YouSaid · the spoken record

Neal Berger

lines on the record: 50
first: 2023-02-09
most recent: 2023-02-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“The problem is the Bank of Japan is very, very strong central bank. They're very well capitalized. They own something like 100% of all the GGBs. So that is a very, very controlled market. In fact, they don't make any.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So I am betting on a steepener at the moment. It does seem like the central banks are nearing the end, at least pausing. They call the terminal rate or I prefer to call it the peak rate. We don't know. It's only a peak until there's a new peak after that if there is one. It could be the peak rate, but it seems like the central banks are nearing that end. But yet the long end of the curve, you know, so the 10-year sector, let's say, is not really reflecting the thesis that I have yet that, you know, as liquidity comes out of the system. So the short end is much more tied to central bank influence versus the longer end, which is much more tied to risk assets in general, if markets are selling off, you know, the long end will whip around more consistently with risk assets. And so I am betting on the curve steepening. The Japanese government bond at 38 base points is just, it's also, it's whack.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“With employment or inflation. If the central banks are extracting liquidity from the system, sell the market. That's it. But I can't just do that without risk management because I'm a trader and I have to make money from my investors. So I can't just stand in front of a freight tr”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“What do you think about the employment report, the employment report just came out a week? Doesn't matter. I don't care. The central bank is adding liquidity by the market. What do you think about the COVID-19 pandemic? You know, the global economy screeched to a halt. Doesn't matter. The central banks are adding liquidity by the market. That's it. And that's really all you had to know because that was a story. All of the vagaries and all the movements associated with economic activity and all the minutia that people were focused on for the last 12 years amounted to one thing and that was the market just went straight up, essentially. Yet every time there was a dip, you bought it. Every time the market, you know, and you stayed long. And that's a function to me of central banks adding liquidity. So now as central banks are extracting liquidity to the extent that they continue to extract liquidity, it's basically the polar opposite, where none of this stuff really matters in the big picture. It just creates trading opportunities where it doesn't really matter what happened.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“I believe so. My thesis is going to remain intact until something dramatic happens and maybe the central banks say not only are we going to stop letting our balance sheet roll off, but we're going to start buying bonds again. Then obviously I would have to reevaluate the thesis. So I think that ultimately, you know, a lot of people are very focused on Fed policy and, you know, inflationary pressures and that sort of thing. I'm focused on what I think is a much more longer-term issue would have been interesting and very appropriate if you always have economists going on TV, whether it's Bloomberg or CNBC and over the last dozen years. The reporters are always asking, you know, well, what do you think about inflation? What do you think about, oh, we had this inflation number? What do you think? Someone would have said, doesn't matter. I don't care. Central Bank is adding liquidity by the market.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Currently, you would definitely have a negative 200 something basis point return, you know, real return. So that's not rational. It's just not rational that people are going to invest for a negative real return. And so the more natural condition is that there is some positive spread, there's some level of real interest rates, meaning a real return, meaning after inflation, people are getting paid to invest their money. And that's the much more normal historical condition. And so based upon where inflation is today, and even in a rosy scenario, if it comes down, the pricing structure of the fixed income markets across the world is, to use the academic term, whackado.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“It's a good question. I would say that I don't know. I think that probably bonds, because bonds are, you know, stocks knew how to do anything. S&P can go up to 5,000 or 6,000 or, you know, whatever. It's pretty hard to rationalize, let's say, 10-year Japanese interest rates, which I think are about 38 basis points when the Japanese inflation rate is running at 4%. Even if the Japanese inflation rate running at 2%, it would still be hard to justify 10-year JGBs, Japanese government bonds trading at 40 basis points. So, you know, there's a somewhat more rationality associated with bonds. I don't know what the most recent readings on inflation are, but Fed funds, you know, it's in the four, six percent, whatever it is, 6% in the US. But, you know, we have 3.5% tenured notes. So, you know, someone, if inflation would have just stayed where it is.