I was at a party 2 weekends ago where there were a variety of
major “bulge bracket” and independent (and very successful) bankers
and traders (some prop, some index fund), most of whom I’ve known for
years. It might be useful to add what they said to the general discussion:
1) According to “word on the street”, the “big
6” institutions have been deleveraging furiously, and on average, their
leverage as of two weeks ago, was already at the 15 level (back to “traditional”
normal).
2) Major funds (hedge and otherwise) have been furiously selling
into any rallies, trying (and mostly succeeding) to stay one step ahead of redemption
requests. Most of the big players are already loaded with cash. The word is
there’s not much left of that story.
3) Speaking outside of their profession, their gloomy forecasts
were totally correlated across the board.
I stress that these opinions could be perfect herd
mentality or select insight. I’m merely the messenger. For instance, all
of this may put some perspective on the “pros” without providing any
transparency on the “average citizen’s” fear factor, mob momentum,
and all the rest. To a man, they were all quite fearful of when/if all the 401k
wildebeests will run right off the cliff.
Regards,
Gene