The trading year thus far has experienced enough stress to test the merits of all participants. If you are a buy and hold investor, it has been a disaster. If you are a floor trading bear and you did not make enough to quit, quit because you suck. If you are a floor trading bull and managed to avoid disaster, better days are ahead. Of course, if you are an insurance company or bank and have made some questionable strategic decisions, you are in a bull market for bailouts. You win.
It has always been true that many live much better than their IQ would merit. Bad financial decisions for most have direct results, but the bailout frenzy is questioning all of it. Banks and insurance companies have always been the place for those less courageous careers. They are supposed to be stewards of savings and assets and be thoughtful and prudent. But like so many, they became confident and brave about the future when the fees were piling in from the sub prime dirt, but now they have failed. Courage is easy when you are overpaid and stupid.
Nine out of ten traders do not understand risk so why should a banker or an insurance company be able to figure it out. They have a model to generate fees or premiums based on volume without true risk calculators. The risk test for traders and others are in markets such as these. If your risk strategies did well over the last months, you get the prize.
