CHAPTER 17
Portfolio Liquidity
In the wake of an extremely damaging global economic and securities market crisis of the sort that began in 2007, diversification is likely to be a very sore topic. Even granting that many alternative investment vehicles performed well relative to equities and corporate credits, all those shiny claims for diversification look rather shopworn after “correlations go to one.” Investors who tolerated weak relative performance from some of their investments while markets were rising discovered that some of them offered little or none of the advertised protection when markets fell dramatically and in unison. Hedges ceased to hedge, collateral became evanescent, and the only apparent safe haven offered, on a few occasions, ...

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