Some of the best long-short portfolio managers in Financials didn’t see issues inside the banking sector before the crisis.
A generalist portfolio manager told CEO Keith McCullough that four of the best Financials portfolio managers he knows all missed the bank collapse entirely. Macro/Financials analyst Josh Steiner heard a similar story from a friend.
“Last Thursday night when it was going down with Silicon Valley, I was on the phone until almost midnight talking to clients,” Steiner explains in this clip from The Call @ Hedgeye. “One client, who’s also a friend, had talked to one of the most acclaimed legends in Financials and this individual was surprised by the level of concern about the Silicon Valley situation. And this guy is nobody’s idiot."
And here’s the point about why even these savvy Financials analysts missed this move. “When you get deeper into Phase III of the Bear Market the reflexivity factor and the non-linearity embedded therein becomes an increasing factor,” McCullough explains in the clip above. “Just getting the direction of the move right is more important than getting the specificity of it right.”
Watch the full clip above.