It looks like investors are setting up complex financial instruments to protect themselves from the collapse of AI companies. (Archive.is link)
This sounds like the (ultimately ineffective) attempts in the 2006-2008 time frame to use similar instruments.
Investors are riding out the “whack-a-mole” software sell-off by loading up on protection against volatility and exploiting the divergence in sectors tipped to be either winners or losers from AI’s advance.
Some of Wall Street’s biggest players are turning to complex options and hedging strategies to navigate a market buffeted by blog posts and headlines that have recently wiped tens of billions of dollars off the value of some of the S&P 500’s largest tech groups.
Yes, adding complexity to an unstable market always work out SO well.
………
Investors are embracing so-called dispersion trades, which involve buying single-stock volatility while selling index volatility to profit from the gap between the S&P 500’s relatively subdued daily moves and large price swings for individual companies.
………
Dispersion trades could come unstuck if markets suffer a broader setback — perhaps sparked by geopolitical risks or an escalation of trade wars — that causes stocks to fall in unison.
In that situation, investors who have bet on dispersion might be forced to buy index-level volatility protection, potentially exacerbating a market-wide sell-off, according to Jasmine Yeo, a fund manager at Ruffer.
Gee, isn't that how CDOs and the like led to the panic in 2008?
We are f%$#ed/
0 comments :
Post a Comment