YouSaid · the spoken record

Felix Zulauf

lines on the record: 89
first: 2017-11-21
most recent: 2017-11-21
sittings or episodes: 1
sources: podcast

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“Well, in 1998, we had in 97 we had the Asian crisis. China had devalued in 1994 its currency by 50%. 50%, not 15, 50. That's good for everyone.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“As I said before, you always have to figure out what is the leading theme in a market cycle. In the last cycle, it was real estate. In this cycle it is China. And that's why China is so important. China is the second largest economy and in 10, 15 years it will be the largest economy of the world.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“As president. So he wants to have a very good economy in 21-22 that means he has to first slow things down, restructure some of the imbalances in the system because if he tries to carry through he could backfire to him. It could be the worst of all worlds, namely a completely overheated situation with high inflation rates, etc. And that's why”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“And they are central planers, right? So they're leading up. So that means they have to take the pedal off the foot of the pedal in 1819. And I think 1819, they will address the imbalances in the financial sector and that will slow down the Chinese economy in 1819. And it will slow down also the rest of the world. So we are entering a period where sometimes in 18, I would say from the peak, probably in the market is in the first half, the peak in the economy is probably from mid 18 on. And then we slow down into 20. If that is correct, and 2022 is the next National Congress, and President Xi is probably the first leader who tries to run for a third time.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, EM, we've known this for a long time, but Europe is very dependent. The whole revival that you see now. Interesting position right now. You heard President's speech last week and in 2021 there is the 100th anniversary of the Communist Party and it's very clear that they want to have a strong economy at that time. If you want to have a strong economy in 2021, you stimulate in 2020”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's absolutely right that the world economy is doing well right now. It's all driven by China. I think the US is the least dependent on China. It is different from the EM universe, emerging markets, and Europe. They are primarily driven by China Trade with China is as important as intra European trade.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not saying it will be. That will be a spiked up, but it could happen. It could be very crazy. And of course, the central bank, I believe, is now very much concerned with rising inflation. As you know, the New York Fed is gathering its own ways of measuring inflation, and that inflation is close to 3%. So the New York Fred is the one guiding the Fed to a tighter policy. So you have the excesses building in the market in the late stage of the cycle and at the same time you have the central bank moving against it. So that is usually late cycle stuff.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“A long procedure of a rounding top or it could be a procedure where the leading theme stocks going to a buying climax We do not know the outcome if the buying climax thing develops, it will probably develop over the next few months. And in a buying climax, thematic leaders usually double in the last six months.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Late 99 means that we are late in a cycle that is going to peak and then we have an economic slowdown, recession, crisis, and then renewed stimulus. So we are very late in that economic cycle and we are very late in the investment market cycle. The exact timing is very difficult to forecast. I said at the beginning of the year the market should do very well into the summer. I expect a summer peak, then a correction into fall and then another attempt on the upside into a peak most likely in the first half of 2018. That worked out well in the European markets. We had a correction in Japan which was more sideways than down and we didn't have any correction in the US market. The US market just kept going. There are different ways a top could evolve. A top could be”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Know it's one thing to commentate in theory what should be done and what's right and what's wrong. It's another thing to be the guy who pulls the trigger, makes the decision and is responsible for that decision. And as soon as you are responsible, you move more slowly, more cautiously, and you rather err on the side of making it better for the world, not worse, or less painful, not more painful. And unfortunately, that is true for the short term, but in the long run, the outcome is exactly the opposite. You make it less painful in the short run, but you make it more painful in the long run.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That's absolutely right, but it sticks more and more of its fingers into where it doesn't belong. And this is a trend. And the trend is then reflected that the government share of our economies is on the rise as a trend. And the interference is on the rise and the free markets are on a decline. And this is the change. I think it's a structural, secular trend change that we have seen. It started very slowly in 80s after 87 with central banking becoming more biased to asymmetric expansionary policy and after 09 it was two more steps forward in that process and I think central banks cannot go back to where it was because if they tried they would break the system”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the driving force in this cycle is China, but the cycle is somewhat different from previous cycles because we have after 2009, we have really entered cycle planning in a way because the central banks have taken over to manipulate financial markets to the degree that they move prices where they want to have them. And that is a new element. And that is distorting a lot of things that used to work Well, in previous cycles and do not work as well in the current cycle. So that's the distortion. And the question is whether this is a permanent distortion that will be with us forever in the future or whether this is a temporary distortion. My understanding is that it is probably permanent. Distortions.