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Less liquidity, but at the moment, that tends to happen during bearish market environments or rapid sell-offs, like March of 2020. There was some liquidity issues in the market during that time. And the central bank stepped in and helped the market function a little bit better and it worked. But basically, the market right now is functioning very well and people are generally able to move in and out of large blocks of securities with the normal amount of slippage that they would normally incur based upon how much they're moving. So market liquidity, I think, is okay, as you would expect. That market is quite stable. And it's not in a panic sell-off in either stocks or bonds. But the liquidity that I'm really referring to is more central bank liquidity and central bank's balance sheet.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, sure. So I was really just talking about the central bank one. Let's be interesting maybe for your listeners to pull up a chart of M2 money supply versus the S&P. So M2 Money Supply has a very high correlation to the movement of the S&P. And now M2 money supply is coming down by Charlie. And to me, that's a...”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“I feel like there are two definitions of liquidity there's central bank liquidity are they expanding their balance sheet are they reducing their balance sheet and then people combine it with the treasury general account and they make all sorts of these these equations about is liquidity high is it low is it rising is it falling but then there's being in the market liquidity of oh i want to sell a large amount of assets and my ease with which i can enter and exit positions is is either large or small. I either have to pay a large fee or a very small fee. When liquidity is ample, I can get in and out, no problem. When it's not, I have to pay dearly. Are you noticing that both of those definitions, when you were just talking about liquidity, were using only the central bank one, only the market one? And to what degree are they related? Because you see both.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Going to get rallies like we're getting now, and you're going to get sell offs. But I just don't think that the next 10 years will be resembling the previous 10 years when we had the liquidity infusion that we had. And now we have the liquidity extraction. So on a shorter term basis, which is people looking at things on a six-month, one year, three-month basis, whatever it may be, clearly the market is pricing a soft landing and a dramatic reduction of inflation. a ceasing of rise at interest rates by global central banks. And in fact, lowering of interest rates down the road.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“My thesis is more relevant, is more related to liquidity in the market as opposed to central bank movements of the overnight interest rate or the movements of stocks at the moment in much the same way that there was really no fundamental reason that could be justifiable as to why global economy screeched to a halt during the COVID-19 pandemic and the market shot up like a rocket ship, or that $19 trillion of sovereign debt traded negative in terms of you had to pay governments to own their bonds. And that was a really function of the amount of liquidity that was sloshing around in the system added by the central bank. So my thesis is much more related to the movement of that liquidity by the central banks. And that's a long, long time period where you...”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“So again, that's not a prediction. That's an observation. So it's factual that the market is pricing Goldilocks. Now, whether the market is going to be right or it's not going to be right, that remains to be seen. That's a prediction that I don't know and nobody else knows, quite frankly. Not that Jay Powell doesn't know. He's just following along with information as we're receiving it. But based upon something like recent jobless claims and today's employment report, it does seem like the economy is fine. Based upon recent inflationary indicators, it does seem like inflation is coming off. It's certainly not coming off to the level yet that they would like it to be. The market is anticipating that it will. And that is a prediction. And whether that rings true or not will be adjudicated by the market in the months to come as we see new information continuously come out of the market.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm observing what, like I said, I'm not predicting observing. The market is pricing goldilocks. I mean, the market is pricing that we're going to have a soft landing and that we're towards the end of this inflationary episode that we saw, that the central banks are going to be, you know, maybe have one more modest rate hike. And NEF pretty much it. And then they're going to be forced to reduce interest rates because inflation will be so under control that there'll be no need to keep rates at the levels at which they peak at, you know, some people call it the terminal rate. And that the economy will not tip into recession. And that's why the S&P is in the same spot as where it was basically in May of last year. So we had all this tightening, you know, from the first tightening on, as you alluded to earlier. The S&P is basically the same spot as it was when the Fed first started.