While 2008 was a difficult year for many hedge fund managers, there are those who have done well despite the difficult trading conditions. I would like to highlight one of them, not so much for their performance, which has been good, in 2007 the manager returned over 25% and in 2008 over 10%, but because [...]

We have a crisis in debt that started in the US housing sector, that spread to the US financial system and then to the US economy. As a result, Asian equity markets and economies have suffered far worse than the US or Europe. Makes perfect sense, doesn’t it? It does. And it will have some [...]

Its going to be harder to make money. Equity long short is correlated to equity markets.
Equity long short managers in aggregate tend to have chronic long biases which introduce positive correlation to equity markets. In aggregate. Particular managers, however, will have particular styles which may offer diversification and downside control. Its all in the skill [...]

Whole chapters in statistics textbooks are written about correlation and we are not talking about option pricing or credit default pricing here, just simple correlation. I thought it would be illustrative to simply display a couple of charts of returns data and their corresponding correlations.
Here is example 1. The blue line is a fund which [...]

As the world ponders market interventionist bail outs and mass nationalizations we risk abandoning the free market which has created the prosperity of the last 100 years. Yet even the experts, and that champion of free markets himself Alan Greenspan advocates a temporary detour from free markets to save the current situation. 
The first priority is [...]

 Measure with a micrometer, mark with a chalk, cut with an axe. So much for the scientific and quantitative analysis. I am going to simply eyeball a chart and draw a straight line through it. The chart in question is the S&P500 since 1928 to Feb 2009. I have plot it on a log scale and [...]

When a champion of the free market like Alan Greenspan starts to advocate the nationalization of banks, you know you are in trouble.  Since we have his blessing, let’s cook up our very own Recipe For Disaster.
1. Create a bad bank. This entity will buy the non performing assets from the banks.
2. Create a buy [...]

 
Certain industries simply need to be nationalized. But for different reasons. Industries such as the auto industry, which is dominated by a handful of large companies and which employ large numbers of people, need to be nationalized simply to stem the lay offs. These industries are no longer viable in size but an instantaneous downsizing [...]

As Asian consumers were saving and US consumers were spending, and the current accounts got all imbalanced, and also the capital accounts (as they must do if the current account is imbalanced), what were the US investing in with all that foreign capital?

There are many ways of looking at a situation, and how we look at a situation provides us with particular insights into specific aspects of a situation. Take the current credit crisis. We could look at it from the point of view of the financial markets, the banking industry, the real economy, and so on. [...]