Via the AFR:
Perth-based hedge fund investor NWQ has signed up former Reserve Bank governor Glenn Stevens as it ramps up efforts to attract offshore investors to the Australian hedge fund scene.
Mr Stevens will join NWQ as a member of the investment committee, adding to his role as an adviser to Ellerston Capital’s macro hedge fund.
“Glenn will add important insights with regards to global economic conditions, the state of risk factors that will influence our strategy allocations and ultimately our manager selections,” Jonathan Horton, the managing partner of NWQ Capital Management, told The Australian Financial Review.
Mr Horton, who has known Mr Stevens for 25 years, said Mr Stevens would focus on “top down” or macro analysis.
This is what Captain Glenn said following the GFC:
I don’t know anyone who predicted this course of events.
This should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. What we have seen is truly a ‘tail’ outcome—the kind of outcome that the routine forecasting process never predicts.
It wasn’t that hard to predict, was it? Lot’s of analysts did predict it, especially ones that ran hedge funds. They just weren’t stuck in a silly central bank paradigm about the end of risk.
Of course, Captain Glenn’s failure may have educated him for the better today. After all, following his forecasting failure, the good Captain did declare that Australian households should no longer accumulate mortgage debt. He appeared on Sunrise to tell us so as the post-GFC mining boom took off again.
Stevens then argued that the mining boom would last decades. Captain Glenn is notoriously “glass half full”. Under his guidance the RBA consistently over-estimated the Chinese growth outlook and Australian terms of trade:
But the boom lasted just two years and caught the RBA on the hop as it slashed interest rates and explicitly told everyone to gamble on house prices again.
Is this the record of someone that you want running your macro hedge fund, the sole purpose of which is see through the balderdash of the day so you can be positioned when the imbalances adjust?
