First published on January 4, 2015 for subscribers to the Intelligent Investor
Over the past several years we have documented countless errors made by the IMF, from its overly optimistic economic forecasts to its disastrous recommendations provided to the EU, UK and Japan. It is a fact that the IMF actually worsened the economic conditions in virtually every nation that has followed its recommendations.
Understanding the incompetence of the IMF can go a long way to assist investors and especially traders. For instance, by knowing that the EU faced a long period of deflation well in advance of the ECB, IMF and EC’s acknowledgement of this reality, we knew to take large short positions on the euro once these officials finally realized what was going on and announced it. We did not need any time to analyze what they said or question it. All we were waiting for was the shit to hit the fan and go all in.
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On the other hand, if we had taken a short position when we first were aware of the fate of the EU, we would not have profited by nearly as much.
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