Contrarian Hedge Funds Prepare for Fed Rate Rise

The video discusses the differing strategies of hedge funds and mutual funds regarding interest rates, with hedge funds betting on short-term rate falls and mutual funds expecting rises. It explores the contrarian investment logic, noting past unexpected market movements and the influence of global economic factors like European disinflation and US dollar strength. The video also examines how investors are positioning themselves for 2015, considering the potential for contrarian strategies to succeed again.

What is the primary difference in the interest rate expectations between hedge funds and mutual funds?

• Both expect rates to fall.

• Hedge funds expect rates to rise, mutual funds expect them to fall.

• Both expect rates to rise.

• Hedge funds expect rates to fall, mutual funds expect them to rise.

What unexpected market event occurred when the Fed pulled back from asset purchases?

• Yields doubled.

• Yields fell unexpectedly.

• Yields remained stable.

• Yields rose significantly.

How might Europe's economic measures affect the US market?

• They will cause US interest rates to rise.

• They will only affect European markets.

• They will have no effect.

• They could lead to a stronger US dollar.

Why are mutual fund investors aligning with hedge funds despite different strategies?

• They are seeking higher risk investments.

• They are following the Fed's guidance.

• They expect short-term rates to rise significantly.

• They believe in a global economic slowdown.

What is the anticipated market strategy for investors in the coming year?

• Being contrarian.

• Following the crowd.

• Avoiding all investments.

• Investing only in bonds.