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“At their time. And I was pounding the table, and nobody was listening. So I do not get the reputation of a raging bull. I got the reputation of a bear because of the 87 experience, I believe.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“40% up from I'm not the perma bear, but the label was given to me after the 87 crash because I called that downturn and I made bare statements, and unlike most others in the industry who are reluctant to make bare statements, I call them as I see him. So, whenever everybody else who might be bearish is reluctant to speak up, I do. And that gave me that label, which is absolutely wrong. In the early 1980s, you know, I was going around as a raging bull. It was a time when you could buy a blue chip type of stocks like a Unilever. You could buy at the P that was lower than the dividend yield. And nobody wanted to turn bullish because everybody was sitting in money market that was so high returns.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it was one day away from the low and it is in print in Baron's. I said now the next six months we'll see 25 to 40 percent rally and then we'll see it could fall back once again but I'm not sure we have to assess it as we see it happening.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's always important to see what's the driving factor and the driving theme in a cycle is. So in the last cycle, it was housing, real estate, and in the current cycle it's China.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And then we had that crisis, and that crisis again triggered the next stimulation, you know, support of the system, the next stimulation, and then you had also the economic policy of making housing available for every American, even if they cannot afford them and all that. And that created the next big excess, which was the last cycle. And in the center of that cycle was housing, primarily US housing, but also housing in Spain or wherever.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“So you had excessive valuations and then you had rising inflation and rising interest rates and that broke the market. No doubt.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And due to his fear he flooded the markets. He flooded the system and that created the excesses thereafter. And the excesses were monumental. You had a simple telephone stock trading at 100 times earnings and things like that.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Months to discuss world affairs, and his forecasts were not that appropriate, but he is a great historian. And I detected because it was the time of the late 70s, early 80s, when we went from rising inflation to declining inflation. And I asked him lots of questions about deflationary processes. And he was very concerned about another traumatic 1930s. And from then on, and you can really go back in the statistics, from 1987 on, that trauma sort of guided monetary policy. It was always too easy for way too long. And this led to the excesses that we have seen before. First, the Asian crisis, then we had 1998 with a big decline in the market. And then we have LTCN. And all that. 97.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, before we had the Asian crisis in the late 1990s, and we had Alan Greenspan running the Fed, and I knew Alan Greenspan before he became He was an advisor to UBS at that time, and we met every three.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That may be, that may be. But we did very well. We were up a lot. Margaret was down a lot. And unlike the US market, the European markets kept going down for another month after the crash. And interestingly, in Switzerland, where you had registered shares and bearer shares, registered shares could not be bought by foreigners. So a clever, smart investment banker, he created warrants on registered shares. And those warrants all had a premium of up to 40% running for another year to two years. And I, for myself, I shorted all those warrants because at that time you could short them in the future on margin. So, all those warrants were done about 80% or so. I had a good year, to say the least.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“It was way up, and I wanted to cut back, and the investment committee followed, and we decided to cut back, and then general management intervened. And I thought they should care about their business and we do the investment side. And that's why I made an extreme example statement that we go to zero. And I ordered all my portfolio managers to go to zero equities. But I explain them why. I explain them the reason. I didn't know that the crash was coming. I expected a 25% decline for the next six months or so.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Wow. And we were unloading equities for weeks and weeks and weeks. And I was criticized by general management for doing that. But it was because in the early 80s, 82, I increased or I pushed the bank to increase equity to 65%, which at that time was unheard aggressive for a continental European bank.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I was in Switzerland at the time and I visited Barons and I gave an interview and the title of the interview was Investors Hell and Traders Paradise and that's what I said. It was in early 86 and I said the market would move sideways up and down and up and down. Great for traders but horrible for investors. And I said in that interview that the Soviet Union was bankrupt and would decay. And as a result of that, interest rates would inflation would decline. interest rates would decline for many years to come. And L&Belson then wrote me a letter, an invitational letter to join the Baron's Roundtable. And that's how it happened. And then thereafter was 87 when I was running the institutional portfolio management at UBS in Zurich and I did something that probably nobody ever did before or after. I went to zero equity.