Singer says today's market is more range bound and well-suited for a macro strategy — one that's capable of taking advantage of a market now overly discounted from the effects of the financial crisis as well as the debt/future tax backlash it has unleashed.
"The equity markets were extremely undervalued in past months and still remain attractive on a 20 percent to 30 percent value/price basis," he says. "But there's a lot of money still on the sidelines because we're faced with the usual 'wall of worry' that occurs coming out of every cycle."
Like a true hedged investor, Singer plays the markets on both sides. He sees once-in-a-lifetime opportunities to buy high yield, convertible and emerging debt but also opposingly owns a 20 percent short position in Australian, European and Canadian government bonds, which he feels are somewhat overvalued.
He's game for the relative risks for the same reason he's knee-deep in equities: though the environment is certainly still cautionary for risky assets, Singer says more than enough bad news is already priced in.
The final piece in the portfolio pie is currencies. It's typical for managers to indicate how much risk they would incur relative to the portfolio's/client's base currency through currency exposures.
At the moment, Singer is sweet on the Swedish Kronor (SEK), Korean (South) Won (KRW), and the Taiwanese New Dollar (TWD).
In terms of his general outlook, Singer believes the worst is behind us but that the end of the recesion won't be declared until well after it has ended, just like the beginning was declared 12 months after it started.
"The economy likely bottomed in the quarter that just ended (Q2)," he says. "But the data will come in choppy for quite a while, during which time people will be able to paint any picture they want, from pessimistic to optimistic."