Kyle Bass wrote on his blog that he started his company, Hayman Capital Management, by predicting the real estate crisis of 2008. However, this was his only correct prediction so far. In many circles he is considered a less than reliable source of information when it comes to financial matters. Bass has yet to predict any other market trends and has been linked to other many unscrupulous acts.
Recently, Bass discussed on CNBC Halftime his take on the 2016 market based on what he says are significant changes in China. Bass points out the issues with the banking systems in China. He explains that China’s banking system has grown 400% and is at $35 trillion while their GDP is at $10 trillion. Bass equates China’s banking system to Europe’s banking system which caused their financial crisis. He expects this volatility will cause a credit cycle in Asia predicting a grim outlook. Bass believes that investors should be worried of the upcoming changes in the market. He points out that the coming credit cycle will eventually cause a 10-20% decrease in the US stock market.
Although Bass’ 2016 prediction seems realistic, there may be a need for a second opinion. He has been linked to Cristina Fernandez de Kirchner who has been in her own financial downfall. Kirchner has been connected to the cause of Argentina defaulting on their debt. Bass supported Kirchner and when a New York judge declared Argentina had to pay all their debts, even those who did not agree to a reducing debt, he discredited the creditors saying they were taking from the poor. He also was associated with the faulty airbags and power steering in General Motors cars. When confronted he blamed drivers stating they were drunk or not wearing seat belts.
One of his most grievous acts was his dealings against the pharmaceutical industry. Bass along with his partner Erich Spangenberg, found firms that they could challenge patents against with their organization, the Coalition for Affordable Drugs. The challenge of the patents drove stocks down a fact that financially benefited Bass. The challenges hurt patients and pharmaceutical companies by raising prices. He eventually admitted that profit was his motivation. Although he does not publicly release his financials, it is believed that he lost 30% of his funds in 2014, accounting for some of his less desirable dealings.
Considering his past, Kyle Bass is hardly the one to give financial advice, and from what UsefulStooges says about Bass, you might not want advice from him. His one-time prediction of the housing market seems to be a fluke that only was able to get him temporary gains. He has lost a considerable amount of credibility. His recent prediction of Asian credit cycle and US stock being down could be a ploy to drop stock. Either way further analysis should be done before making any moves based on his accounts.