Last year’s bear market left many investors deep in the red, but hedge fund manager Neal Berger bucked the trend. Berger is founder and president of Eagle’s View Capital Management. The hedge fund’s Contrarian Macro Fund delivered returns of more than 160% in 2022, using futures contracts to short stocks and bonds whose valuations Berger saw as distorted by years of easy money. He joins other hedge fund managers, such as Satori Fund’s Dan Niles , who successfully grew their money in a turbulent year by taking short positions in the market. “The core fundamental thesis of the contrarian macro fund is that global central bank posture toward liquidity has changed 180 degrees from a liquidity infusion posture to a liquidity extraction posture,” he told CNBC’s ” Street Signs Asia ” on Thursday. Berger said the injection of $25 trillion of liquidity into the global financial system over the past decade has created “massive” asset price inflation. And while central banks around the world are now scrambling to unwind bloated balance sheets, the process is likely to take “many years” and have an adverse impact on the market, he added. “The massive infusion of liquidity provided a tailwind for all asset prices for a dozen years. The reversal of this liquidity infusion will now be a tremendous headwind against asset prices for the foreseeable future,” he said. ‘My bible is the price action’ That’s why the veteran fund manager is sticking to his tried-and-proven playbook. The Contrarian Macro Fund currently holds short positions in S & P 500 futures, U.S. 10-year note futures, German bund futures and Japanese Government Bond futures, according to notes Berger sent to CNBC. “As a trader, my bible is the price action. I’m a student of price action and I’m going to be trading the market in accordance with the longer-term trends,” he said. He noted that the one-year trend of all asset prices, such as stocks, bonds and crypto, is pointing downward. “I must follow the price action of the markets and it would be arrogant of me to predict that this downtrend in asset prices will stop now,” he added. Berger said investors should be patient and watch for price movements “over a period of weeks and months,” rather than days to determine if trends have really changed. And while many investors want to “catch the bottom,” Berger said he is “OK with missing the initial move.” “If we are going to have a real move to the upside, and we are going to rally a couple of 100% like we did over the past decade or so, it’s OK to miss the first 10% to be certain that the trends have changed,” he added.
