Why Stock Picking No Longer Matters Thanks To The Fed
byon 02-01-2011 at 11:01 AM (599 Views)
repost from zerohedge
One of the long-term themes on Zero Hedge over the past two years has been that beginning in 2009, following the Fed's total incursion in all capital markets, mostly in equities due to the highest delta on consumer net wealth as a function of stock price upside, any type of traditional stock picking (long-short but also virtually everything) has ceased to matter. Various hedge fund manager retirements in 2010 merely confirmed the acceleration of this trend. The complete elimination of volatility in what has become a policy weapon merely means that day traders are also leaving stocks in droves and heading for places where the Fed's complete domination has yet to manifest itself, such as commodities, bonds and FX, where vol has surged over the past two years. Today, we present Iridian Asset Management's most recent market thoughts, which confirms the observations in the Morgan Stanley report posted a few days ago on Zero Hedge discussing the firm's fears that a 2007-like quant collapse is coming as there is no longer any normalcy in the market, on why stock picking as a business is now dead. Obviously, we couldn't agree more.
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