Japan Is Getting The Wrong Type Of Inflation…
May 15, 2013
Presentation At The Las Vegas Value Investor Congress
June 3, 2013

Exiting Aircastle

Over the last two days, I’ve pondered the extreme stupidity of the European Central Bankers. I know that I wrote about them on Sunday, but I simply cannot get over how their actions have forever changed the face of the banking system. In the past, scared depositors did nothing. They were stupid enough to trust their governments. They never will again. Going forward, a small piece of bad news can set off a stampede. All hope for governments to stabilize a problem are squandered. European banks are already hurting for liquidity; imagine the liquidity buffers needed now? In 2008, the collapse took nearly a year from start to finish. The whole way down, people were told not to panic. How long will it take to unravel next time? Everyone’s liquidity in the whole financial system is now imperiled as every bank is interconnected.

Aircastle (AYR: NYSE) owns a few billion dollars of jet planes, but in the end, it’s a financing vehicle. If the financial system is going to have issues, I don’t want to take part. I think it is a great business and a great long term holding, but given the risks I suddenly see on the horizon, I’m going to step out of the shares for the time being. While I was hoping for a better gain, an almost 20% gain along with some dividends isn’t a disaster either.

Gold has been in a treacherous bear market for nearly two years now. It’s not far off the lows hit a few weeks back. I’m using the proceeds from my Aircastle sale to beef up my already large gold holdings. I have a feeling that Saturday’s news out of Cyprus will be the start of some real fireworks in the future.

Categories: Current Investments
Positions Mentioned: none
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