Alpha

Authored by Mark Spitznagel via PIOnline.com,

There is a movement today among pension funds toward systemic risk mitigation - or "safe haven" - strategies. This makes great sense as a potential solution to the widespread underfunding problem. Many pension funds still haven't fully recovered from the crash of 2008, and can't afford another. Moreover, truly effective risk mitigation must lead to an incrementally higher long run compound annual growth rate; and a higher CAGR is the way to raise a pension plan's funding level over time.

Jim Grant, author of Grant's Interest Rate Observer, first hinted last week that not all is well when it comes to the world's biggest hedge fund, Ray Dalio's $160 billion Bridgewater (of which one half is the world's biggest risk-parity juggernaut). Speaking to Bloomberg last week, Grant said he was "bearish" on Bridgewater because founder Dalio has become "less focused on investing, while the firm lacks transparency and has produced lackluster returns."

Authored by Doug Kass via RealInvestmentAdvice.com,

* In a paperless and cloudy world, are investors and citizens as safe as the markets assume we are? –Kass Diary

Another provocative missile launched by North Korea and another apparent terrorist attack in London, England, are, once again, overnight and early-morning features of our reality as investors and as citizens.

In short, buy stocks.

Remember that 2011 NY Fed study which found that since 1994, a stunning 80% of all equity returns on U.S. stocks were generated over the twenty-four hours preceding scheduled Federal Open Market Committee announcements, a phenomenon called the pre-FOMC announcement “drift.”

Last week news emerged that as a result of the deteriorating local economy, coupled with a plunge in hedge fund profits, the capital of Connecticut - Hartford - was preparing for bankruptcy. Among the reasons cited by Department of Revenue Services Commissioner Kevin Sullivan was that wealthy people are “dramatically less wealthy than they were before.”

It turns out that, at least relatively speaking, he was correct.