Hendry's Eclectica Builds Asian Bear Portfolio to Hedge Against Hyperinflation

Market Folly submits:

Hugh Hendry just released the May market commentary from his Eclectica hedge fund (see below). We haven't checked in on Hendry since his March update when we saw he liked Annaly Capital Management (NLY), but his time around we get much more in-depth macro commentary. Hendry has compiled eleven pages worth of insight complete with charts, pictures of Chairman Mao, and even lyrics from the band Gorillaz. The main takeaway from his commentary though is that he sees hyperinflation in store as sovereign entities will need to pay off their overwhelming debts via 'worthless fiat currency.' However, for this to occur, he argues that first we need to see a large deflationary event.

Curiously enough, Nassim Taleb mentioned this sort of scenario at an investment panel where Hendry was a speaker as well. Taleb presented the idea that if you were creating a portfolio today you should allocate a tiny portion to insurance against hyperinflation. If the scenario doesn't unfold, your cheap insurance expires worthless. However, if it does occur, your investment returns an exponential amount. We just yesterday detailed how legendary fund manager Seth Klarman is worried about inflation and has bought insurance to hedge this risk.

Read More

Comment on "Hendry's Eclectica Builds Asian Bear Portfolio to Hedge Against Hyperinflation"

• 3 Financial ETFs Most Influenced By New Bank Rules
• Hendry's Eclectica Builds Asian Bear Portfolio to Hedge Against Hyperinflation
• China Biotech Week in Review: Deals Abound
• Earnings Review: Staples, Salesforce.com, Gamestop
• Top 5 Graphs of the Week: GDP and Inflation Update