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Strategies & Market Trends : ahhaha's ahs
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To: Mark Adams who wrote (3127)10/17/2001 10:45:31 AM
From: ahhahaRead Replies (2) of 24758
 
I meant those making the decision on shortening the duration or not. Has nothing to do with what rates are, but rather what policy regarding Govt cash/debt management.

It is we the people who generate the force that causes those making the decisions to act in the direction that they do. We make the policy. Leaders can't operate in their own vacuum.

I suspect that's why RD has incorporated scenarios into their strategic planning.

Did you know that scenario creation in stock market strategy is the worst thing you can do? Inventing a possible future is absurd. It's all part of the hoodwink job of modern pseudo-sophisticated management whose real intent is to keep a fat job.

That's the way I prefer to operate- but others will argue that you can't operate on a grand scale without embracing risk and financial leverage.

LTCM took that view as do the gold companies. Leverage pushes a positive expected return into a negative one, because levered risk which is non-linear can't be managed under the linear assumption upon which it is always built. Nonlinear risk estimation is completely unstable.

Those that do so successfully are subject of books. Those who do so and fail, well, we don't hear much about them.

The ones who do so successfully quit doing that if they are so fortunate to escape the expected reality. The fortunate make it to the books.

But that doesn't mean we shouldn't try to grasp what some of the risks might be. Especially the more probable ones.

It's wise to have a spare tire.
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