We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
The wacky markets are losing a lot of money for some of the hedgies, and making a lot of money for others. It isn't the quant funds per se, it's the funds that do a lot of leveraged stat arb that are suffering from the market divergences. Some quant funds are doing great right now.
But when a fund is down 15% in five days, people take their money out, and the overall market dips. Watch 2-3 big hedge funds shut their doors. I would be an equity buyer now, if I had some loose pennies, and I would shed no tears for the hedgies on the losing side of all of this: they (properly but unluckily) had a high risk strategery (aka gambling), which is what they are paid to have.
Soon. No one's quite sure how much of the bad mortgage paper is lying around or where it is. Look for financials with low leverage and no exposure to this stuff. It's getting a little silly right now and the herd is going over a cliff. Watch for news regarding leveraged holders of the 'toxic' stuff. Big banks, money center and investment, make me a little nervous right now. Not sure if the bad news has hit a crescendo yet. Some things are getting a little too cheap, no doubt. BTW, some quant funds are getting killed.
Tom C., Stamford,Ct.
Renaissance Medallion, up an average 30%/yr for 20 straight years, down 9% in August. Pure black box, the biggest brains in the biz. What went wrong? It'stats alright, but a human enters the data--and someone overvalued growth, and hence underweighted default aggregates. I think it may have been a sort of black swan --such as, a good-times-hidden accumulation of, well, shamelessness in the boomer tailenders, who nowadays see less personal failure in going bust on a mortgage, and thus walk away in greater numbers than they would if there was more of a personal rather than strictly financial stake in a default. Black swans are defined by such unseen forces suddenly manifesting in action.
Regarding shamelessness, that's comes from seeing bankruptcy turned into a business strategy, "what does "is" mean?", a general decline in manners, a rise in vulgarity and coarseness and a pirate booty feeling in making money like the the hedge funds or credit card companies that change rates at the drop off a hat.
BTW, lots of money will be made by the careful investors buying low in the mortgage market.