Tag: hedge funds

Investing in liquidity driven markets

Investing in liquidity driven markets

I have spent some time this past weekend reading what investment manager Hugh Hendry has had to say about why he has turned bullish. And the clear takeaways are twofold. First, it is very difficult to ‘fight the Fed’ when it wants growth. Second, the reflexive pursuit of growth leads to liquidity driven markets and that’s bullish for shares in the short- and medium-term. Where this leads over the longer-term is another matter.

In Search of the Holy Grail of Investing

In Search of the Holy Grail of Investing

By Niels Jensen The Absolute Return Letter, December 2012 “It’s one thing to have an opinion on the macro, but something very different to act as if it’s correct.” -Howard Marks, Oaktree Capital Management It can be a frustrating, and rather futile, experience to be an economist. Financial markets do not always behave as if there is a connection between […]

When Career Risk Reigns

When Career Risk Reigns

I have been an observer of financial markets, and of those who operate within the markets, for almost 30 years. I have never before experienced investors paying more attention to career risk than they do at present. A preoccupation with career risk changes behavioural patterns. Decisions become more defensive, and sometimes less rational.

Greece and the IMF appear to be pushing for as much as a 75% haircut

Greece and the IMF appear to be pushing for as much as a 75% haircut

Greece and the IMF appear to be pushing for as much as a 75% loss on NPV basis, while the banks, many of whom have written down 50% of their Greek holdings, appear willing to accept a 60-65% hit on the NPV basis. Participating in the haircut damages the ECB. It is possible that the loss, even from the discounted levels it purchased the Greek bonds, would wipe out the ECB’s capital. Alternatively, as we have point out previously, if the ECB does not take a haircut, it undermines the effectiveness of its sovereign bond purchases. The more the ECB buys the greater the haircut the private sector ultimately faces.

Hugh Hendry at the LSE

Hugh Hendry at the LSE

This is an interview with Eclectica Asset Management’s Hugh Hendry from much earlier in the year. It is a wide-ranging interview about the global macro environment, comparisons to the 1920s, investing, money management and hedge funds.

“Dexia was not a bank but a hedge fund”

“Dexia was not a bank but a hedge fund”

If you recall Global Macro Monitor’s post on Europe’s Bank Problem last week, the IMF chart showed very well how banks were struggling to wean themselves from short-term funding sources and increase tangible common equity. The Belgians had made Herculean strides in this effort. But it has not been enough.

Ray Dalio on the D-Process in Europe

Ray Dalio on the D-Process in Europe

The D-Process played out in greater initial force in the US private sector. Now Europe is playing catch-up, but more via the public sector due to the restrictions imposed by the Euro. Ray Dalio comments on how he sees this process proceding and how to invest in this environment.

Is Italy running out of money?

Is Italy running out of money?

Institutional investors have learned how to create and game self-fulfilling prophecy runs in various asset markets. (George Soros understood this and demonstrated its efficacy with his effort to break the pound in 1992.) Indeed, this is one of the “secrets” to manufacturing higher absolute returns if you are a hedge fund portfolio manager – namely, creating and managing such bandwagon effects. It is a plausible simple story with a self-fulfilling aspect to it.