22 Dec 2021

A not so fairytale prince and princess marriage. That is what the face of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum looked like during happy times, I wonder what he looked like after learning that the London High Court ordered him to settle $1 billion as a parting fee. It seems like every other week I am reading of a billion dollar divorce settlement. I guess there is always an upside to crazy wealth bubbles. I am interested to know if there is a correlation with divorce rates and bull markets I assume yes.

As suspected the Magellan shares bounced 4% yesterday after their 32% drop Monday. Before I get too full of myself and say I caught the bottom we need to watch out for a dead cat bounce. The lessons are enormous for any money manager watching things play out for Hamish Douglass. I am staying out of all the potential backroom dramas that I am not privy to. What I am watching is the mettle of the man who for so long had the golden touch. For those who haven’t followed the story Magellan has been the darling of the wealth management industry in Australia, growing to $125 billion in assets under management. The secret to their success has been the ability to identify high quality stocks and take concentrated bets as well as position their funds returns to be longer term focused according to a sensible benchmark. Everything has been going swimmingly until Douglass took a cautious approach to Covid and some of their concentrated bets on Chinese mega caps got smacked. I suspect they are going to bleed AUM for the foreseeable future.

Once again we are witnessing a critical buy the dip moment and of course to make me more irritated the drug addicted QE markets are wondering if they can handle this Covid19 outbreak so tappering is maybe not going to happen as previously thought. Of course I am now short the S&P500 and sucking wind. I think “all I want for Christmas…..” is going to deliver a new market high so I best buckle up tight.

Anyone who has been reading me for the last month knows how circumspect I have been with the Chinese economy. Using the Ditto Navigator tool I am looking at the performance of the S&P500 versus the Hong Kong 50 over the last 14 months and you can see how the performances have diverged. I am going to trade the narrowing of the spread as I feel the markets have discounted the weak China news and are not leaving any room for disappointments in the US markets.

I had an amazing call last night with someone I regard as a celebrity in the hedge fund community. It is always such a cool feeling when you get to have a meaningful discussion and put aside ego and bravado.

Ending today’s note with something to think about.

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