One of my New Year resolutions – and sadly the first to be broken – was not to write any more negative articles about hedge funds. Some of the poor chumps in the industry seem to be sensitive to anything remotely critical of their activities. My measured comments in this space last August prompted the industry’s official lobbyist, the Alternative Investment Management Association, to complain that I was peddling “hoary old myths” about the hedge fund business.
Author: Jonathan Davis
Author, columnist and investment professional.
A European Drama with Many Twists
The eurozone crisis is proving to be a wonderful political drama, with the most essential of all ingredients, as with all good drama, that the potential consequences of different outcomes are so serious. There is almost nobody in Europe, and increasingly beyond, who has not by now worked out that they stand to be adversely affected in some way or another, especially if the worst of all conceivable outcomes materialises. The fallout has reached capitals and markets all round the globe, from Washington to Beijing.
What Bob Diamond Really Tells Us About The City
A widely noted speech last week by Bob Diamond, chief executive of Barclays, coincided with the 25th anniversary of Big Bang, the great shake-up of the structure of the City of London. The transformation of the man – who had told the world the time for remorse was over – into a figure who pleaded for more public understanding of his industry, was widely noted.
A Mid-Pacific View of Markets
Robin Griffiths, one of the longest serving technical analysts in the City of London, now at Cazenove Capital, has a plan for surviving the next phase of the market cycles. Later this week he sets off to fulfil a lifetime ambition, sailing round the world in his 54ft ketch. Thanks to the wonder of modern communications, he will continue to have access to data while he is bobbing around on the oceans; and being a committed market junkie, like the rest of us, he will of course be at his laptop updating his views at periodic intervals on where he thinks the world is going.
Danger: Computers at Work
In The Fear Index, the latest thriller by Robert Harris, now heading for the Christmas bestseller lists, a brainbox hedge fund manager with little in the way of interpersonal skills discovers that his computer-driven trading system has flown out of control and threatens to send the world’s stock markets into an unprecedented tailspin. Anyone familiar with Mary Shelley’s Dr Frankinstein, or any Bond film, will recognise the genre: an oddball genius consumed by his own creation, conflagration, nemesis, the whole works – populist fiction at its best. But is it fiction?
Here We Go Again …
Market action of the past few weeks has been exceptionally volatile, albeit less so than at the depths of the financial crisis in the fourth quarter of 2008 when Lehman Brothers filed for bankruptcy. The banks are once again at the centre of this storm, with the focus having shifted from US to European financial institutions. Human beings have evolved over thousands of years to react to such extreme situations via the “fight-or-flight” response. Long term valuation data point to the likelihood of weak bond market returns and higher but still modest equity market gains.
Jonathan Davis 