Judgement Day

One of our favorite money managers (besides our clients who we love so much) is Whitney Tilson of T2 Partners.  Whitney tells it like it is and isn’t afraid to make bold bets.  If you remember, he stepped up and bought BP in the middle of the Gulf Oil spill.  His analysis proved correct and he was rewarded handsomely.  He is very public with his market calls and isn’t afraid to trade jabs even with CEO’s of companies that he has shorted.  We recently got a peak at T2’s annual letter to clients and found his explanation of why he thought the market has surged since the now famous Ben Bernanke speech at the end of August in Jackson Hole:

“A bigger driver of the markets upward surge, we believe, is froth: the expectation (followed by the implementation) of QE2 triggered a dont fight the Fed burst of optimism across the market and, in particular, a speculative orgy among the most popular momentum stocks, which ripped upwards, irrespective of valuation.  It is nothing short of mind-boggling that a mere two years after utter panic and paralysis in the market, animal spirits have returned and reckless risk-taking is occurring in many areas of both the debt and equity markets.  We think this will end badly and we will not participate.”

We don’t like to give market calls here on Themis Thoughts but when a guy like Whitney Tilson thinks this will end badly, then you have to respect his opinion.  And when we started to see things like birds falling from the sky, dying fish and massive Australian floods, it made us wonder what the heck is going on in the world.  And when we saw this fun fact published on CNBC yesterday, we starting stocking the cabinets with canned goods and fresh water: