00:00Every year, about this time, I pay a visit to the offices of Hindsight Capital, LLC.
00:06If you haven't heard of them, they are a hedge fund which has a strategy which is guaranteed
00:10to beat all others 100% of the time.
00:15Now there is one problem, it doesn't actually exist.
00:18It's a figment of my imagination.
00:20As their name implies, they can invest with knowledge of the future.
00:25But just to limit them a little bit, I don't let them trade during the year,
00:29and I don't let them buy individual stocks or stack up on leverage.
00:34Otherwise, their returns would be infinite.
00:36First trade is what you might call the debasement trade.
00:39Long silver, short Bitcoin.
00:42When you're worried that currencies are being debased,
00:44which is obviously a concern when countries are borrowing the way they are at the moment,
00:49you want precious metals, particularly silver,
00:52because it's been kind of neglected compared to the others like gold.
00:55Long silver, which more than doubled.
00:57Short Bitcoin, which fell, and you've made more than 100%.
01:01Next trade, money illusion.
01:03Thanks to the ruinously bad decisions on inflation by President Erdogan,
01:10the Turkish lira had a terrible year.
01:13Where do you put that money?
01:15The ruble has been the outcast of the international system for a while.
01:19The sanctions against it, we all know, were somewhat ineffective.
01:23So you choose the right autocrat.
01:26You go long the ruble and short the Turkish lira, and you make a lot of money.
01:33Next trade.
01:34Buy the Korean Kospi and short the Danish Copenhagen OMX index.
01:41This is an example of hindsight capital finding a way around the rule that they can't invest in individual companies.
01:48The diet drug boom had gone a little too far too fast,
01:54and they shorted Denmark's index because more than half of it is Novo Nordisk that makes Ozempic.
02:01Meanwhile, if you wanted a really good, simple play on the growth of AI,
02:07the growth of infrastructure for AI,
02:09actually South Korea was just about the best place to do it.
02:13They make very good chips.
02:15They're not NVIDIA,
02:17but the Kospi index overhaul was up more than 70%.
02:21Short Denmark, long South Korea make a lot of money.
02:28Next trade.
02:28Let's call it the counterintuitive energy index.
02:31With Trump coming in,
02:32everybody knew that alternative energy was going to have a problem.
02:36But demand for energy, thanks to AI, was bound to increase.
02:41Yes, alternative energy was cheap.
02:43Buying clean energy was actually a pretty good idea at the beginning of this year.
02:47The Trump administration wanted to control inflation.
02:50It had friends in the Middle East.
02:52It needed the oil price to go down,
02:55and it was therefore an extremely good bet that the oil price would indeed fall.
03:01So hindsight capital went long clean energy,
03:04short West Texas intermediate crude,
03:07and made an awful lot of money.
03:09One more trade.
03:11You could call this TradFi teaches DeFi a lesson.
03:16There was a lot of excitement about what's known as DeFi,
03:20decentralized finance.
03:21These very cool new ways of trading money using crypto and other protocols.
03:28In the month after the election,
03:30our Bloomberg Black Galaxy DeFi index rose 165% in just one month.
03:37Was that a tad overblown?
03:39Yes.
03:40The new approach, more fiscal expansion across the world,
03:45means a steeper yield curve.
03:47It means higher longer term yields relative to short term.
03:53Banks make their money by the gap between short and long term yields.
03:57This was going to be good for banks,
03:59particularly in Europe where they have been on the floor for a long time
04:04and have now finally got their act together.
04:07Go long the FTSE Eurozone Banks index
04:11and short the Bloomberg Galaxy DeFi index
04:16and make squintillions.
04:19There was a lot of activities in the world where they were added to your defense.
04:22There are lots of steps of our Dem peut자�
04:34to attach the overseers of valuable sources.
04:35There are lots of things ofolovert Gene Sikha
04:37with borrowned silver cards.
04:38They bolted them out in favor of limiting pay index
04:41and covert cost the spare hustler
04:42and op-parenting bag for bankings.
04:43There are two magical healthier ones
04:44and theèmes of Singapore
04:46episodeausslast.
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