In continuing with our coverage of hedge fund D.E. Shaw's Market Insights, we want to bring you another installment, this time focusing on 'The Basis Monster That Ate Wall Street.' Over the past few days, we've also covered D.E. Shaw's look at tracking asset class returns through the crisis, as well as their piece that focused on common trading mistakes and the consequences that follow.
This time they focus on the 'basis' between cash financial instruments and their derivative based equivalents. They note that this "cash-synthetic" basis has shifted drastically which has created both opportunity and risk. In the piece, they examine the various risks as well as how this basis can lead to distorted perceptions of the market.
Download this edition of D.E. Shaw's Market Insights here (.pdf).
Thursday, September 24, 2009
Hedge Fund D.E. Shaw & Co's Market Insight: The Basis Monster That Ate Wall Street
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