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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

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Dec 19 4:00 PM EST

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D.Austin

To: Lazarus who wrote (52129)	6/21/2013 10:11:56 AM
From: ggersh	1 Recommendation Read Replies (1) of 220483

"ETF Losses Today Were Far Beyond What The Most Sophisticated Risk Models Could Have Predicted"Submitted by Tyler Durden on 06/21/2013 - 08:01 There was a time when portfolio insurance guaranteed that events like Black Monday would never happen. Then Black Monday happened precisely due to portfolio insurance. Some years later, the credit-driven housing boom made modeling of declining home prices at rating agencies (and everywhere else) redundant. Then the (first) housing and credit bubble popped leading to the biggest housing market crash in US history. Fast forward to today, when ETFs were supposed to be the "greatest thing since sliced bread" and providing an ultra-low cost alternative to mutual fund and other market exposure "for the people", were supposed to revolutionize investing. Until days like yesterday. To wit from the FT: "The losses for ETFs today were far beyond what the most sophisticated financial risk models could have predicated for worst-case scenarios," said Bryce James, president of Smart Portfolio, which provides ETF asset allocation models.

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