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I remember reading about Buffet that back in the 50s and 60s he did a lot of risk arbitrage, i.e. buying merger and acquisition companies after the buy out announcement, capturing the spread. Buffet was saying that back then he had less capital, so he could participate in many of the most...

IMO if hyperinflation becomes reality a leveraged short bet on long bonds will outperform gold, not on a risk/reward basis but on nominal profit. In a hyperinflation scenario (50,000% annualized) 10/30y bonds will become completely worthless. I'm not in this boat, but if I was then this would...

Imagine how compelling the economic arguments for betting against the USD felt in 1979, 1988 and 1992 and 1995.

Why do you keep focusing on on 2001/2002, a period of gross Dollar overvaluation and compare it today, a period a gross Dollar undervaluation (on a PPP basis)? The truth is IMO somewhere in the middle. The Dollar is now "just" 10% lower than it was in 1991, 18 years ago. That's a breathtaking...

Did you ever take the time to look at a 30 year chart instead of a 10 year? Quite enlightening.

The commodity/Oil/"Inflation Trade" bubble burst.

Every taxi driver and house wife was positioned long in early 1999. Still took the markets 12 months to fall apart.

Why doesn't VN instead address those 100 SSRN papers discussing momentum profits? How many scientific papers of VN have been accepted substantiating his hypothesis?

I believe reflexivity exists, it is a market inefficiency and trend following is a great strategy to exploit it. That's why hopping on every trend worked (historically): folding many losing trades and letting a few big winners ride. Covel does a great job of illustrating the fundamental idea...

I'm curious why VN uses correlation to test for the existence of abnormal returns. You will find no scientific paper on SSRN using autocorrelation tests (like VN) testing for market inefficiencies of price series. I just did a test on 20 years of G8 currency data. The average 12 month...

I'm curious how you feel so certain making the above claims, unless it is just a personal opinion. Research/backtesting/rigor can help validate/falsify an opinion, even if the result appears counter-intuitive. I am especially astonished by your claim how TF is in your opinion most certainly the...

You have jackshit upfront. In our example hyperinflation kicks in AFTER you give me the $1,000,000 and I got the house. You're running in circles with taxes and ammorization schedules, all this changes nothing in the example. I got free money by ripping off the creditor (you). You gave...

To get to the point: It is obvious that the Fed (representing the interest of creditors/banks) has ZERO interest in intentionally creating hyperinflation. It would massively hurt the interest of commercial banks it represents. Actually, the Fed's member banks would get their heads handed to...

Yes, but you realize I got that smaller $2m house for FREE! I borrowed your $1m, then sold for $3m. Then paid back your $1m and kept $2m. Then bought a smaller house for the $2m paper profit.

I buy the house with your borrowed money, it triples in paper value thanks to huge inflation. I sell it for a nice fat paper gain and give you back your money. Thank you very much.

I'll sell it for $3,000,000 and give you back your $1,000,000. Net gain $2,000,000. Thank you very much.

A house is a real asset that appreciates in line with hyperinflation while the underlying debt stays the same. If you don't like the house example you can replace it with any other hard asset (commodities, stocks etc). You didn't answer anything. In hyperinflation, would you rather owe paper...

You type up all this political mumbo-jumbo but you can't answer the question. I will ask again: in the scenario of run-away hyperinflation (e.g. 50,000% a year annualized), which side would you prefer. Would you rather be OWED $1,000,000 of paper money on 30 year fixed interest terms? Or...

The cost of bread has ZERO relevance to the question I asked: Who loses in hyperinflation. Those who owe money or those who are owed money? A house is a real asset. With inflation running at 50,000% in 2010 in our example, suddenly I have a gigantic paper gain as the house has a paper value...

So if I owe the bank $1,000,000 for a house on a 30 year fixed mortgage. Say starting in 2010, inflation is suddenly approaching 50,000% annualized overnight as Bernanke and the rest of his evil conspiring central bankers controlled by rich Europeans step up the velocity of the money printing...