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Asset Diversification Theory Fail
For people who have forgotten what asset diversification looks like, do not look at this chart to be reminded. All asset classes over the past three days have ploughed higher, contrary to any possible logical argument. But such is our market. Cash out of bonds into everything else... inverse... rinse... repeat. One wonders just how much excess liquidity is trapped in the market.
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Are you saying that leveraged inverse index ETF/Ns are NOT an asset class?
What am I missing...
Yields moved higher on GT10 but NOT prices!!
LQD, AGG, et al. Ah, the dichotomy of buying ETFs vs investing in the underlying.
The economy has become a Henny Youngman joke.
"I told my doctor I couldn't afford an operation. He offered to touch-up my X-rays."
LOL Is that part of the new Universal Health Care plan??
It has been a liquidity trade - either everything goes up or everything goes down. Also if everyone thinks they are diversified then everyone is on the same boat and hence nobody is really diversified.
well - globalization & securitization appear to have rather unexpected consequences. : ) Who could have.. thought ???:)!!!.
Perhaps, if you don't actually have to PAY for what you buy, you can buy everything at the same time.
This is one for the scrap books today (except for JB Hunt and Yummy screwing up the Green photo Shoot):
http://finviz.com/map3d.ashx
p.s. Would someone kindly tighten up the spread on IRE Jan 10 puts?
I dont think we should look at diversification on a day today basis.
Diversification = Half capital long on stock A, half capital short on stock A. If you have good execution fees it's a pretty solid strategy lately.
What is this a driving survey? Over 50% of all investors consider themselves hedged above the average?
I'm betting on fundamentals (though not the usual kind) and here they are as I see them:
1. The debt shell game between the banks, the Fed, etc. will eventually end by necessity.
2. Eventually "Goldie Mac" will run up against some boundary (unexpected losses, regulatory changes, bad luck, etc.) that might interfere with its ability to goose the markets.
3. With 16% unemployment (lets be honest, using anything other than U6 is a joke), record low capacity utilization, and a totally global demand-recession/deleveraging, deflation remains (to me, as an economist) a more compelling story than inflation.
I'm trying to defy Keynes' statement that, "The market can remain irrational longer than you can remain solvent."