Empire of Dunces

Neoreaction

Portfolio update

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Our newly formed high-risk portfolio is off to a good start so far. Currently, we are focused on silver, oil, and the financials. A wager on falling prices in the financial sector is certainly a contrarian investment right now, since first of all, everybody believes that the “too big to fail” insurance policy will work in perpetuity, and secondly, because QE2 is pumping an obscene amount of money into the markets. Both of these are wrong. The Obama administration will not be able to once again persuade the public of the need for a bank bailout, and they know that now already. These banks will be allowed to fail now. They simply do not have a choice anymore. As far as QE2 goes… primary dealers are obviously profiting from this, but in the grand scheme, this has been priced into the market a long while ago already. And long term of course, quantitative easing a catastrophe anyhow, as I have explained at length before.

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Written by gloege

November 17, 2010 at 02:24

Posted in Uncategorized

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