AXcess News – Over the last several months fear has crept into investors psyche. While some of that might be just prudence, the kind of fear that grips most of the folks who take the time to drop mea line is often based on the role hedge funds play in the current economic cycle.
It is understandable. These are a somewhat mysterious entity that fascinates those of us that report on their comings and goings and frighten those that believe they are manipulating the system for the benefit of the few.
One note, received just last week struck me as typical.
Carl writes: “What do you think of their [hedge funds] role in artificially keeping mortgage interest rates low by intervening in the short-term treasuries market [2-year notes] in order to flatten the yield curve with return on the 10-year notes low? I suspect there is massive collusion between the banks and the hedge funds to keep the real estate bubble from bursting at the expense of small and institutional investors, who may not be aware that housing has been the engine of the recovery that began back in 2001. What are your thoughts on this and the prospect for an economic/stock market collapse?”
Whether or not his fear is well-founded remains to be seen, but I did answer his question, and with any luck, many similar ones.
