market folly

Next up in our notes from Invest For Kids Chicago is Kyle Bass of Hayman Capital.
 
•    Casual observation from Bass: He has heard the same sentiment as Zell that uncertainty is massive and they are buying tail protection from billionaires across the world
•    Hayman is a global event-driven fund which is 90% long in short duration things like mortgage backed securities etc.
•    Bass sees convexity in pricing and “all the convexity of world is in Japan.”
•    The next 18 months will set the stage for the Japan
•    Central banks have replaced traditional intermediaries – that is why global volatility is so low
•    Availability heuristic - people can only process data from readily available data
•    Accepting the logical conclusion is detrimental to many factors of our life


Bass: Short Japanese Government Bonds

•    3 false axioms of Japan

o    (1)  Can Japan run a current account surplus to self fund?  Bass says no.
o    (2)  Bank of Japan is not buying debt. Bass says false.  Monetization is occurring.
o    (3)  Retail investors will actually be able to hold all the debt.

This is largely in-line with what Bass presented at the Great Investors' Best Ideas conference recently as well if you want further thoughts from him.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.