Saturday, 1 August 2015
Last updated 18 hours ago
Jul 6 2010 | 12:34pm ET
Odey Asset Management chief Crispin Odey admitted he underestimated bonds in May, as his Opus hedge fund fell 7.8%.
Odey was short fixed-income and long equities, the Financial Times reports. But it was bonds that did the advancing in May, and stocks that took a plunge.
“The price action of May for all asset classes was only explicable on the ground that Europe and indeed the world is going to follow Japan into deflation,” Odey explained. “Markets are worrying, in many ways rightly, that with corporate sitting on cash, a fall in government expenditure is not going to be met by a rise in private sector spending and employment. Thus, the market was pricing in a double-dip.”
Odey remains bullish, he said, calling stocks “cheap” compared to other asset classes. Still, he cut his equity exposure to 40% of the hedge fund’s assets, as well as slashing his bond shorts to less than 20%.
“It is highly unusual for a new bear market in equities to begin as profit estimates are being upgraded as they are now,” he said.
May 27 2015 | 2:15pm ET
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