It’s hard not to feel bad for hedge funds these days, what with their status as the dinosaurs watching the asteroid streak across the sky. OK, so it’s not really that hard. But if you’re one of the heartless ones watching and laughing, consider poor John Burbank. (Not objectively poor in a wealth sense, but subjectively, in a “woe is him” sort of way.) All the Passport Capital chief has ever tried to do is invest responsibly���by which he does not mean in, say, green energy and not in, say, tobacco or assault-weapons manufacturers (which is not to say that Burbank invests in these things), but by which he means making the objectively right investments. The only problem is, Janet Yellen and her cohorts have turned the world upside-down, making black white, bad good and right wrong. And so responsible guys like him can’t really be held responsible for the losses they’re causing their investors. Focus your ire in the right places, people!
“I’ve been expecting this significant pullback because that’s what happens. It’s normal to have recessions,” Burbank told Real Vision, “A lot of retailers are telling you that. Profit margins have been falling in the S&P now, pretty steadily. But multiples, February to May, we had multiple expansion in many things with essentially declining earnings. It’s very hard to invest responsibly when that’s happening … particularly as a hedge fund….”
"I think I and a few other people were right and willing to be positioned that way but the thing is … China, for their own reasons, and the Fed, for their own reasons, are watching the same things and their threshold for pain is a lot lower than I expected so they said — China: ‘let’s pretend we don’t devalue our way through this.’ And [the Fed] ‘let’s pretend we didn’t hike.’ It’s like we went back to July. And market regained its composure and equilibrium in a way that was shocking to me. But that’s the power of these two most extraordinary liquidity providers. They’re the most important countries and powers in the world.”