At the beginning of 2010 equity markets had benefited from almost a year of positive returns. At the beginning of 2009 it was clear that it would be fairly easy to make money in the market given the degree of pessimism in the market at the end of 2008 and how much equity markets had [...]

Forget about correlations.
Since Jan 1998, over 159 months,
Hedge funds were positive when equities were positive 80 months or 50.35% of the time.
Hedge funds were negative when equities were negative 47 months or 29.6% of the time.
Hedge funds were positive when equities were negative 25 months or 15.7% of the time.
And
Hedge funds were negative when equities [...]

Most hedge fund managers waited too long when the markets corrected sharply in May, preferring to stay long of the market. As European sovereign default risk rose in the eyes of the media and investors, investors began to revise their views. The popular press and newspapers like the Economist began to write about the tight spot [...]

As Europe’s banks undergo so-called stress tests, an old adage comes to mind. Every failed trade becomes an investment. Every failed investment becomes a strategic holding.
Apart from specifying the nature of the stress, what is being assumed in each stress scenario, what probabilities have been assigned to sovereign default, etc etc, the valuation of assets [...]

Governments are torn between fiscal austerity and stimulating economic growth. Since credit driven growth ceased in 2008 private sector economic growth has been muted. Consumption has been hampered by the need to restore household balance sheets. Such restoration is likely to overshoot as the lessons of 2008 linger, so savings rates are likely to be [...]

 
In economic policy there is a difference of view between the US and the rest of the world. As Japan’s largest trading partner the US is especially empathic to the deflation scenario that has plagued Japan since 1990. Therefore, US monetary policy is likely to err on the side of being too loose rather than [...]

On Saturday, 19 June, China signalled the end of its currency peg which fixed the CNY at 6.83 to the USD and said it would gradually make the its currency more flexible. The CNY appreciated to 6.80 on Monday.
A stronger CNY it was hoped would:

Address the trade imbalances between the US and China.
Address inflationary pressures [...]

Hedged.biz has downgraded Fitch, Moody’s and Standard and Poors from AAA directly to junk.
For downgrading (upgrading)  issuers only after price discovery has occurred and being reactive rather than proactive. For downgrading (upgrading) issuers only after bad (good) stuff has happened and been priced in. Downgrading BP over a month after their rig in the Gulf [...]

We are not rewarded to bolster the base of the pyramid but to reach for the stars. Too often intermediate levels are built upon a deck of cards. Where the potential to build highest lies, most effort is directed there, often in disregard of the frailty of the supporting levels below.
The engineer knows that they [...]

With the acceleration of globalization in the last 20 years up until 2008 sector risk has risen relative to country risk. The classic example is in Europe where a stock like RWE starts trading less like a German stock and more like a European utility stock. With the credit crisis of 2008 came a number [...]