Credit Crisis and Equity Investments
(Fourth Quarter 2008)

What started in mid 2007 as high default rates in the subprime mortgage market escalated into a full blown crisis that extended well beyond fixed income to touch just about every area of investments. By the end of 2008, equity markets, alternative investments, real estate, and commodities generated losses not seen in decades and currencies reached new exchange levels. The consensus for equities is that what happened can be explained now but could not have been forecasted.

While the crisis is ongoing, we take a look in this newsletter at trends and patterns that became established in 2008. Risk, in terms of volatility, reached record levels, but risk control was effective in 2008. Stock selection, instead, was perverse in a market dominated by selling and deleveraging. Finally, transactions costs increased even with high levels of trading and liquidity.”


To receive the full newsletter, please click here.