Death of Diversification - II

Pls see charts below


SPX - Equity Index

CRB  - Commodity Index

HFRIFOF - Fund of Hedge Funds

DXY - US Dollar Currency Index

10 YR US Rates - Fixed Income

HY Index - Credit

Diversification is a MYTH


It is also DEAD


Since early 2009 - SPX , CRB , FOHF ie risky assets have all moved UP


DXY has moved down - so this makes sense too - it is a RISK OFF trade


10 YS US Rates haved moved UP so bond prices have moved down - This also makes sense


HY Spreads have moved down - so HY bond prices are up - so this makes sense too


But look at the way they have moved - in 3 steps UP


All in the same direction - in the same style - in 3 steps


Rising liquidity has lifted all risky boats - but this has to end at some point as this cant go on forever.


When we approach that TIPPING POINT - trust me - all these assets will head lower - not only lower  - but they will crash 


Only the DXY will be UP and this is the asset you MUST own


I am saying it again and again.


Also VIX is one thing that will rise as SPX collapses all the way to 666.


Fund of Hedge Funds will have a very tough time - in general.


The death of diversification has sown the seeds of destruction for the HF industry.


I am sure looking back from 2015 or 2020 - the HF space will look very different.


Let us wait and watch.