. There has arguably never been a more important time to take control of your super yourself through a Self Managed Super Fund (SMSF). What few people ‘get’ is that should the shares that make up the majority of your industry or investment house super fund drop by 50% (ala GFC), you need to make 100% gains on the resultant value just to get back to where you started before the drop. Whilst retirement may be a long way off for some, it can take a LONG time to make 100% on your money. Learn a little more here and take control of your future. The hurdle of the cost to set one up may well pale to what you could lose by doing nothing. When the likes of Druckenmiller, Soros and Icahn are protecting themselves from a major crash, it’s time to protect yourself too.