Saturday, February 2, 2013

Another front page sell signal?

Recently, Barry Ritholz highlighted a New York Times front page article entitled As Worries Ebb, Small Investors Propel Markets as a contrarian Front Page Cover sell-signal.

Now, with the Dow at 14K, Barron's has followed suit with a bullish headline:

Uh oh!

Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. ("Qwest"). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest.

None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Either Qwest or Mr. Hui may hold or control long or short positions in the securities or instruments mentioned.

1 comment:

Gloeschi said...

A "tall and skinny" distribution, like "B", simply say that variables are scattered closely around the mean and the tails are thin (K>0).

"The higher the kurtosis, the fatter the tails"

I believe those two statements are contradictory.

High kurtosis, or low historic volatility, could also mean that investors are lulled into complacency, as the volatile and risky times are long forgotten. Leverage increases.

You could turn the argument around by saying that it is in highly volatile times that risk is overpriced and you get rewarded for assuming that risk from other market participants.