Jonathan Pain
Jonathan Pain, the former chief investment strategist with HFA Asset Management, has left the hedge fund to run his own publishing venture.

After 25 years in the investment industry, Pain, a self-confessed “market and data junkie” has left professional funds management to publish his macro views in The Pain Report.

First published in 2004 during his time at HFA, the online reports saw him challenge the momentum of the “Wall Street marketing machine” – the big banks, investment banks and funds managers across the globe – to warn of an unsustainable US debt bubble before the financial crisis struck.

“The Wall Street marketing machine is a formidable force, but the only media channel they don’t control is the internet,” Pain said.

Soon after going live at midnight on Wednesday last week, the publication attracted one US subscriber, who was followed by approximately another 100 readers in the next 24 hours.

Pain said the distorted asset price valuations he saw in various market bubbles during his career showed the delusional investment views that regularly prevail due to the power of commentary from Wall Street.

Japan’s 1989 real estate bubble was “the first time I saw an unbelievable amount of denial in the investment industry, then we had the tech bubble,” in which companies could not be properly valued because many internet start-ups could show no earnings.

“The investment industry collectively says, ‘that’s irrelevant, nonsense, rubbish’ – for example, that US house prices never decline was the belief on Wall Street,” Pain said.

That false view pumped up the debt bubble that caused the current financial crisis. Now the collective voice of Wall Street said that 2008 was a shocking year “but we’re back to normal because the market is rising”.

“They say we’re on a self-sustaining economic recovery. But with close to zero interest rates and large financial stimulus packages it would be difficult to not get some kind of recovery,” he said.

“2010 will pose challenges. Governments and central banks are talking about exit strategies for their stimulus spending and monetary policies. 2010 will be harder than people say.”

His “multi-decade view” is that emerging Asia – particularly China and India – will provide the engines of growth for the world economy, taking over from the US.

“China is the undisputed growth locomotive right now,” he said.

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