The Newest Financial Weapons of Mass Destruction
By Doug Kass 08/31/11 - 01:00 PM EDT
The toxic combination of price momentum-based high-frequency trading (HFT) strategies and the proliferation of leveraged ETFs has served to launch the newest forms of financial weapons of mass destruction, and they're alienating legions of investors.
Since the beginning of 2007, domestic equity mutual funds have had net outflows of more than $400 billion (in the same period, $835 billion of fixed-income funds have been purchased! That spread between stock outflows and bond inflows -- $1.235 trillion (in 4.5 years) -- is unprecedented in the annals of financial history.
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