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“So, I'm going to say two things. One is I'm not in the prediction business. I'm in the observation business. Anybody that is in the Any material way. I'm not living right business. I'm in the money making business. So my investors don't pay me to be right on the economy. They don't reward me for being right in my predictions. They reward me for making money in the form of incentive fees and or in the form of sort of management fees by giving me money to manage. And so I don't mind if I'm dead wrong and I make money. That's what my judiciary responsibility is to my investors. An economist is their job is to try to be right. And if people want to listen to economists, that's fine. But my job is not to be in the being right business. My job is to be in the money making business. And so that's a, you know, that doesn't mean I can't have a thesis that I'm thinking about and looking to see if the market confirms that thesis, but I have to be much more of a trader and I have to be following the price action and worry about things like making money.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“And maybe the market is telling us that those people that own businesses around the world and who are senior executives and major companies around the world are just not able to raise prices. And they're seeing it before the Fed is even seeing it. So we just don't know. That's why for someone like myself, I have to have a view and I have a fundamental thesis, but I can't stick to it that automatically because, you know, the price action just doesn't dictate it. So the best scenarios for me to profit, which is why we made so much money in 2022, is when my fundamental thesis and the price action coincide with each other. So right now I've got a certain fundamental thesis which is not being supported by the market price action and I have to be much more timid in my approach because I have to respect that price action.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Opportunity for the speculator who lose money. But, you know, so I would bet that the central banks, and this is what they're telling us as well, that rate cuts are off the table. They're not going to be cutting rates for this year. The market is saying we don't care what you say, Mr. Powell. We're going to believe that the economy is going to get so weak and inflation is going to come down so aggressively that, yes, you are going to cut rates. And so, you know, whether the Fed is going to be correct, ultimately they hold the guards. They can do what they want. But, you know, the market is historically a pretty amazing weighing machine that, you know, is the collective wisdom of millions of participants all over the world, some of whom own the businesses directly or have direct information on their businesses as to whether they're able to raise prices.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Down the road has come out of the market, at least on this one day basis that we're talking today. And everybody talks about the terminal rate, but it's a little bit of a silly statement because it's never really terminal. It might be terminal for like a month or two months. I don't know. It may be peak rate is better because the market is suggesting that we're going to hit that rate and then we're going to start going down. But the market is usually, you know, The pendulum swings too far to one side or too far to the other side. So the market is that's what allows for speculators to make profits when the fundamentals or when the reality diverges from what the market is anticipating and a speculator gets that right that provides a profit opportunity for the speculator. Of course, it also provides an opportunity.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, you know, sentiment tends to be risk on or risk off, you know, at least during the most recent periods. Today, this is February 3rd. We got the employment report today, and it was a huge upside surprise, up over 500,000. And I'm watching the market. And bonds are selling off and stocks are rallying. which I suppose in theory should be logical. You know, if the economy is doing well, stocks should rally and the bonds are telling you a little bit that, well, maybe there's not going to be as much geezing as we have thought. So the market is always sort of as new information comes to light, the market is always weighing things differently each day, like where we get a surprise like today to the upside of employment doing very, very well, at least as the numbers suggested today, a little bit of that enthusiasm for rate cuts.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“I don't have to buy into it and belong, but I do have to be much more cautious in terms of establishing aggressive short positions when the market is just not supporting that view. I have to respect the market. I have to be have no ego to suggest that I'm right and the market is wrong. I do still believe that the larger thesis is central bank liquidity is really what is the most important aspect of the game here, but that's a long-term game. That's not something that may play out in a quarter or even possibly in a year. And I have to make returns and protect capital from my investors on a much shorter time scale. And so I have to respect what's going on in the market.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“People are going to be right or not of, I guess, their thesis that we're getting towards the end of central bank tightening cycles that inflation is coming down. You know, people are betting that it will continue to come down to lower levels, to levels that are acceptable to the point that not only will the central banks stop tightening, but the market is actually pricing and easing at the moment that economic activity will become so depressed and inflation will become so depressed that later this year the Fed is, let's say, in the US, the Fed is not only going to stop tightening, but they're going to start lowering interest rates. I don't share that belief, but that's what makes a market. I'm betting that those people are going to be wrong. But again, I have to respect the price action above all else. The market is telling us something and I have to listen to what the market is telling us.