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When Career Risk Reigns

By Niels Jensen, Absolute Return Partners

I concluded last month’s Absolute Return Letter by suggesting that only when policy makers begin to address the underlying root causes that lie underneath the current crisis will we be able to leave the problems of the past few years behind us.

What I didn’t say, but probably should have said, was that an almost universal lack of appetite amongst policy makers on both sides of the Atlantic to deal with those root causes will ensure that the crisis will rumble on for quite some time to come. To paraphrase John Mauldin, politicians are like teenagers. They opt for the difficult choice only when all other options have been explored.

So far, only Greece has reached that point. The Spanish are probably next in line. And there will be many more countries forced to make tough decisions before this crisis is well and truly over.

This has repercussions for asset allocation and portfolio construction. The credit crisis, now into its sixth year, has changed the investment landscape on two important fronts. Investors have had to get accustomed to low return expectations – not something that comes naturally to Homo sapiens – and they have had to adapt to what is often referred to as the high correlation environment.

Read the full letter here:



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