Don’t Fight the Herd
5th February 2008
“Don’t fight the FED” has been the mantra forever in the investment community. The huge rally that transpired over the past few weeks was the trained herd piling into equities. We were also do for a bounce. Now its over. This next leg down is going to be massive. The fed can lower rates but they can’t make banks lend. The Dow finished down 370 points and the VIX tacked on another 8% rally. The bond market had a flight to quality rally with the front end leading the way. The curve steepened again.
- BA