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“So Justin, you know, 33 years trader, nuance feel that the buying that's gone on this year primarily is the sub short covering, but there's also some real money buying in the market. There's real money getting along here, unlike a lot of the rallies that you alluded to last year during the bear market were sort of the tights that were vicious counter trend rallies, you know, short-covering rallies. A lot of people who were short, maybe the macro guys, the CTAs, you know, people that were underinvested, whatever they may meet, you know, were scrambling to buy the market. And those felt like aggressive counter trend, short covering rallies. This year feels a little bit more like, obviously there's some short covering going on, but there's also real money buying. And whether those”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“As a trader to cut losses quickly when they occur, only in hindsight, we see how far it went or how fast it went. So when you're living at real time, there's not an exact science to this. But I think we did a decent job of cutting our risk when it was going against us, taking some losses. But then when the market was turning back in our favor, our performance was positively skewed, which means that we made more money when markets were in our favor than we lost when markets were going against us. And that really speaks to risk management and trading talent.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Sure, those were challenging times, and there were a few episodes during 2022 when the SP rallied maybe 500 points from the lowcoin to the peak before resuming its downtrend again. And again, I'm a trader, and a trader needs to, certainly we had hurt during those periods, not a fortune teller, but a trader needs to have certain risk management that when the market is going against you, you lighten up and even to the possibility of just getting flat. We weren't long the market because it was against the thesis that we had and it was against the longer term trend. But, you know, during those very vicious Calvin trend rallies, some of the biggest market rallies in history come as counter trend, bear market rallies. And so, you know, in short periods of time, some of the biggest updates that we've ever seen happen during these counterfeit rally periods. So I have to be very vigilant.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Back to the interview. Let's move forward from January. You started noticing that shorting everything is a trade that's working, so you do more and more of it. And that trade continues to work all the way, I think, till June 15th was the 15th or 16th was the first time that the Federal Reserve hiked by 75 basis points. But paradoxically, even though after that week, you had a sell-off, that was the big beginning of the first real moderation rally, bear market rally, I guess we can call it, from June all about to Jackson Hole. So, you know, I imagine because of the stellar returns that you had, not only were you right, but you must have sort of delved in and delved out and navigated those bear market rally ably. So yeah, tell us about that when the price action was briefly for a few months moving against your thesis.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“I think in general, both the stock market sell off and the bond market sell-off were fairly orderly. In the bond market, you actually have something that to hold on to that's supposed to anchor bonds, whether it's downside or upside. And that's the federal fundraiser. So as a federal funds rate was being, you know, that doesn't directly control the stock market. The stock market can still go up, even if the central bank is raising the federal funds rate. But it's hard. I can't point to any individual day or any individual week where there was a crash per se and it was extremely disorderly, at least in the products that I trade, which is mostly the sovereign debt as opposed to corporate bonds or mortgage securities or other types of bonds. But my understanding is everything was generally pretty ord”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Cryptocurrencies, but it filtered in initially through purchasing of the bonds, which provides investors with money. That money gets divided up in many different ways and ultimately finds its way into some more speculative aspects of financial markets, including the private equity space and venture and all kinds of stocks and other securities.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Getting somewhat back to normal. And so the central bank started to normalize the balance sheet. And I believe that when you get the biggest buyer in the world not participating in the market any longer, it's natural to expect that prices are going to fall. And they did. So I just kept going with it. It's as simple as that. Ultimately, it affects all asset prices. Obviously, the central banks weren't buying cryptocurrencies and letting those roll off. Their vehicle of choice is bonds. But when bonds start to roll off, and that has to go be absorbed by private sector, there's less liquidity to buy more speculative things like cryptos and NFTs and even stocks. So it has a spill-on effect just in the same way that it had an effect when they were injecting liquidity into the system. They weren't buying.