Have you ever seen an asset price and thought 'that is just total BS'?
In late Sept 2001 I had to transfer through Buenos Aires airport on a work trip. After buying a snack at an airport cafe, I was glad I'd asked for a receipt..my coffee and biscuit had come to twenty bucks Australian! (US$12 at the time). You might pay that these days in a major European airport, but in a South American economy in recession, seven years ago.... it was bizarre enough for me to keep a copy of the receipt as a curiosity.
Being so soon after September 11th, we were stranded for five hours, and looked at getting a cab to the city. Even though we could see across to Buenos Aires, a fare was going to cost the equivalent of US$60, or A$100. By that time I knew something was seriously wrong.. Argentina wasn't worth that much!!
A few months later, in January of 2002, Argentina's currency crashed, and after 6 months the peso had fallen in value by 75%. The government had persisted with a BS unsustainable 1 peso=1 USD peg for years, and as their solvency began to be questioned, peso holders dumped spectacularly. Carrying out the currency trade may not have been straightforward at the time - but simply buying a coffee and applying a bit of common sense had led to a pretty powerful conclusion.
What about Iceland - the most expensive country in the world.... huh? Trawling flogged out fisheries and bus a few fat poms around the geysers, and all of a sudden you've got some of the highest per capita incomes in the world? Doesn't make sense really does it. And then the reality check..... Icelandic Kronur down 57% since last June.
BS should be fairly obvious because even though everyone accepts it, it just doesn't make any sense. Does anyone see any standout candidates today?
(if it took the form of a low price, obviously 'short the bs' by going long...)