Saturday, June 6, 2009


From a few days ago - FAAAAAAAANTASTIC back-and-forth between Lutnick, Rogers, about the direction of treasury yields.

Here's a light subject - NYTimes on the "efficient market" theory:

"As Mr. Grantham sees it, if professional investors had been willing to acknowledge these aberrations — and trade on the fact that the market was out of whack — they should have been able to beat the market. But thanks to the efficient market hypothesis, no one was willing to call a bubble a bubble — because, after all, stock prices were rational.

“It helped mold the ‘this time it’s different’ mentality,” he said. Indeed, professional money managers who tried to buck the tide wound up losing their jobs — because everybody else was making money by riding the bubble for all it was worth. Meanwhile, government officials, starting with Alan Greenspan, were unwilling to burst the bubble precisely because they were unwilling to even judge that it was a bubble. “Our default reflex is that the world knows what it is doing, and that is extravagant nonsense,” Mr. Grantham said."

Barron's - you can't eat relative performance...

"For months since October, money managers have tried to spin their double-digit losses with arguments such as, "Well, we did much better than our peers," or, "We beat our benchmark index pretty convincingly."
Another common refrain; "Hey, we may be down 30%, but our competitors are down 40% and have that much more ground to make up."
Whatever. A person who has to defer retirement, or a retiree who has to take a job as a Wal-Mart greeter because his 401(k)s just lost a third of its value after the collapse of financial markets, will take little solace -- or have little sympathy for -- the common portfolio manager's lament: "There was no place to hide" except Treasuries. (That was true, of course, but Granny thought the managers were there to protect her nest egg.)"

WSJ on the "garbage rally."

"Autos, miscellaneous finance, insurance and banks each lost an average of more than 80% from the market's peak in 2007 to the trough this March. Since then, these industries have shot out of the rubbish pile. Money manager Ted Aronson of Aronson+Johnson +Ortiz in Philadelphia calculates insurance stocks are up 78%, banks 104%, miscellaneous finance 111% and autos 158%."

Latvia's struggles continue, to the detriment of its creditors

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