HSBC puts to heat map form the terms "risk on" and "risk off," showing the sharp increase in...

HSBC puts to heat map form the terms "risk on" and "risk off," showing the sharp increase in correlation across asset classes since the Lehman collapse. With assets moving together, many managers feel the whole investment process is broken, says the report, but get used to it as long as government policy is the gorilla in the markets.

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Comments (7)
  • bbro
    , contributor
    Comments (11234) | Send Message
    And explain to me what the markets would like if the "gorilla" was out of the markets...specifically investors would put risk on if the government was out of the markets?
    19 Apr 2012, 09:32 AM Reply Like
  • 1mp1r3t4
    , contributor
    Comments (327) | Send Message
    Actually, investors would have a better chance of making the right call if the government stopped manipulating the markets and if the hedge funds faced the uptick rule and Glass Steagall were brought back. For sixty years we never saw manipulation as flagrant as we see since the repeal of the Banking Act of 1933. For sixty years, companies succeeded or paid the price by going bust.


    No one was "bailed out." Bubbles did not exist. Disparities were the product of wrongful personal decisions, not created by government intervention and manipulation.


    In all candor, anything else explained beyond this point would only seem to trumpet Ron Paul's platform. It would serve everyone well to read through it. The understanding of the many points raised underscores why liberty is not a negotiable commodity. Personal freedoms and free markets go hand in hand.


    It's dismaying to watch how we're all capitalists when we make money and want to keep it all to ourselves, but when things go wrong, we immediately welcome socialist bailouts at the people's expense and accept them as our unconstitutional right to prevent greater social and economic chaos. There are only two letters to explain this phenomenon, BS.


    Government intervention in the market is preposterous on all levels, socially, financially, and as an economic philosophy; it detracts from the people as a whole and from each individual in specific terms. We can't support freedom and liberty while we support government bailouts or handouts. In either case, only the recipients are different. They're both abusive and defy the principles of law and order.


    Tolerance for government intervention and acceptance of too big to fail are abuses of power no matter how they're rationalized and sold to the public. In all of life, there are consequences to making wrong decisions. Why should commercial enterprises or personal choices be any different?
    19 Apr 2012, 11:14 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (4323) | Send Message
    the hedge funds are the gorillas in the market. With their huge leverage they command mammoth, market-moving amounts of capital. They all zig and zag at pretty much the same time like a school of fish. For them, all assets are pretty much fair game, and therefore assets that used to be uncorrelated now trade more or less in sync. Their footprints are all over the place. Mind you don't get trampled.
    19 Apr 2012, 09:43 AM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
    well they would be markets...valued at what people will sell at and at what people will buy at...notice I said people...and not HFT´s computers or algos for trading...
    19 Apr 2012, 09:43 AM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
    I'm quitting the Equity guessing game. I'm just going to double down on Junk Bonds (JNK) and reinvest the 7.5% dividends back into JNK. And hopefully the price tag on JNK drops so the yield will go back to 10%+..
    19 Apr 2012, 10:09 AM Reply Like
  • tomkemnitz
    , contributor
    Comments (3) | Send Message
    I think AlbyVA is on to a winning strategy. Stock like returns with less volatility.
    19 Apr 2012, 11:16 AM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
    JNK holds bonds in 227 companies and the default rate right now is only around 1.5% with a historical norm around 5%. That said, it is very unlikely JNK will just collapse from massive defaults unless something major happens in the economy. And it isn't like JNK is stocked with CCC bonds. Most of the companies have decent cash flows to pay their debts. So I have no fear of losing money in JNK vs. trying to hold actual Junk Paper. JNK's diversity in Junk is its insurance policy while still paying amazing yields. 7.5% yield will double your money every 9.3/years. Assuming JNK gets back to 10% yields, its more like doubling every 7/years.


    That might not sound great to day traders, but if you are investing with a 20/yr timeline and want some security, it is the best of both worlds. God Bless the Junk Bond ETFs.
    20 Apr 2012, 08:31 AM Reply Like
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