'It's the greatest short in history'

Christopher Joye

Coolabah Capital

In The AFR I argue that loading up on long-dated interest rate duration across any asset-class---including the massive amounts embedded in equities, fixed-rate bonds and property---when yields have been at the lowest levels in human history is a self-evidently crazy-brave trade akin to financial Russian roulette with probabilities tilted towards savage losses: "In the first 14 days of September, AAA rated Australian government bonds lost 1.5 per cent of their value even after accounting for their miserly yield. Blindly loading up on duration by following the mad mantra of "bonds for growth and equities for income" is as silly as the RBA claiming that cooling housing conditions gave it room to cut rates in August. "It's the greatest short in history," exclaimed the Phoenician honcho at a $2 billion hedge fund a few weeks ago. He was referring to interest rate duration. "No sh-t," I responded. "I've been telling you the same thing for years." While my friend's timing proved to be impeccable, he would be the first to admit this was pure luck, not skill. Free (VIEW LINK)


Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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