It's been a very good year for those who stayed fully invested in the Zimbabwe Ben trade: stocks, commodities, precious metals, anything denominated in dollars. Throw darts to pick stocks, because they're all going up together.
But I'm starting to wonder if we're getting late in the game for the Zimbabwe Ben trade. I'm taking a little off the table.
Too many institutional investors are too confident that policymakers will do whatever is necessary to keep the market up. I think the recent tax deal was the last gasp for massive fiscal stimulus, and I think political will for more monetization both within and outside the Dirty Fed may dry up. The new Congress is already skeptical of the Dirty Fed, and they will become even more so if food and energy inflation continues to outpace wage inflation. What does Bernanke do if he has to defend $5 gas to Ron Paul?
Then we've got Europe, the states and cities, a housing double dip, bond vigilantes, mortgage putbacks... so many things that could go so wrong, and it's not clear that all of them would bring about QE3 and QE4.
I'm still fairly heavily invested in Zimbabwe Ben, and I still believe the dollar faces a big long-run decline, but I'm raising a little cash in case of a bumpy ride in the short term.