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to me this current period (summer 2002) presents a classic example of the divergence of price risk and information risk. given the corporate accounting scandals and the new accounting rules, the demise of andersen and their replacement by the other accounting firms, we currently have a very high level of information risk in the equity and high yield debt markets but experience shows time and time again that price risk is often lowest when information risk is highest. by the time information risk has been reduced, price will already have adjusted.

what we know: by the end of august, nearly all of the S&P 500 will have reported 2Q results to SEC under the new accounting rules and by november, with 3Q results reported, nearly every rock will have been turned over hence information risk will have peaked. and in fact may be peaking right now.

just my $0.02

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