New Wave of Quant Fund Trouble Coming

I'm telling you right now - you are going to be hearing about another wave of quant fund selling and implosions any day now.

Quant funds are a funny thing - they work until they don't work. And when they don't work, they usually blow up. It's like selling naked options, you can do really well for a while, and then one day you wake up and your portfolio has been annihilated.

The past few days we have seen action like we saw in mid August, when the quant funds originally took their hits.

Here's the thing - we hit new multi-year lows today, lower than the August lows that caused so much trouble in the first place (I'm talking the paper of the investment grade players).

So all of these funds that shut their eyes and prayed that things would get better just got hammered again. They just didn't get hammered, they got crushed.

Keep an eye out for it, this is another ugly event that won't help the stock market at all.

Filed under: Hedge Fund News | The Economic Meltdown