Long-term investors fearful of another global financial
storm may be better prepared than they were before Lehman Brothers went bust in
2008, but their increasingly nervous disposition could itself be making markets
more fragile, Reuters writes.
The Lehman collapse and hyper-correlated decline in risky
assets everywhere challenged a key long-standing investment tenet that broad
diversification of portfolios was sufficient to protect overall savings over
time. In the dark six-month period after
September 2008, there were few if any havens from a synchronized slump in
equity, commodities, emerging markets, high-yield debt, hedge funds and the
like. Cash, top-rated government bonds
and more esoteric "tail risk" hedges such as volatility indices were
the only places to hide.
And for many long-term players, pension funds and insurers
with 20- or 30-year horizons, that shock may still amount to just a short-term
hiatus that fundamentals will correct over time. But less than four years later, the
still-smoldering banking crisis now threatens….
Read more at http://www.cnbc.com/id/47610250
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