Hedgehogs

Roberta FlackI appreciate and respect honesty, despise blatant lies, find frauds disturbing, though a bit like reality TV- mostly because Ive never been personally impacted (unless you include commodity price fixing, Libor, etc.) But these are frauds that the collective popular imagination justify, and a story for another time.

Bronte Capital’s blog post When the hedge doesn’t work caught my attention this morning. I like to see hedge fund managers fall on their swords once in a while, not because I’m becoming more French, but because it’s a frank, honest truth about speculation. Whatever your model has defined to hedge exposure (short or long), volatility, leverage or capital, the hard truth is your model will never always respect your predictions. Adjustments are a part of the game,  maybe the most difficult part. Good Luck, time will tell, but the market might be telling us it’s time for a post-QE adjustment.

It’s a good post and my readers should have a look.

Roberta Flack:  One of the primary qualities of a good performance is honesty.