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“With the term that they use for that and normalizing it was that they were going to cease buying fixed income securities and they were actually going to let certain amount of fixed income securities roll off. Now, central bankers in general move slowly, but also don't want to cause any massive market disruptions. They don't want to cause a market crash or anything. So they announced it. They move slowly and methodically to make sure that the markets can handle that, the economy can handle that. And, you know, seems like COVID-19 started to get a little bit better in terms of at least its lethalness. And certainly people are still dying from it. But the initial lockdown on the global economies around the world started to ease a bit where people were getting back to work and likely.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Buying the debt of corporations, not a central bank. So the Bank of England had said that they were going to sell their corporate bond portfolio, which I think was about $20 billion, which is not a lot, the global scheme of things. And that was sort of the canary in the coal mine to start me thinking that, okay, maybe the central banks, now that we're past the worst of the COVID-19 pandemic, we're certainly many years past the global financial crisis, maybe central banks are going to start thinking similarly where they're anxious to start allowing the market to be a more freely tradable market that has natural price discovery, unlike it was where they were so involved. So I was very much on guard for looking for hints from the central bank. And then eventually, and I'm not sure exactly what the timing was, but they did announce that central banks around the world announced that they were going to be normalizing their balance sheet.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Of sovereign bonds trading at negative interest rate, negative nominal yield. So you actually had to pay the government to own their bonds, which is just an unnatural condition. So the central banks know that, and there was always going to be a time when they were going to extract it. And they got interrupted from doing that because of the COVID-19 pandemic. And not only did they were they not allowed to do that, they actually had to add more liquidity to the system to say, you know, to help, you know, support the financial system during the crisis times. And so, you know, I think it was early in 2021 maybe February that the Bank of England was one of the first ones to say that they were going to let they were going to start selling off some of their corporate bonds that they had purchased. I mean, it's just unnatural for a central bank that by buying corporate bonds. I mean, this is something that a private sector should be, you know, private investors should be.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Right. So for years, I've been on guard to note that the liquidity infusion that was injected into the system was always meant to be a temporary situation. The central banks had tried on numerous occasions to withdraw that liquidity because they're not in the business necessarily of influencing the market to such a great deal. The market should be a free market where private buyers and sellers have price discovery that's uninterrupted by global central banks. So that's the more natural condition. So I was always on guard for when the Fed would or global central banks would reverse course and try to extract the liquidity that they had added to the system unnaturally influencing prices and causing some of the collateral effects. I suppose the most startling one being 19”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“And in January and February, what was the Federal Reserve saying? How closely were you paying attention to them? I think they were tapering, had not done quantitative tightening yet. They did not hike interest rates in January, but I think they indicated that they would in March. So the spot interest rate of Fed funds at zero was basically at zero, but the two-year was going up because it was pricing in these cuts. And then the 10-year, the 30, they were selling off as well. So what were sort of noticing in the bond market and how did that relate to your thoughts on Fed and inflation?”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Qualitative assessment, but should be up 10 instead it's up seven or eight, you know, and so that's sort of a little hint to tell you that, hey, I've seen this pattern before it really should be up 10, but it's really not up that much, just kind of telling me a piece of information as to who's got the control in the market, whether it's the bulls or the bears. Conversely,”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“There's always a placeholder numbers every month. There's always economic information. I don't recall any individual piece of news that I responded to. But as you said, if a piece of news is bullish, and we all know when news is bullish, right? Inflation is better than the market expects or employment is better than the market expects, whatever that might be bearish for bonds, bulliters stock. We all know what bullish and bearish indicators are. But as you said, it's the market reaction to that. So, you know, if in my history, based upon a piece of information, if the market should be up 10, let's just say I'm being hypothetical and it's actually up eight, that's a piece of information that tells you something about the stature of the market at that time that maybe the balls aren't in complete control and that there is selling pressure underlying the market, which has caused something that technically, theoretically, you know, this is all quality.