Crispin Odey buys back into markets betting that the stock market trough or bottom was reached back in March in the wake of the 2020 corona bubble stock market crash, which played out in late February 2020.

Crispin Odey is the founding partner of Odey Asset Management. 

In 2008 during the financial crisis, he shorted banking shares, a lucrative wager which earned him almost 28 million pounds that year!

“The market hasn’t been this interesting since 2008” said Crispin Odey. “Going into March, I was down 12% for the year but my fund is now between 18% and 20% up for the year” added Crispin Odey.

Indeed, for the London based hedge fund manager, the COVID-19 triggered 2020 stock market crash has been a moveable feast as Crispin Odey buys back after shorting the markets into a tailspin and bagging £115m

“2020 stock market crash has been a moveable feast as Crispin Odey buys back after shorting the markets into a tailspin and bagging £115m”

THE WEALTH TRAINING COMPANY

Crispin Odey, a prominent Eurosceptic and a staunch Brexiteer, correctly forecast the FTSE 100 would fall below 5,000, which it did on March.

So before the Crispin Odey buys back cherry-picking stocks in March the hedge fund manager was not on the sidelines waiting for the anticipated stock sell-off but also profiting from it due to several bearish stock wagers. For example, Fevertree, Metro Bank, and Intu, the shopping center giant were among the British companies he had been betting against, where he had short positions in the first few weeks of March, according to the Financial Conduct Authority.

The above-mentioned stocks have seen their respective share prices fall by more than 60%, 50%, and 33% since the start of March, as the FTSE 100 fell around 22%.

Crispin Odey, well-timed short positions in the above-mentioned stocks helped his flagship fund swing into profits, thereby bringing a reversal in the Odey European fund’s performance from a loss of 12% in the first two months of the year to a gain of around 20% year to date. 

a reversal in the Odey European fund’s performance from a loss of 12% in the first two months of the year to a gain of around 20% year to date

THE WEALTH TRAINING COMPANY

But what is different from the 2008 stock market crash and the latest 2020 stock market crash?

“The big difference between now and the last big crash in the 2008 financial crisis is the trading machines” said Crispin Odey. “The machines just never stop selling when the market falls. That’s why you are seeing such high levels of volatility and big index moves down” said Crispin Odey. 

Crispin Odey believes that much of the market selling contributed to the 2020 stock market crash was driven by the increasing dominance of algorithmic trading. Algorithmic trading now accounts for 70% of all trading volume in global stock markets in 2019. Orders are executed using automated pre-programmed trading instructions which account for variables such as time, price, and volume. The edge that algorithmic trading has over human trading is speed, data processing, and decision making based on pre-determined parameters rather than human emotions. Fourth revolution automation technologies are also revolutionizing trading. The modern trading room of banks now employs more financial trading bots than human traders.

The big difference between now and the last big crash in the 2008 financial crisis is the trading machines” – Crispin Odey

Crispin Odey believes that the 2020 stock market crash was due to the dominance of algorithmic trading. ‘The machines just never stop selling when the market falls’, said Crispin Odey. March 15, 2020, plunging stocks triggered a key market “circuit breaker” to prevent a market meltdown. Crispin Odey also warned that the rise of algorithmic trading could result in a hedge fund going bust without much warning. ‘I have a feeling that one of the big hedge funds is about to go bust,’ said Crispin Odey. 

However, Crispin Odey buys back stocks and he is hopeful that a recession is already priced into stocks

But just as Crispin Odey believes, “a recession has now been priced in” how does he quantify into stock prices “the worse recession in 300 years in 2020” according to the Bank of England.

Latest macro news now shows that the UK has matched the US record monthly jump in jobless claims. So in a depressed job market with the pandemic lingering it would be foolhardy to talk about pent up demand and a V shape recovery. 

Moreover, to make the Crispin Odey buys back stocks bet even dicier how do investors factor unprecedented fiscal spending when government budgets are already stretched to near breaking point and the greatest monetary easing experiment on top of the next greatest monetary easing experiment will be implemented to finance modern monetary theory (MMT). 

“Crispin Odey’s strong performance so far this year follows a lackluster 2019, in which he clocked losses to the tune of 18.1 percent for the year” – The Wealth Training Company

In other words, paying humans to not participate in the economy because in the fourth revolution, humans need not apply as smart bots are far more productive.

Something has got to give, and if late February’s stock market crash was anything to go by when it breaks it happens at bot speed. Indeed, the first leg down of the 2020 stock market crash was the fastest 30% decline in the stock market’s history.

Crispin Odey buys back stocks, but just exactly what stocks is he cherry-picking

The hedge fund manager has increased his stake in Vodafone. He also bought shares in UBS, US cable company Charter Communications, and Dutch shipping company Euronav, according to an article.

Crispin Odey’s strong performance so far this year follows a lackluster 2019, in which he clocked losses to the tune of 18.1 percent for the year. 

Crispin Odey losses in 2019 were primarily due to a rapid rotation out of top-performing stocks into oversold value stocks. In 2019 investors piled into the neglected and fast-moving technology sector, which caught a lot of money managers by surprise

So it yet remains to be seen whether Crispin Odey buys back stocks will prove to be on the winning side as the already 2020 tumultuous year could throw up many surprises

But a string of grand master of the investing world from Ray Dalio, Warren Buffett, Paul Tudor Jones, George Soros, and Jeff Gundlach are all leaning towards a bear market rally with another leg down going forward. It will be interesting to see how effective  Fiscal and Monetary policy will be in this current economic downturn and whether the coronavirus rears its head again, mutates, and makes any vaccines irrelevant.