Four years ago, hedge funder Bill Fleckenstein closed down his short fund to go exclusively long.
Now, Fleckenstein has announced he will reopen his short fund amid a bullish market, The Street’s Herb Greenberg is reporting. From the Street:
“For four years and counting, there was no reason to think about shorting,” [Fleckenstein] told me. “I survived from 2000 to 2009, even when the market was going up, because I made what the Fed was doing a key variable.”
When that variable changed, he figured “it would be impossible to make money on the short side. I knew the Fed and the other central bankers would print a tremendous amount of money and it would be impossible to be short until the time the bond market takes away the printing presses — I mean, forces them to stop.”
That’s where Fleckenstein thinks we are now.
“I could be off by a year, I don’t know,” Fleckenstein told The Street. “I may have to sit in cash for a year. I know the bond market will have to stop the Fed. Money printing was the problem and more of it won’t fix anything. But you can’t win that argument as a short until such time that the bond market stops it.”