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Very early in 2020, 22. And really, as you said, the peak was right around the beginning of the year. And markets started to sell off. And it's not just looking at trends, trend lines. I mean, in a very technical way, you know, just more of a qualitative type guy. But, you know, just looking at the price action, how does the market respond to good news? How does the market respond to bad news, the momentum of the market versus how it was trading in years prior? Does it have the same energy to the upside? Or does it have different energy to the downside? So it's somewhat of a qualitative assessment having been a trader for 33 years that the market was just trading a bit different. And so we went with it and nothing reinforces more than satisfaction. So we were getting satisfaction and we were winning to it. So we kept going. And ultimately the trend.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“I'm going to stop doing that. So in the year 20, we did launch in April of 2021. I really can't publicly disclose performance information, but let's just say we didn't lose, we didn't make. So, you know, broadly speaking. So 2021 was a year that the price action really didn't confirm the thesis, the fundamental thesis. So as a good trader, because not only does one have to have the right thesis, but one also has to, that's sort of the white collar part of the job. You know, the blue collar part of the job is actually to trade implementation and managing the risk and knowing what to step on the gas pedal a little bit harder and knowing when to take your foot off the gas pedal and put your foot on the brakes. That's all part of the trading aspect for the job. So we really didn't have confirmation that the thesis was playing out, at least the market wasn't confirming this until”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Sure, that's a good question. So we launched the fund in April of 2021 with this fundamental thesis, recognizing that the price action hadn't yet supported the fundamental thesis that we had, that I had. And so I traded throughout 2021 very cautiously. In fact, not much at all, actually, because the S&P, I believe, was up roughly 27% in 2021. You know, as a trader, you know, the old adage of cutting your losses quickly or again, like I said, price action is the ultimate Bible here. If it's just not working, and I'm not getting satisfaction, I'm not a glutton for punishment. So if I lose money and I try to make some short positions and it doesn't work out, then I'm going to stop. Maybe come back again and try again a little bit later. And if it still doesn't work.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“And when did you get that confirmation? I think the stocks peaked maybe November of 2021. And I remember January 1st, they were near their all-time highs, but they dropped like a stone and bonds fell. So yeah, walk us back to early 2022, maybe late 2021 when you had a thesis, you were sort of dipping your toe in the water. I think I'm right. And if I'm right, this could be big, but I don't know if I'm right. What was the process of you getting confirmation and your conviction going up to place this bet on very large?”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“And we started to have a downtrend. And I had the fundamental thesis in place, although I didn't play it aggressively until I got confirmation from the price action in the market that both stocks and bonds, which is what I chose to play in. I didn't short cryptos or anything like that, but I could have. But when I got confirmation from price action that the trend was pointing down, everything sort of aligned. So I had the fundamental thesis along with the price action where markets were in a bear market. supporting it. And I was able to bet very aggressively when I had those conditions in place.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So, as you said, historically, it's been very difficult to make money from being a bear, from the bearish side. Most people have made their money on Wall Street being bullish. And as you alluded to in Japan, they don't call the trade of trying to short Japanese interest rates, the widowmaker trade for no reason. So it is a more difficult trade. I am a trader. A lot of the people that you allude to and that we know about in the markets are portfolio managers, you know, so they have to make large bets and they kind of have to sit with it no matter whether the market price action is confirming their thesis or not. So I had the luxury of being able to wait until the trend of the market started to confirm the fundamental thesis that I had. And ultimately, the price action is the vible. And so when markets are going down.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“And I believe will provide a headwind against all asset prices in much the same way that the liquidity infusion provided a tailwind in supporting all asset prices.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Around the world that would provide a tailwind against asset prices of all stripes. And that's exactly what we saw. We saw stocks go down. We saw bonds go down. We saw cryptocurrencies go down. We saw NFTs go down. Everything that basically was the beneficiary of the ocean of liquidity has started to come down. And this, you know, just like it was a multi-year process to add in the liquidity, you know, over a period of 12 to 14 years, central banks added in the $25 trillion liquidity, extracting that liquidity will also be a multi-year process that began last year in earnest. The Fed just started to allow $85 billion a month of bonds to roll off their balance sheet starting in September of last year. And the ECB, the European Central Bank, will start allowing 15 billion euros per month to roll off starting upcoming in March. So this is just a process that has only started to get underway.