For what interest it holds, David Sherman hosted an hour-long conference call today (Monday, 3/16) from 5:30 - 6:30 EDT.
I submitted a question on attribution for the Strategic Income strategy's performance; in absolute terms, down 7% YTD through Friday but in relative terms, top 25% of the Morningstar peer group. Likely for legal reasons, the question was not addressed.
David tends to geek out when he starts talking about fixed-income, at least to a layperson's ears. Some of the discussions of the ARMS Index not being above 2 or intricacies of the commercial paper market escaped me. That said, he appeared to say:
- Selling has been orderly, unlike the '08 crisis. You may not like the price you're offered, but you're getting bids and getting them executed. Also in distinction to '08, this crisis is more Wall Street than Main Street. Consumers are not nearly so overleveraged, especially in mortgage debt, as they were then.
- He was a net seller much of last week and a net buyer today.
- He agrees with the analysis that this is an event-driven collapse, which tend to see quicker turnarounds than structural crashes do. He likens it more to '98 - triggered by an Asian currency crisis - than '08. He thinks he sees light at the end of this tunnel, though he admits that he has no idea of whether than means June or December. He does, it seems, anticipate a turnaround this year. "We're going to make money."
- He's bullish on America: "We are not good at planning as a country, but great at reactiing which often leads to infrastructure rebuilds and generally financially expansive outcomes, and which allows us to appreciate one another more deeply."
- It would be very wise to be investing senior in the credit structure, since recovery rates there are much higher if things do go south.
Bought some RPHYX before the market close today, just by way of full disclosure.
David
