Memo from Wall Street: "Heads or Tails, You Lose"

"We are now investing in 'imagined realities', which we know will end badly. For you."

Rydex Bull:Bear asset allocation ratio:

"China is set to record its weakest growth in GDP in 25 years. Yet it seems to have entered a bull market and may be where we deploy much more of our risk capital next year. That's because the recent exuberant run up in onshore Chinese equities seems to me to amply demonstrate the power of imagined realities"

Shanghai Composite: 62% Gain in 5 months:

I'm no legal expert, but I think the lawyers should have read this memo before it went out...

Permit me to paraphrase below, since this line of thought is exactly what every investment manager is embracing right now. Someone would have to be an abject moron to invest with a fund manager who openly admits that he puts return on capital over return of capital. It just shows how stoned the Idiocracy is at this late stage...

ZH: Dec. 31st, 2014
"I am Taking the Blue Pills Now"

"Dear Investor...

There are times when a money manager has no choice but to believe in the impossible, in order to maximize bonus.

For us that means buying assets that are vastly overpriced with the knowledge that there will be no way to sell them at a profit in the future. This will undoubtedly all end in tears - i.e. yours, not mine.

Due to my conflict of interest, I have decided to pursue imagined realities

Everything about this latent catastrophe is line by line from Kindleberger's Manias, Panics and Crashes. However, that book has cost me a lot of bonus money, so I don't read it anymore. Over the past six years, I have been overly cautious, so now I am throwing caution to the wind and pursuing imagined realities instead.

There is zero doubt that this will end catastrophically, but since no one can say exactly 'when', then I have plausible deniability on my side, with respect to pursuing the short-term maximization of bonus. This is strictly about return on capital, unfortunately return of capital is not concurrently possible.

China is set to record its weakest growth in GDP in 25 years. Yet it seems to have entered some sort of momentum-chasing fantasy bull market, therefore that will be where we deploy much more of our risk capital next year. That's because the recent exuberant run up in onshore Chinese equities seems to me to amply demonstrate the power of imagined realities. " [Almost word for word what he said]

ALL IN betting on imagined realities - no one knows when this will all end...
20 Years of Rydex Funds' Bull/Bear Asset Allocation i.e. 30:1 Bull versus Bear
h/t: ZH/Acting-Man: "The Dangers of the Blue Pill"

There is zero doubt that in the end, you will lose everything - this market is 'Keynesian' with an 'Austrian' tail i.e. destined to implode.

Happy 2015"