My market-neutral strategy failed today. I almost never give up a significant amount during a down day, as my shorts generate enough alpha to more than compensate 90% of the time. Today, I'm down as much as the broader indexes. My global stagflation strategy, with a near zero beta, is breaking down. I wonder if this might be early indication that were moving towards full on global recession, with a likely hood of interest rate increases to cool overheated emerging markets. Much has been written about the possibility of Japanese style deflation moving to China, in particular, as sudden capital flight takes hold. There is certainly more FDI than actual investment opportunity in the BRICs at the moment.