Sunday, November 13, 2011

When Markets Move in Sync - Finding the Downbeat -

When Markets Move in Sync - Finding the Downbeat -
"Stocks have been moving largely in lock step with one another, and with many other assets as well. Especially when prices fall, this can be a source of great frustration. After all, when markets become more highly correlated, it not only makes diversifying a portfolio seem like a pointless exercise, it also reinforces the feeling that there’s no place to hide."
"As investors have grown more fearful of macroeconomic threats like the European debt crisis and weakness in the global recovery, fundamental factors that typically drive individual security prices have taken a back seat.
which leads to potential buying opportunties:
"The good news is that whenever the good gets thrown out with the bad in periods of high correlations, mispricing and distortions take place in the market that create wonderful buying opportunities,” said Robert D. Arnott, chairman of the investment management firm Research Affiliates in Newport Beach, Calif. "

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