The following is David Einhorn's introduction to an article that he wrote for the Huffington Post several months ago with respect to the policies of Ben Bernanke and the Federal Reserve:
A Jelly Donut is a yummy mid-afternoon energy boost.
Two Jelly Donuts are an indulgent breakfast.
Three Jelly Donuts may induce a tummy ache.
Six Jelly Donuts -- that's an eating disorder.
Twelve Jelly Donuts is fraternity pledge hazing.
My point is that you can have too much of a good thing and overdoses are destructive. Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn't giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. Last year, when asked why his measures weren't working, he suggested it was "bad luck."
Einhorn goes on to suggest that this easy money policy is causing him to do the following with his investment portfolio:
"While I hope that you found this discussion thought-provoking and persuasive, as an investor my job is to figure out what will happen rather than what should happen. If we didn't have a Jelly Donut monetary policy, I would sell gold, sell bonds and buy stocks. But, the Fed is filled with academics who thoughtlessly rely on econometric models that reflexively indicate that repeated Jelly Donut orgies are the best way to get a sugar rush into the economy. And, the Fed Chairman seems to have no trouble rationalizing any policy failure on the basis that "monetary policy cannot be a panacea," or "it's bad luck," or as proof that he just hasn't force fed us enough Jelly Donuts, yet. As long as this is the case, it seems unlikely the Fed will change course.
As a result, I will keep a substantial long exposure to gold -- which serves as a Jelly Donut antidote for my portfolio. While I'd love for our leaders to adopt sensible policies that would reduce the tail risks so that I could sell our gold, one nice thing about gold is that it doesn't even have quarterly conference calls."
In the video below Einhorn sits down for a lengthy discussion on the Fed's policies and investing: