Monday, August 01, 2011

Charlie Rose interviews Barton Biggs (March 9, 2009)

Charlie Rose interviews hedge fund manager, Barton Biggs (Traxis Partners) for an episode which aired on March 9, 2009. 

Yes, that was also the exact day the S&P 500 put in its bottom at the 666 mark, amidst more economic gloom than some of us had ever seen. 

Thought it would be interesting to revisit this interview, and while I still don't agree with much of what Barton and Charlie said about the "need" for certain bailout measures and monetary stimulus, it is quite instructive to hear the discussion that took place at this particular moment in time (some might say this is real market and economic history you're watching). 

Note that Biggs is rather bullish on stocks in the interview, which, in hindsight, was the right thing to be up to this point. Of course, the two year bull move in shares we've witnessed has been helped along by holding interest rates at historically low levels and employing "quantitative easing" programs designed to keep asset prices aloft

Still, Biggs makes the sound point that the sharp declines of '08 had occurred in a short timeframe, thereby providing the necessary fuel for a sharp rally (even if only within the context of a bear market). He also compares the "scary" mood of the time with the terrible period surrounding the 1974 market bottom. In fact, he goes on to say that "[negative] sentiment is more extreme than in 1974". 

These points are quite similar to those made around the same time by Jim Rogers and Marc Faber, who argued that a forced asset liquidation period and extreme negative sentiment were signs of a potential share rally to come, as well as an entry point for long-term share investors in commodities and certain segments of global share markets.

If you enjoyed this interview, you may also want to check out Biggs' follow up appearances at Rose's table.