Medium Term Strategy-Short Dollar and Buy Commodities, Says Pellegrini

Paolo Pellegrini, who helped figure out the great housing bet after striking out on his own, made 175% gain since inception. In his first shareholder letter, Pellegrini reveals that he hates the dollar, and likes commodities. He predicts US MBS and US dollar will fall further.

As an investor he will attempt a strategy relatively variant to China’s action. If China purchases US goods with Dollars it will push the US inflation up and MBS down, and if China purchases other currencies then US Dollar will collapse.

As the Dollar weakens he suggests ways to short dollar by buying commodities and commodity-related currencies. Demand from emerging markets will make commodities outperform other asset classes in the medium term.

To diligently capture the benefit of their investments Mr. Paolo urges to critically evaluate the respective weights of the two legs of the strategy (short MBS, long commodities) and to leverage. This will avoid temporary trade reversals.