Ready for a risk rally? The critical date has passed and a low in risk has been cemented. Meanwhile, the professional market, hedgefunds, have once again loaded up on risk negative trades attempting to make trades based on headlines and fundamentals.
I just find it comical that large hedge fund portfolio managers I know are continuously misreading these markets. No matter what anyone tells you, very few people get it right when it comes to trading and that includes hedge funds, real money funds, mutual funds, etc. And I truly think this is the case because most funds still trade the markets according to fundamentals which just does not work well enough to allow for prudent risk mgmt.
The disconnect between price action and fundamentals can be so great that its very easy to see prices reach a stop loss point long before the fundamentals begin to work. The ONLY way a fundamentally driven investor or trader can successfully navigate these markets is by operating without stop loss orders AND be willing to add to losers in unlimited fashion for perhaps years. And as far as I know, only Mr. Buffet is capable of that with a forever holding period. Most others need to watch their drawdowns to stay in business!
Never forget what Keynes said "the market can remain irrational much longer than you or I can remain solvent". And this is coming from an economist who began investing according to fundamentals but during the 1930's quickly learned that price action over rules fundamentals.
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