Felix Zulauf, who made a name for himself making big bets in bear markets, described himself as having contrarian genes – making money on the short side in all bear markets. In his view, most of today’s money managers play only on the long side while true opportunity and risk managers should play both sides.

Zulauf sees emerging markets in down cycles as being a big theme. His biggest positions are short emerging market currencies. The most obvious play is shorting the Turkish lira, said Zulauf. He characterized Turkey as the classic macro case – an artificially inflated boom paid for by foreign money. “It is a balance of payment crisis that will end with a much weaker currency, higher interest rates and a recession – then it will rebalance,” according to Zulauf.

Other countries in similar situation are Russia and Brazil, stated Zulauf.

Zulauf says the credit booms and credit bubbles in many of the emerging markets and throughout virtually all of Asia are of historic proportions – much bigger than what we had in the US in 2007. He further elaborates, “The mother of all credit and real estate bubbles is China. We see now many of the signs that you see at the end of the boom years – distress in the financial system and you don’t get the full picture because the information flow is filtered. I have been completely anti-consensus for quite some time that the world economy will not normalize but will in fact relapse into much slower growth and economic problems and this will eventually hurt our markets,” said Zulauf.

Felix Zulauf was born 1950, and is the owner and president of Zulauf Asset Management, a Zug, Switzerland-based hedge fund. Felix has worked in the financial markets and asset management for almost 40 years. Mr. Zulauf has been a regular member of the Barron's Roundtable for more than 20 years.