Several trends have been in evidence over the last six to nine months, some of these trends going back several years. Most of these trends have several things in common. They started from a “value” base, their prices rose to value levels but they kept climbing based on momentum. In our view, the public has insisted on playing each of these trends until it lost money.
In particular:
After 20 years of declining interest rates, long-term bonds were viewed as safe – until interest rates rose earlier this year resulting in losses on bonds.
Secondly, after three years of “out-performance,” emerging markets attracted a lot of money, then Bolivia nationalized oil and gas reserves and Ecuador seized the assets of Occidental Petroleum. Many emerging market securities have tanked in the last month with some markets down 30% - 40%.
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In particular:
After 20 years of declining interest rates, long-term bonds were viewed as safe – until interest rates rose earlier this year resulting in losses on bonds.
Secondly, after three years of “out-performance,” emerging markets attracted a lot of money, then Bolivia nationalized oil and gas reserves and Ecuador seized the assets of Occidental Petroleum. Many emerging market securities have tanked in the last month with some markets down 30% - 40%.
Read the complete minutes
