|This phenomenon may partly explain the entrenchment of the current financial crisis. Inefficient companies that benefited from bank lending during their early years now continue to benefit through the new complex financial structures. The efficient startup companies from today, however, have little financing available. The predominant risk models assume they are bound to fail because they are undecapitalized startups, suggesting an unfortunate self-fulfilling prophecy caused by a vicious circle of risk aversion.
I invite my readers to design strategies to test this hypothesis that an effective, profitable portfolio diversification should include a healthy, significant percentage of old fashioned investment in addition to the trendy securitization.
Top: Mosaïque de trucages by RRivero 2010
Bottom: Trazos de Maracay by RRivero 1997