Rational Advisor

As the saying goes

“It’s not the bus you’r expecting. It’s the one you’re not expecting that rusn you over.”

Remember 1997? Thai bahts were swinging for the fences - until they got called out. People who had no exposure to emerging Asian markets suffered the consequences of something they didn’t know about, and wouldn’t know how to analyze of it had been offered to them on a plate. (Similar things can be said about today’s markets, are people able to really analyze the supply and demand of Oil, the profits in a Country that has very little disclosure and lots of corruption - things such as Menu Foods and lead lined toys tell me a lot about the quality over the price.)

Yet a year later, the same thing happened, dragging down world markets as Russia defaulted on its sovereign bonds. Who, given the chaotic Yeltsin administration would have invested in Russian debt? How about some Nobel economics laureates - the LTCM gang - Long Term Capital Managment did!

And this summer who would thought of things such as ABCP, CDO, MBS - All triple rated by the rating agencies, until they collapsed.

Risks occurs in the most unexpected places, precisely because most people aren’t looking for it there. Like the bus, there should be another one along in ten minutes.

Rational

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