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Robert,
Great post, as was Tim's on spread trading.
Its good to see someone characterize LTCM's positions
accurately, as you have, as being yield curve spreads or credit
instrument grade spreads. The public is very wrong information,
such as that repeatedly said by Bob Brinker, a very popular host of
a syndicated radio investment program that runs on weekends.
He kept saying that LTCM was "short US bonds" only to make the
point that he, Brinker, had called for a higher bond market, and why
anyone would even think of trading against his benevolent advice
was a complete mystery, let alone highly vaunted wall street
experts. I'm sure Brinker knows what a spread is, but his
purposeful efforts to convince his listeners of how wonderful he is,
required a misrepresentation of the actual structure of the LTCM
positions.
Promotion first, facts last.
--------------
We are, for the immediate future in markets of liquidation. Strange
things will happen, tehcnical and fundy analysis are not useful for
trading, and in general it is more difficult for the trader to be
successful. Sales of assets are forced, and unwanted sales are
made to cover exposures elsewhere. Capital is repatriated for
fleeting reasons, and interest rate differentials do not reflect relative
currency values.
...we live in interesting times...
Cliff
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