Its not fundamentals that are driving equity markets and responsible for the current weakness. Fundamentals were bound to weaken once the first round of inventory restocking had taken place and the benefits of cost cutting had been realized.

Having attended various lectures by academics, regulators, central bankers and investors in the opening weeks of 2010, and being surprised at the diversity of views among the experts, I thought to look back at the 2008 credit crisis in a bit more detail to see what I missed. I tried to look back at the events from first principles and to avoid any biases I might have as a member of the alternatives investment industry.

1. The US owes China 1 trillion bucks. Is it any surprise that China wants a stronger USD?

January 2010 was a bad month for investing. Markets fell from equities to credit to commodities. The USD was strong by default. Fears of a sovereign default by Greece was blamed for the general de-risking.

Hedge Fund Performance Table 2009:

In 2009, the HFRI Equity Market Neutral Index was up 1.69%. The HFRI Index of all strategies was up over 20% and the equity long short index was up over 26%. Equity long short hides a multitude of sins, like a chronic long bias and market timing. Equity market neutral, however, is fairly specific.

It is time for central banks to back away. Not from raising or cutting rates. It is time for them to extricate themselves from any activities that might distort market prices.

Renewable energy will be an investment theme for the foreseeable future, and we are very attuned to some recent developments that have the potential to revolutionise energy production.