For those who have not followed David Einhorn’s crusade against central bank money printing, and the epic bubble these cluless academic hacks have created, his views on the “enormous tech bubble” we are currently living through and published in his latest letter to investors of his Greenlight hedge fund (which returned 5.9% in Q3) will provide some unique perspective.
To everyone else who is familiar with how his fund has been hammered by his tech short basket — and especially Tesla — over the past five years, as the most overvalued tech stocks in history continued to rip even higher year after year, we doubt his latest thoughts will come as a surprise, although his observations on the endgame are certainly remarkable, if for no other reason that he has dared to declare the time of death of said “enormous tech bubble” as Sept 2, 2020, the day the S&P500 and the Nasdaq both hit an all time high.
Why is Einhorn confident that this time he has finally timed the exact moment the bubble popped? He explains:
Bubbles tend to topple under their own weight. Everybody is in. The last short has covered. The last buyer has bought (or bought massive amounts of weekly calls). The decline starts and the psychology shifts from greed to complacency to worry to panic. Our working hypothesis, which might be disproven, is that September 2, 2020 was the top and the bubble has already popped. If so, investor sentiment is in the process of shifting from greed to complacency. We have adjusted our short book accordingly including adding a fresh bubble basket of mostly second-tier companies and recent IPOs trading at remarkable valuations
So without further ado, below we excerpt his key thoughts on the biggest asset bubble that the Fed has inflated:
We are now in the midst of an enormous tech bubble. We prematurely identified what we thought was a bubble in early 2016. Part of our thinking at the time was that the height of the 1999–2000 bubble was a once-in-a-career experience and that investors would not repeat that level of insanity. Clearly, we were mistaken.
Source: Tyler Durden | ZeroHedge
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