Tuesday, February 16, 2010

The Absolute Return Letter February 2010 If PIIGS Could Fly

It was always naïve to believe that a crisis so deep and profound was
going to go away with a whimper; however, an increase of more than
50% in global equity prices can be very seductive, and nine months of
virtually uninterrupted gains have led many to believe that the
problems of 2008-09 are now largely behind us.

Well, not quite everybody. Friend and business partner John Mauldin
remains a sceptic. I have had the pleasure of travelling across Europe
with John over the past week or so and, as the week progressed, my
mood swung decisively towards a state where Prozac would probably
be the most appropriate remedy.

Now, John and I do not agree on absolutely everything. For example, I
believe – and have believed for a while – that he is too bearish on
equities. But, before we go there, allow me to share with you the
essence of John’s views which can be summed up quite nicely by two
charts, courtesy of BCA Research.
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