20080912

Nothing new can be told since yesterday. The WIG Index did not change its price level and we are still waiting for clarification (this chart is a way too suggestive):



The WIG20 Index has similar situation, but is much more choppy.



There is an interesting article how hedge funds are impacting the market in general. Just few citations:
...on any given day 25%-60% of global trading is handled by these unregulated funds...
...hedge fund managers are forced to cope with +20% return expectations...
...use of leverage, long, short, and derivative positions...
It's no longer smart money, it's fast money instead. Hedge funds rely on momentum and sophisticated risk models, jumping from one bubble to another.
Problem is there are too many big and fast players there and the slower ones are dropping out fast. The last hedge fund going out from a bubble is going to be hit by its own leverage. And depending on its leverage it can be very hard hit. That presses hedge funds managers and introduces fear that they will be too slow. I will say there is direct relation between fear and how fast are we pressing Sell button. The result is tremendous volatility in US market.
The emerging markets do not have such a problem yet, due to very limited ability to play on derivatives other than futures (in case of WSE).

Sources:
[http://seekingalpha.com/article/95184-the-next-bubble]
[http://www.iht.com/articles/2007/08/13/business/hedge.php]