Friday links: models are just a tool

17Apr09

Talk of a “sucker’s rally” ignores the fact that the stock market is back to where it was just two months ago.  (The Balance Sheet)

We should be taking recent good news items at face value.  (A Dash of Insight)

A “sea change in investor outlook” is seen in the falling VIX. (VIX and More)

“Continuation of the “crap rally” could indicate larger, systematic problems at the largest, most sophisticated quant managers.”  (Zero Hedge)

Multi-day runs [in the stock market] are not any more frequent today than they have been over the last 50+ years.”  (MarketSci Blog)

What is the best vehicle to trade the oil services sector?  (IndexUniverse.com)

Leverage kills (an illustration).  (Alea)

“While it’s a great sign to see [high yield bond] spreads come in, the charts show that they are still extremely high from a historical perspective.”  (Bespoke)

Muni bonds have bounced back of late, but “the future looks unsettling.”  (Economist.com)

U.S. government bonds and “bond-like stocks” tend to co-move, in part due to changes in investment sentiment.  (SSRN.com)

No surprise that the launch of a new convertible bond ETF coincides with a rebound in that market.  (MarketBeat)

Strong IPO performance sets the stage for further IPO launches.  (Dealscape)

Should we believe what investors say they want in hedge fund returns?  (designing better futures)

“Because hedge funds aren’t allowed to advertise their services overtly, a dank and secretive ecosystem of often-unpleasant middlemen has evolved with the purpose of putting funds and investors together.”  (Felix Salmon)

Can private equity put some light between themselves and the world of hedge funds?  (Private Equity Beat)

“I don’t think banks in Iceland went bankrupt because of bad models. They went bankrupt because of over – leverage,” said Mr. Derman. “Models are just the tool.”  (Deal Journal)

Does Goldman Sachs (GS) deserve the bad press it is receiving?  (DealBook)

Goldman will loom as the first great test case of the rigor and seriousness of this new era of reform. Bizarre as it may seem, you can’t dismiss the possibility of a breakup.”  (Dealscape)

CDS holders are making bankruptcy filings more likely.  (Clusterstock, Atlantic Business)

Bill Ackman gets his wish.  General Growth Properties is now in bankruptcy.  (NYTimes.com, WSJ.com, Dealbreaker, Zero Hedge)

Improving Fundamental Outlook + Severe Government Reaction = Crisis Over.”  (Jeff Matthews)

We all have to understand that the Fed and Treasury have embarked on a grand experiment. We now have a marketplace where fundamental analysis is being trumped by huge event risk of a different kind, Washington, DC kind…” (Big Picture)

Say goodbye to the “surgical bankruptcy” option for the automakers.  (naked capitalism also Felix Salmon)

Adverse selection writ large.  The government gets stuck owing the losers (AIG, Fannie) while the winners (Goldman, JP Morgan) pull away.  (Deal Journal)

Is it that hard to find people to work in the Obama administration that aren’t under an ethical cloud?  (NYTimes.com, WSJ.com, Clusterstock, peHUB)

“Sometimes asking someone [even bankers] to do something for nothing is more powerful than paying them.”  (Predictably Irrational)

There is no entity that is capable of ensuring that everyone can consume a serene twenty or thirty years of leisure at the end of their lives.  And we may be making people worse off by pretending that there is.”  (Atlantic Business)

Has China’s economy bottomed?  (Breakingviews)

Don’t expect start-ups to win the race for viable biofuels.  (BusinessWeek.com)

High speed rail is just around the corner.  Or is it?  (Green Sheet, Market Movers, ChicagoTribune.com)

Why do people like streetcars so much?  (Marginal Revolution)

Somebody named “Oprah” has joined the Twitter thingy.  Apparently she is a big deal.  (Bits)

Free real-time quotes for your iPhone.  (TUAW)

Have we overlooked an interesting post in the investment blogosphere? If so, feel free to drop Abnormal Returns a line.

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