Friday, June 12, 2009

A Problem, an Issue, or a Conundrum

Actually it is probably more an issue and/or a problem, rather than a conundrum.

I am referring to the fact that financial markets like gold and oil are relatively small compared to traditional markets like equities and bonds.

The changing face of market players (the rise of hedge funds, SWFs, and ETFs), along with changing perspectives on asset allocation and investment strategy, has led to the prospect of significant demand/supply imbalances.

In other words, the flow of funds can unhinge a market from its fundamentals, aka bubble.

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