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Alternative Market Briefing

Hedge funds surf volatility wave as government intervention and risk averse investors drive wild swings

Friday, August 19, 2011

amb
Russell Abrams
From Kirsten Bischoff, Opalesque New York:

Low growth. High volatility. Welcome to the "new normal".

While the current 8%-10% swings of the Dow may not be the sustained "new normal", we have certainly entered a new phase; one where government intervention is expected, yet the unknowns of politics are causing wild swings based on speculation, and overreactions.

For the final half of 2011, as investment firms adjust their expectations of US and European economic growth downward, and new political seasons ramp up, managers such as Russell Abrams, Founder and Portfolio Manager at Titan Capital Group expect US and European markets to continue to see higher levels of volatility. The New York-based Titan Capital runs several volatility funds and has found plenty of opportunity in 2011’s fickle markets, especially as the summer months have seen a major uptick in volatility.

Last week Russell Abrams commented, "The market is now down 10% on the quarter and recently broke through the 200 day moving average. This is a key technical indicator and could portend a significant correction in the near term as each time this has happened in the past the market has gone down an additional 5% to 20% in short order." With the market instability continuing into this week, Opalesque spoke with Abrams again about his firm’s volatility strategy, and how government intervention has altered mark......................

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