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“The central banks are not trying to kill bull markets in general. They don't care if there's a bull market in Solana or there's a bull market in Dogecoin or crypto punks. But what they care about is that if there is consumer price inflation around the world as a result of the ocean of liquidity they injected into the system, that's something that they have to address. And that's the bet that we made, that they would address it by reversing 180 degrees their posture towards liquidity from a liquidity going from liquidity infusion posture to a liquidity extraction posture. And so it's logical to believe that if you believe that markets rallied and did what they did simply because the central banks injected enormous amounts of liquidity into the system and that provided a tremendous tailwind for all asset prices. It's very logical to believe that as they extract liquidity in an effort to rein in inflation,”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Anything you want to point to was the beneficiary of that tremendous amount of liquidity infusion. And unfortunately, the secondary collateral effect of that liquidity infusion was consumer price inflation around the world. It took a long time for that to develop and to become seen. But prior to recently consumer price inflation is somewhat of a unicorn. It's something that anybody under the age of 60 maybe has not has heard about, but really hasn't experienced in their lifetime and it's become we're hearing about this thing called consumer price inflation, but is it extinct? Does it really exist? We haven't really seen it, at least in the US, elsewhere around the world. There is consumer price inflation in certain countries. So the secondary collateral of that being consumer price inflation, that is something that's central.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Of certain NFTs, you know, trade to get $69 million. I'm referring to people or things like that is a rational occurrence. But yet this is factual. These things happen. And so we have to think about why did it happen? And so public equity valuations, private equity valuations, $19 trillion of sovereign debt trading at negative nominal interest rates, NFTs, 18,500 cryptocurrencies, the SPAC boom. These are all different stripes of the same zebra, the zebra being the $25 trillion of liquidity injected into the system. And when you inject $25 trillion into the system, you're going to get a collateral impact of that. And the initial collateral impact was massive asset price inflation across the board. So as you said, both stocks and bonds and cryptos and rare Rolex watches and baseball cards and NFTs and Dogecoin.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Global financial crisis and later on in response to the COVID 19 pandemic. And the collateral effect of that, the initial collateral effect of that was massive asset price inflation. So nobody can tell me that having $19 trillion of sovereign debt trading at negative nominal interest rates, Germany, for example, German bonds traded at negative 70 basis points. Nobody can tell me that that's normal in a universe and explainable and rational. Nobody could tell me that it's rational or explainable or normal, that the global economy should reach to a halt in response to the pandemic, but yet the stock market goes up like a rocket ship. That's just not normal and explainable and rational. Nobody can tell me that it's rational or normal that the proliferation of”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Suppose it dates back, you know, even a decade prior, both stocks and bonds rallied together. So everybody likes to point out that the 60-40 model failed on the downside, but it actually worked quite well anomalously well when markets went up. So as you said, historically, stocks and bonds have been somewhat negatively correlated, but for 10 or 12 years prior, we actually saw bonds rallying, you know, interest rates coming down and stocks rallying at the same time. So one has to think about what was the reason for that. And the reason for that, in my opinion, and I'm fairly confident about it, is one reason and one reason only. And that was the $25 trillion of liquidity that the global central banks injected into the system an ocean of liquidity, initially in response to the”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“Yes, we were pretty aggressive when the opportunity set is big. We bet it. And I believe that the opportunity set was big. And as it turns out, it turned out to be correct. And the market cooperated with the thesis that we had.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT
“First of all, thank you. Second of all, as you said, everything was down, and we bet that everything was going to be down. So that's a simple answer as to how we did it. I can elaborate a little bit more as to why we bet that way and what the thesis was that caused us to bet that way. But the simple answer is, you know, as a hedge fund, we're able to take advantage of betting that the market would go down, both stocks and bonds. And that's what we did.”
2023-02-09 · Forward Guidance · Bear Market Not Over, Says Veteran Trader Who Made 163% Return in 2022 | Neal Berger · IDENTIFIED FROM THE TRANSCRIPT