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