Outside the Box

When Career Risk Reigns

October 5, 2012

We have entered an era of increasing correlation among what were once considered diversified investment classes. That would not be so bad, but overall returns have been reduced as well, almost across the board. As the song says, “Nowhere to run and nowhere to hide.” (For the younger generation, listen to the far superior version on YouTube, which was the original by Martha Reeves and the Vandellas, and not the noise of Korn or Caliban.)

This week’s Outside the Box takes us on a tour of recent research, which shows that correlations among a wide variety of asset classes are increasing. It comes as no surprise to serious investors that it is getting ever more difficult to construct a diversified portfolio. My friend and partner Niels Jensen of Absolute Return Partners in London looks at half a dozen different research papers of recent vintage to give us some insights into today’s investment climate and offer a few modest suggestions. All in all, a very useful piece of work. You can see more of their writing and research at www.arpllp.com.

This is the first Outside the Box under the new schedule, which will now bring you OTB on a Friday, for your weekend reading. I will now be writing Thoughts from the Frontline on Sunday afternoons and evenings, with the goal of putting it in your inbox on Monday morning.

Tonight is my birthday (63), and some of the kids are waiting for Dad to finish up and come down and be with them, so I will hit the send button. But I will note that I did 189 push-ups today (sets of 50, 50, 50, and 39 with other upper-body exercises) at the gym. That is twice as many as I have ever done. There is a story behind that, as technology “assisted” me. I still had to do the actual work, but a prototype of a new invention (no, not available yet) allowed me to recover from my exertion much, much faster and therefore do more actual pushing and pumping in the same amount of time. Nothing magic. No cool new biotech pill that makes me 10 times stronger. And no mechanical assists. I will write more at a later time as I test my new toy, but the first day was cool. Let’s see how it works in a few months. But a great way to start another year.

“Do not go gentle into that good night.”

My mother is 95, and I visited her in ICU yesterday. She offers a contrast to my own efforts to stay active: “Sixty-three sounds young to me now.” Her mind is as sharp as ever, but her body is just failing one part at a time. Getting old is not for sissies.

Your thinking I will enjoy 63 as much as possible analyst,

John Mauldin, Editor
Outside the Box

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The Absolute Return Letter October 2012

When Career Risk Reigns

I concluded last month’s Absolute Return Letter by suggesting that only when policy makers begin to address the underlying root causes that lie underneath the current crisis will we be able to leave the problems of the past few years behind us.

What I didn’t say, but probably should have said, was that an almost universal lack of appetite amongst policy makers on both sides…

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