Argonaut Capital's David Gerstenhaber: Thoughts On The Economy ~ market folly

Tuesday, February 16, 2010

Argonaut Capital's David Gerstenhaber: Thoughts On The Economy

Last Thursday, hedge fund manager David Gerstenhaber of Argonaut Capital was on CNBC for an extended period of time and shared his thoughts on the economy. Gerstenhaber of course is a former Managing Director at Julian Roberton's legendary Tiger Management. And since (let's face it) many of us watch CNBC on mute, we wanted to highlight something that's definitely worth listening to.

Gerstenhaber thinks you need to be careful investing in this environment (2010) as the easy money has been made in 2009. He notes that he thinks we're at fair valuations and as such 2010 could be difficult for stocks.

In terms of investments, he thinks the yield curve will remain very steep for quite a while and he's got a play to capitalize on that. He says, "(we're) running a position in the yield curve on a basis where we earn the carry associated with the steepness of the difference between the spot and forward curve." We've seen this type of play from numerous hedge funds and in particular, Gerstenhaber's former employer Tiger Management. Tiger's grand maestro Julian Robertson had been betting on higher interest rates via constant maturity swaps (CMS).

One of Gerstenhaber's other main assertions was that it is unfair to compare the current great recession to previous deep recessions in the 1970's and 1980's. He highlights that de-industrialization in the United States has been occurring since World War II and after each recession, we lose more industrial jobs. As such, this recession is unlike the previous deep recessions we've experienced in recent decades.

Below you will find a series of 3 video interviews where he shares his thoughts (RSS & Email readers will need to come to the site to view it).

Video 1:

Video 2:

Video 3:

It's a rarity to get appearances from prominent hedge fund managers on television, but in the recent past we've seen Bill Ackman interviewed, as well as David Einhorn, and occasionally Jim Chanos too. We've also previously covered Gerstenhaber's appearance on another hedge fund panel that is worth checking out.

blog comments powered by Disqus