正文
Thursday, August 30, 2007
East For Income, West For Wealth (and Dow 100.000)
...."Thedie has been cast: The Economy of The East is based on labor income andThe Economy of The West is asset wealth. And just as it was unthinkablein years past for incomes to go down in any given year, it is nowabsolute anathema for asset prices to drop. It is not only a reason ofnational importance, but of global balance: we in the West buy lots oftheir cheap goods, they buy our expensive assets. This is a balanceresting on the knife edge of market performance, a global financialaccord that is rapidly overtaking entrenched perceptions establisheddecades ago in Bretton Woods.
How is it maintained? By a seriesof algorithms that are pushed, stretched and if need be kicked intoconstantly spewing out buy orders for all manner of securities,regardless of fundamentals and it all boils down to one simpleparameter: momentum. Buy because the market is up and going higher,period. All the rest is fancy footwork pour epater les bourgeois. Roughlyeighty percent of all transactions in US equities are now done by hedgefunds, 15 percent by other institutions and a minute 5% by individuals.The name "hedge fund" has long become an oxymoron because they nolonger "hedge" anything and they merely follow the latest fashion intrading, which right now is "quantitative strategies". There are exceptions, of course, but the great majority just follow the exact same fake rabbit around the dog track."
MORE
East For Income, West For Wealth (and Dow 100.000)
...."Thedie has been cast: The Economy of The East is based on labor income andThe Economy of The West is asset wealth. And just as it was unthinkablein years past for incomes to go down in any given year, it is nowabsolute anathema for asset prices to drop. It is not only a reason ofnational importance, but of global balance: we in the West buy lots oftheir cheap goods, they buy our expensive assets. This is a balanceresting on the knife edge of market performance, a global financialaccord that is rapidly overtaking entrenched perceptions establisheddecades ago in Bretton Woods.
How is it maintained? By a seriesof algorithms that are pushed, stretched and if need be kicked intoconstantly spewing out buy orders for all manner of securities,regardless of fundamentals and it all boils down to one simpleparameter: momentum. Buy because the market is up and going higher,period. All the rest is fancy footwork pour epater les bourgeois. Roughlyeighty percent of all transactions in US equities are now done by hedgefunds, 15 percent by other institutions and a minute 5% by individuals.The name "hedge fund" has long become an oxymoron because they nolonger "hedge" anything and they merely follow the latest fashion intrading, which right now is "quantitative strategies". There are exceptions, of course, but the great majority just follow the exact same fake rabbit around the dog track."
MORE
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