Men At Work Meets Ben Bernanke

Well, so, this post title is kinda ironic, isn’t it – given the Fed’s failure to fulfill its employment mandate…  Anyway, I was actually referring to the 1980′s Aussie Rock powerhouse band, Men At Work.  Specifically, their hit “Down Under,” which includes the potent lyric:

“Lying in a den in Bombay
With a slack jaw and not much to say
I said to the man, “Are you trying to tempt me
Because I come from the land of plenty?”

I rediscovered this song recently after hearing a stellar solo-acoustic version of it from Men At Work frontman Colin Hey on the radio this summer.   It goes like this:

Tremendous… anyway: Bernanke’s policies bring to mind the specific line:

I said to the man, “Are you trying to tempt me, because I come from the land of plenty.”

Bernanke continues to try to tempt me to make irrational investing decisions by making other options (ie, holding cash at 0%) even less palpable…   I ran through my investment account numbers today, and I’m roughly 25% gross long, and 11% gross short.   You could call that 14% net long.   In other words, I am running relatively low risk at this point.   I am not drinking Bernanke’s potion.

Maybe this is just because I’m a horrible trader – I don’t know.  Maybe it’s because I’m a good portfolio manager -  I don’t know.  Barry Ritholtz wrote a post last week about how his job is not to critique the Fed: his job is to “to look out over the world and assess where opportunity and risk lay.”   I believe Barry’s point was that Bernanke is giving the world the green light – the Bernanke Put – he has The Market’s back, don’t sweat it.   But that, for me, is the problem:  all I see is that “risk” that Ritholtz mentioned: everywhere.   I see the Fed continuing to blow bubbles – pass hot potatoes, throw around grenades with the pin pulled – and I don’t want to be the one left holding the bag, even if the Fed keeps trying to tell us that the music isn’t stopping soon.

On the other hand, my “job,” unlike Ritholtz’s is not to manage clients’ money.  My “job” is to manage my personal portfolio in such a way that I don’t have to go back to work and generate more income.   That job, of course, is a lot more difficult with scarce lower-risk yield options available, but Bernanke doesn’t have me panicked (into chasing returns!) yet.

-KD

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