Friday, 5 March 2010

The bizarre dynamics of the Risk ON/ Risk OFF switch

More and more we have markets that go up primarily because of short covering by over-zealous bears who get too confidently pessimistic during the RISK OFF phase of the game, and go down when the hedge funds enjoying the RISK ON phase get too enthusiastic, and then stare at each other wondering where the next punter is to whom they can unload their positions.

As referenced in a blog posting here , almost exactly one year ago, we had better get used to increasingly bipolar capital markets.

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