The Simple Accountant

Emerging Markets: Betting Against Conventional Wisdom

What an odd thesis. Going short EM debt is no different in principle from going short any other debt. The analyst must make the case that either (1) a high rate of defaults is expected, or (2) an interest rate spike will decrease the value of the future cash flows, or (3) both 1 & 2 will occur. Debt markets do not trade like equity markets, and contrarian sentiment indicators do not work the same way.

Great Depression Not Imminent, But Inevitable

Inevitability of a great depression is a non sequitur, given the analysis in the article. The evidence is troubling, indeed, but inevitability is a extraordinary claim which should not be made lightly.

Currency Impacts Are Huge When It Comes to Investment Returns

Sadly, many a mutual fund investor will have scanned the return tables, spotted the outperformance of the global and international funds, and allocated substantial portions of the portfolio to them. With the Euro in particular having cracked, performance chasing once again will come to grief at the cold cruel hands of mean reversion.