Thursday, June 26, 2008


There is an interesting run down of high-level investing strategies from Gavekal in FT Alphaville. Basically, they claim there are broadly four ways to make money investing each of which has some current incarnation:
  1. Momentum -- currently commodities
  2. Reversion to the mean -- currently nothing, which is weirdly true. The article points out that this is perhaps partly for reasons of visibility, but I think the problem is more one of valuation.
  3. Be a bank -- Borrow short and lend long or some other carry trade. This is tough right now, because nobody wants to lend.
  4. Buy insurance -- Run a negative carry trade, or borrow long and wait for the short-term stuff to blow up. This is the CDS strategy.

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