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I visited barons in early nineteen eighty six, and I did so because I was asked to do so from the bank. The bank wanted to have a better saying and a better word in the world of investments. And so they sent me on a mission to see the media, et cetera.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. You know, I have the best stock picker I know in Europe with an outstanding track record. He's a dentist by education. And he then went into consulting, business consulting and learned all that. But he was never biased by learning the theories early on in his career. And so I think this is an advantage, or it can be an advantage. In my case, it was.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. I think I learned the business from the practical side. And not from the theoretical side. I read and studied the theory next to it, but it was not the driving force. I was a practitioner and I wanted to learn the theories behind what makes the world moving and what makes markets moving. But it was not that the theories, that the world is moving like this and therefore stocks or bond prices have to do this or that. I started from the other way around.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Although I did produce research reports and things like that, but I was in love with macro. And that is my field of expertise, and that's where I feel home. And so I was given the position of the global strategist at an age of 30 virtually. And I was a global strategist for the whole group worldwide when I was 30. And that was way ahead of my peers at that time.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think it was a different time than it is now, and I was ahead of my peers because I didn't go to university. I worked it up the hard way. I was a speculator and a practitioner. And I read probably more books than those guys who went to university teaching business and learning business and economics. So I was way ahead of that in terms of knowledge and practice experience when I was in my upper 20s. And I ran mutual fund at UBS, a US equity mutual fund, by the way. I outperformed. I did very well. I was an aggressive young man at that time. Then they merged research and mutual funds. And I had to be On top of being a mutual fund manager, I had to be a research analyst, which I hated. I didn't like it because I'm not a stock picker and company analyst.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“And he showed me technical analysis, pointed figures and cycles and all that stuff. And I did my analysis and I came to the conclusion that the market is due to top and to go into a bear market. That was before the first hike in oil prices and the first oil crisis hit. And I speculated the owner of the shop asked me to become a salesman in Paris. I was an intern at that time. I was 23 years old. And he said, I should play with my own money. And I said, I do, but I don't have enough. So he asked, How much do you need? And I said, half a million? At that time, that was a lot of money. And he gave me to have million, and I started to build a short position on credit, margin. And I wrote. I wrote the whole market down and I was almost killed in the bear market rally in fall of 1973. It was brutal from summer to fall.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“That was before I met Bob Farrell. Oh, really? And yes, I met an English gentleman, a good friend of mine, when I worked at a brokerage firm in Paris.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Booklet was written 100 years ago and it describes what happened in the Wall Street brokerage firm by And he chose how sentiment changes over a full cycle in the stock market from the lows from the bottom to the peak. And that really made a big impression on me. So I started to learn that.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“Bob Farrell. He's a modest man A true gentleman and a very good friend. And I learned from him not only the modesty, I learned from him how sentiment changes over time. Gave me a booklet very early, The One Way Pocket.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I looked at it and I learned it and I read the books and Bob is still a colleague of mine. I visited him a few times at his home in Gainesville, Georgia. But I figured out after some years that all of a sudden you see threes and fives and ABCs everywhere and it pollutes your mind, you know. And there is a subjectivity. To the theory. It can be very helpful at times, but it is one of many tools.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“He ran a market analysis department. It was a technical analysis At that time, and I think he is the dean of technical analysis and had a department of about 20 people at that time”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I wanted to learn what made those things move. And there were no opinion leaders in Europe at that time. That was in the late 60s, early 70s. So I looked for the US because there were some opinion leaders. Read them and I made the decision that I wanted to be able to make those decisions like they and found my opinion on solid research. So this is how it happened.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“I didn't need a college degree for that, and I went to a bank and worked for a bank as an intern. They educated me. It was very boring. Banking was very boring at that time. And once I went to the investment department, it became lively. Something started to move and I was interested to see what made things move. And I asked the people there and I got so many answers and I figured out very quickly that they had no clue”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I was a college dropout actually, and my parents requested that I learned a solid profession. And that was the profession of a banker at that time. At that time, it was still a solid profession.”
2017-11-21 · Masters in Business · Felix Zulauf Discusses the Evolution of Markets · IDENTIFIED FROM THE TRANSCRIPT · source