Diversifying in the everything bubble is like trying to square a circle. Money manager will go the extra mile to engineer diversification in their portfolio because forecasting is a dicey business. My understanding of a well-diversified, hedged portfolio is one invested in a wide range of assets where those assets prices are inversely, or negatively correlated to each other. So when one asset falls in any given day the other asset...
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Is the everything bubble ripe? The global stock market rout is underway with red flags in abundance. The inverted yield curve warning, which is now making mainstream headlines, has become even more inverted. That typically is not what happens when investors are bullish. Historic data suggests that the inverted yield curve is a reliable recession indicator, so the latest stock sell-off could be signal that the everything bubble is ripe...
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Unwinding the everything bubble began in the final quarter of 2018 and it is likely to be a big story in 2019. The central bank’s bubble of everything was financially engineered with nearly a decade of experimental monetary policy. Through a policy known as quantitative easing QE, the major central banks purchased approximately 15 trillion dollars of assets in the market to create the so-called “wealth effect”. The idea, albeit...
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