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Money managers under the microscope

Steer clear of the free lunch, says Noster

January 21, 2011

Diversification is meant to be the only free lunch in investing.

But according to hedge fund Noster Capital, with most markets looking toppy and with problems ahead, it’s not necessarily one that investors would be wise to tuck into.

“This is not the time to be invested in broad ETFs or in very diversified funds, because the indexes will likely not do much in aggregate,” it says in its end of year letter.

“We feel that most asset classes are currently approaching untenable levels, and while they could certainly grow dearer for some time to come, in most cases we have long passed the level where investors are being adequately remunerated for the risks they are taking.”

Markets are likely to be range-bound for the next 3-5 years, meaning that just buying and holding stocks might not be the best approach, says Noster.

“The likely way to succeed in the years ahead is to be very selective and tactical about what one owns, to be ready to sell if assets approach fair value and, most importantly of all, to be protected and retain liquidity so that one can take advantage of opportunities that will transpire when any of the myriad things that could (and will) go wrong, do.”


This current rally continued for longer than I expected -similar to what happened after I began my warnings in early 2007 but the fun didn’t start until mid 2007.

It’s now extremely overextended and the very overdue correction actually started last week IMO.

FX market and gold/silver have already given the signal and these warnings should not be ignored.

Posted by GrandSupercycle | Report as abusive

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