As you will recall, a pair trade is a trade that goes lengthy one facet and quick the other with the notion of capturing the variation in overall performance. Another way to body my present favorite pair trade is “Knowledge” vs “Emotion”.
It is my hypothesis that a species’ evolutionarily successful emotional responses are codified in DNA as instincts. We also know that markets punish herd habits, considering that the herd can be spooked, and consequently trusted to overreact in times of peak agitation. This is why I like to evaluate volatility and explain it with statistics in this kind of a way as it is the two secure adequate for continuity and but adaptive adequate to react to alter in accord with deeper trends which are evolving beneath the surface area of immediate observation
In this pair trade Buffett plays the role of knowledge, the protoypical smart uncle who has seen it all, and is aware of how to frame the difficulty and navigate through uncertainty. The most current, hottest ETF, the metaphorically exuberant youth in lookup of riches in the land of milk and honey, is represented by EEM (the emerging markets.
There is a time for every in human existence cycle, in the passing of seasons, in the cycling of markets. Would we genuinely say that the exuberance of youth need to be minimize out of our life and knowledge? where would the ventures appear from? mytherapistdelraybeach ? knowledge is not everything, but it also has its time and location.
Just as we can grow and experienced our judgement, so to can we carry diverse values and insights to bear as the industry morphs all around us.
This is obviously Buffett time, however you slice it.