John Sindreu
speaker
195 appearances
4 recordings
1 series
first heard Feb 2018
last heard Mar 2019
John Sindreu’s voice in public audio — every appearance, attributed to the second.
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Appearances
And there's like a range of investors in the market that are betting on whether volatility will be high or volatility will be low.
And because the stock market has been so calm for the last two years, we found that a lot of investors were trying to squeeze some extra return by betting that it would stay calm.
And what happens if you do that is that when suddenly it doesn't stay calm for whatever reason, suddenly you lose a lot of money and then you need to offset all those bets that you made that are now losing bets.
And it's sort of a reinforcing feedback loop.
And this is a bit what we've seen over the last couple of days.
And
It's interesting because we actually wrote about this before it happened, that it was a possible concern.
It was interesting to actually see it unwind.
In the end, it is a bit like, so the VIX is basically, it's not a product in itself.
You can trade it through different kinds of products and several of them have had issues in these last couple of days.
It's more like they look at derivatives that are built around these stocks and then they sort of, you know, they extrapolate like a price on whether investors believe that stocks are likely to swing higher
a lot or not in the near future.
But in the end, it works a bit like I like to compare it to hurricane insurance.
There are some people selling insurance.
There are some people buying insurance.
Over the long term, you kind of know that the people who sell insurance tend to win because you don't really insure your house against tornadoes because you want to make money.
You do it to be able to sleep at night.
So in the market, it's a bit the same.
So in theory, betting against this volatility is a good long-term strategy.
And betting for volatility is a bad long-term strategy.
Showing 141–160 of 195 · page 8 of 10
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