Thursday, Aug 16, 2007
More evidence of a k-winter
The Telegraph: Hedge funds take more than a trim
"On the down side, when the markets turn swiftly and erratically, with little basis to historical performance, things can go badly wrong"
We are entering into a new era. Maybe the historical data that these systems use didn't include what happened in 1929-1933. DJIA 3000 by 2012. We have never seen a credit crunch with debt levels this high - EVER. This is the biggest bubble in history bursting.
Posted by sold 2 rent 1 @ 06:33 AM (235 views) Add Comment
8 Comments
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1. Su said...
Excuse my ignorance, but what's a k-winter?
2. Darren70 said...
"Trading is driven by computers programmed by mathematical maestros" - help
As a "normal" programmer i can tell you that even the most complex programs and algorithms after extensive testing all have bugs and flaws in logic. A worrying trend if ever there was one. Mathematical maestros indeed.
3. Darren70 said...
BTW has anyone seen the FTSE 100 lately, gone below the 6000 mark for the second day.
4. The Capitalist said...
The central banks will pump more cash to keep the bubble inflated, but the hole is too big now. And now speculators are exiting their carry-trade positions en masse. We are seeing herd behaviour before our eyes. History says that August is a month when s*** happens. Really great for those who are short on shares and property. I'm long on gold but price still going down - why? Dollar weakness? (I own ETF traded in greenbacks).
Can't wait to read this week's issue of MoneyWeek.
5. Stoatgobbler said...
In defence of the industry, we don't all do the same thing, and we aren't all up to our tits in sub-prime rubbish. In fact, some managers are doing very well indeed, thanks!
6. inbreda said...
As a statistician who was employed as a mathematical maestro in the hedge fund and finance industry in the tax haven of jersey - and who left on realising that the industry only employs mathematical maestros to add credibility for their fund to help sell it (rather than for what the mathematicians can or cannot add) it would worry me massively that this is being quoted in the press. IMO it will make things worse. Much worse. In fact, as tax havens exist to cover up the true details of what is going on it is currently impossible to know how bad things are going to get due to hedge funds.
7. sold 2 rent 1 said...
Su,
K-winter means Kondratieff winter.
He was an economist who studied long wave cycles early in the last century
See www.thelongwaveanalyst.ca
and www.kwaves.com/kond_overview.htm
The long wave (currently around 70 years) is divided into 4 seasons with winter being the worst.
His theory analysed price data over 200 years and is largely discredited by mainstream economists as inflation can be too unpredictable.
When viewed as a debt cycle (which reflects human behavious of fear and greed) the theory seems to hold much more water and the parallels of 2007 and 1929 are very strong.
In short. We are in for the 2nd Great Depression.
8. Su said...
s2r1
Thanks for the explanation. That throws some light on others comments you guys have posted.