Michael Aronstein, who PMs the Marketfield Fund (Profile), talks with Bloomberg's Lewis Braham about his investment strategy and why he's betting against emerging markets.

Aronstein, whom Bloomberg describes as a "dyed-in-the-wool contrarian," buys what everybody else is selling and bets against trendy sectors. Right now he's confident in the U.S. and short emerging markets, especially China.

About his overall view, Aronstein says, "I’m pretty positive about the U.S., very concerned about the emerging markets and the commodity complex. Emerging markets in the past decade have gone up as much as the Nasdaq index did between 1991 and 2000. You have too many investors there with too high expectations, and these markets in my experience have tremendously wide entrance doors and one little exit that is sometimes bolted."

He's also short on a China-based ETF and long on Mexico ETFs because "[t]he idea that many investors have that China can make a seamless transition to a consumer-driven economy is ridiculous," while in Mexico "the wage differential between Mexico and China has narrowed to virtually zero. So given its proximity, Mexico is a good choice for U.S. manufacturers."

Finally, he's short gold, which he says cannot realistically be a monetary substitute, and short bonds. According to him, "bonds have less of a chance of really going up. Their yields are ridiculously low right now…I think of the position like a free put option, because if something really bad comes to pass, the bonds are going to come down in a real hurry, way faster than people, believe because they are intrinsically very illiquid. They trade only in dealer markets, and at the first sign of trouble I would expect that all the dealers are going to run for the hills." 

Edited by: HFD


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