Sovereign debt is certainly the Bears friend these days. In 2009, the Bears were continually run over each time a headline expressed doubts about the overall US economic recovery. After a quick dip, the Bears were crushed by the resumptive upside march. Now that headlines over US unemployment and world finances are being flagged each day, a new desperation over the health of the entire world economic plumbing has become the energy for the Bears big push.
But some structural elements are a problem for these markets and its participants. Traditional investment approaches, (anyone who has a 401K), have proven to be broken models and ineffectual vehicles for building equity. Investors have apparently resigned themselves to being hosed by the great transactional circus emanating from Wall Street as they pile into sector crap. But do not underestimate human blindness. One could put adaptive alternative alpha performing models right under the noses of just about everyone and they would still choose the join the legion of dopes haplessly sliding into poor performing investments. Misery loves, well misery, and nothing gives more grief than being upside down in your investments. Like, owning a home which is worth as much or less than it was ten years ago or holding the largest portion of your retirement in a 401K.
