To the Ignorant the Spoils
It actually seems, at times, as though there is this mysteriously large buyer that suddenly appears whenever the equity market most “needs it”…and the subsequent buying is so aggressive and so desperate…not the style of the mostly steady “hands” I personally know. It just seems too good to be true and the Sortino Ratio numerically reflects that belief. Plus, we all know that the economic fundamentals are not as smooth as the weekly or monthly charts of the S&P 500 would suggest.
Remember that equities typically offer the most risk of any asset class…not the lowest risk as the above data set suggests. Nevertheless, Yellen and Bernanke must be “psyched” as their “wealth effect” model has been so effective…actually too effective as the market distortions grow ever larger…and more market bears become contorted “road-kill”.
To be sure these distorting effects may be entirely assigned to The Fed…the debt monetizing, interest rate suppressing “Masters of the Universe” who always get what they want while answering to nobody.
They’ve literally trounced and expectorated on the concept of “moral hazard” and, it seems, purposely reconfigured and redefined its meaning into: We have no economic morals and this poses an enormous hazard to the performance of hedged money managers. The spoils go to the ignorant only – the Fed’s true heroes. What Risk?