Don Brownstein, the hedge fund manager with the best returns in 2010, according to Bloomberg’s rankings, sent out a passionate letter to his investors last week.Like many, he’s frustrated at politicians. He believes Bernanke should implement QE3.
According to Bloomberg, he wrote to investors last week:
Some Federal Reserve members and lawmakers, acting the part of “modern day ‘Know-Nothings,'” have been “raving about imaginary uncontrolled inflation and wringing their hands over government deficits.”
The Fed has room to use additional asset purchases to stimulate the economy and create moderate inflation to aid indebted consumers, as Bernanke signals he’s ready to spurn “inflation-obsessed fanatics.” Lawmakers shouldn’t “freak out” about deficits with the economy weak.
He told Bloomberg, “My viewpoint is, [freaking out about inflation is] stupid: It has nothing to do with what we know from economic theory or economic fact.”
“Right now, we really don’t have any inflation. So worrying about it is like worrying about something like the bogeyman.”
But there’s another reason he wants QE3. He designed a new fund in March to profit off QE3, if there is one. It’s called the SPM Macro: MVPQ fund (the name references a mathematical equation about the relationship between the supply of money and economic growth) and it’s “designed to produce positive carry while waiting for the results of ‘accommodative’ monetary policy to take effect,” according to his note to investors.
So far it’s up 8.2%.
He also echoes Warren Buffett’s call to raise taxes on the wealthiest and to eliminate the capital gains tax break. Brownstein is up 14.7% YTD through June in his SPM Core fund.