My name is XXXXXXXXXXXX and I was an old student of yours from 06/07. You were one of my favorite teachers as you took the time out of the regular curriculum to teach about what was going on the finance world at the time- CMO’s/CDO’s/etc. I still have my notebook from that class and I appreciate how you were ahead of the times.
Going into your class I had a very small idea of what options and futures are. Now I trade them on daily basis. Funny!
I just wanted to see if you had any new white papers out on any timely subjects. I read your old research paper about derivatives and was a fan. Following the markets is a daily the job of mine now and I’m just so concerned about what’s going on.
I preach a diversified portfolio of different global asset classes and since the start of the year there hasn’t been anything you wanted to own except domestic equities and maybe Japan. My worry is what’s going to happen when the Fed exits and the music stops playing. I own bonds but I feel like I’m playing at the edge of a cliff and the risk/reward is not worth it if we ever see higher interest rates (don’t think that’s happening anytime soon). But my real worry is about the value of the dollar.
Today we have every central bank devaluing the shit out of their currency (including the U.S.) but the dollar is strong. At some point you think with all this debt we have to have inflation like the countries in South America did in the 80’s. And if that happens you want to own commodities and real assets… but after Mondays drop in precious metals- you’re finally seeing a reversal of people not believing in that story anymore. You have the market up around 135% since the bottom and earnings are up around the same… but top line growth has been dismal and most of its been driven by cost cutting. So it’s not like people are flooding into the dollar for the right reasons. It’s almost like we are the best house in a bad neighborhood. At some point- there has to be a shift. And if we experience sudden inflation… will people want to own stocks? (extreme inflation not good for stocks), bonds? (doubt it; but money out of stocks has to go somewhere), real assets like gold/silver/real estate?, (seems like that theme has finally ended).
Anyway, that’s a small glimpse in some of my worries out there. I think it’s a very interesting and hard time to look at the market and I wanted to see how you felt and if you have any concerning views on the market or any research papers.
Hope all is well. Best……