New Hedge Fund Positions
Posted On Tuesday, February 23, 2010 at at 10:12 AM by Finance FanaticAfter a green Monday to open up the week, currently, we are seeing the Dow trading down almost 100 points to open up Tuesday's trading. Weakening economic data is frustrating impatient investors who continue to hope to see increasingly better data. However, like I have been constantly saying, that road back up will be a long, steep one.
Consumer confidence saw its worst number in 10 months in February as the dragging economy is starting to take its toll on optimistic consumers. Indeed we have seen rates of decline decrease greatly, however, usually it is the slow, dragged out bleeding process which can really devastate an economy in the long run. During the Great Depression, it was the latter 2 years that consumers suffered most, as their resources became completely depleted and were left with nothing. Hopefully, we can see a quicker turn around.
It is clear that despite continuing concerns that linger in trading markets, hedge funds will continue to move on. Investment banks cannot afford another year of waiting. Their clients are getting anxious and are starting to consider other means of investment that may payoff higher dividends. We should see more and more hedge funds begin to wedge their way in. So where are they looking? A recent survey showed a strong interest in distressed debt. The markets of banking, energy, health care are very much on hedge fund's radar. The survey showed a 53%, increase, from the prior year in the amount of investing being done in distressed debt investments. Many of the funds feel that the risk of bankruptcy is much less at this point as it was in 2009. Although this may be the case for some companies, this content feeling could come back to bite them if the economy continues to struggle. However, the hedge funds are tired of waiting around and so are their clients.
The degree of these downturn head fakes are very unorthodox. Much like a wave, trading needs a gush of momentum to get a good rally or pullback. Recent trends suggest that no such gush exists on the buy side, as many investors are feeling we are very overbought at the moment. When the gushes do appear on the selling side, the momentum gets quickly eaten up by low volume buying. At any rate, volume is ticking up and up and market moving will become more difficult to accomplish. Happy Trading.
Hedge funds create nothing they just move money around.
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