Why Bill Fleckenstein Is (Almost) Ready to Short Stocks

Bearish on tech, hedge-fund manager Bill Fleckenstein is ready to short stocks -- as soon as the Fed loses its grip on the bond market. Illustration: Mario Wagner/Bloomberg Markets Close

Bearish on tech, hedge-fund manager Bill Fleckenstein is ready to short stocks -- as... Read More

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Bearish on tech, hedge-fund manager Bill Fleckenstein is ready to short stocks -- as soon as the Fed loses its grip on the bond market. Illustration: Mario Wagner/Bloomberg Markets

Take this as a caution if you’re an investor who thinks the Nasdaq Composite Index, up 34 percent in the 12 months ended on Jan. 21, has room to run. Hedge-fund manager Bill Fleckenstein is raising money to short tech shares.

Fleckenstein, 60, based in Seattle, has called a few crashes, Bloomberg Markets reports in its February 2014 issue. He shorted Japanese stocks starting in 1988, meaning he sold borrowed shares to buy them back later at a lower price. The Nikkei 225 Stock Average plunged 39 percent in 1990. He also made money for clients as stocks slid in 2008. And he’s made mistakes, shorting technology stocks in 1999, which was too soon. The Nasdaq climbed 86 percent that year and didn’t peak until March 2000. Fleckenstein declines to say how much his investors lost.

In the 2008 selloff, Fleckenstein’s RTM Fund returned 34 percent after fees. Then he shut the fund down in early 2009, as the U.S. Federal Reserve turned on the spigot. “I knew the Fed was going to print money,” Fleckenstein says. “I had no idea it would get this out of control.”

Now, he’s raising $200 million, which he expects to use to short stocks once the Fed monetary support fails. One signal he’s awaiting is for the yield on the 10-year Treasury bond to rise above 3 percent. That will show that the Fed has lost control of rates, he says. “We’re not going to get short until the bond market stops the Fed.”

To contact the reporter on this story: Anthony Effinger in Portland at +1-503-471-1358 or aeffinger@bloomberg.net

To contact the editor responsible for this story: Robert S. Dieterich in New York at +1-212-617-4485 or rdieterich@bloomberg.net

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