By Eric Peters, CIO of One River Asset Management
On Friday, Aug 5, 2011, Standard and Poor’s lowered America’s AAA credit rating. The S&P 500 index fell 7% in the subsequent session to 1120. The VIX index surged from 22.5 to 48.3. Even though S&P had downgraded US creditworthiness, 10-year treasury yields fell 22bps to 2.34% as investors rushed to “safety.” The Swiss Franc gained 2%. Gold jumped 3% to $1,717. Bitcoin fell from $12.56 to $12.00. And while market pundits spent this weekend looking back in time, to predict Monday’s market moves, I kind of just marveled at how the price of assets with limited supply has risen through time. The magic of money illusion.
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