Alpha Insights - Portfolio Strategy (Part 2)

This is a continuation from my previous email - Alpha Insights: Portfolio Strategy.

I have laid out my thought process, how/why I make my decisions, and when am I doing what. This would be relevant for use, only now I would say, so please don't take this as a golden rule. There is no golden rule. Every event would have its own "customised" strategy that might be better placed in mitigating those risks.

Why?

Well, at various points in time, we would have a matrix of conditions occurring on the global landscape. No one event is the perfect copy of another, and different sets of problems, requires a different mix of solutions.

If we weren't dealing with a credit problem, or if only country #1 had credit issues, but country #2 didn't. Do we have sanctions in play at the moment? How are developing economies going? How are developed economies going?

You get the point.

Let's start from the top.

Where are we right now? Where will the problems start?

Risk begins in the repo facility, when a margin call is made on a participant (probably a hedge fund running a x10 leverage cash-to-futures basis trade (arbitraging the two instruments)), assets has to be liquidated for collateral.