Paul Tudor Jones August 2009 Investor Letter Excerpts
In its market outlook, the firm takes the view that the run-up in stocks over the last 100 days is a “bear market rally.”
“The bottom line is that we are not inclined to aggressively chase the market here,” the firm said in the letter.
“Rather, we eye a better opportunity to be long equities into year-end on a potential autumnal pullback.”
Slowing growth in China and the return of front-page stories on swine flu may be “further catalysts for global equity markets to pause in September
“Impressive counter-trend rallies are a feature, not an oddity, of secular bear markets,” Tudor said. “We are not inclined to aggressively chase the market here. Many doubts remain about the sustainability of this recovery, most prominently the weakness of household income growth.”
On the issue of inflation, the firm said in its report that “the lack of understanding by both markets and policy makers of the impact of the mix of large fiscal deficits and quantitative easing policies has increased volatility and generated fears of uncontrolled inflation.”
The firm said that policy stimulus will peak around the first quarter of 2010 and liquidity facilities and credit guarantees will be discontinued. At that time, “markets will have to assess the sustainability of growth.”
His main fund is up 10% YTD after losing 4.5% in 2008.