Daily Reading – Wednesday, May 4, 2011

The Big Picture: Things To Be Concerned About Regarding This Market

Whenever we are nearly fully invested (like we are now), my cognitive biases become acutely aware of all the things that could go wrong. (When we are short or in cash, the focus is what could go right)

It is the opposite of confirmation bias I write about so often.

What is it that makes me concerned about our investment posture over the short term — say, the next 30-90 days?

FT Alphaville: Cash is king

Here’s something you don’t hear very often in the City of London: cash doesn’t get the attention it deserves as an asset class.

FT Alphaville: Glencore IPO term sheet

FT BeyondBRICs: Renren IPO: over the top?

Renren has got investors running for its IPO. The Chinese social network company’s flotation on the New York Stock Exchange was priced on Wednesday at the top of its expected range giving it a market cap of $5.5bn.

self-evident: An intriguing potential problem with CDS

In case you missed it, this article written by Christopher Whittall for International Financing Review is very much worth reading. Whittall explains that some credit market participants (including an ISDA board member) are expressing skepticism about the value of CDS as it is widely rumored that Greece will try to restructure its debt in a manner that would technically avoid triggering a credit event. The issue here is that CDS users may reconsider the instruments if the terms do not provide the economic protection that investors anticipated. This uncertainty could also potentially have a negative impact on the bond market.

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