GBA PRESENTS- the public games

JB: You are thick and massive
SI: sorry?
JB: Your account is thick and massive.
SI: yes- I'm thinking more long term now.
JB: We'll make a few changes and get back to you.

CNBC
Julie Biel

[paste:font size="4"]

You can see her 23' picks pretty eclectic I like her
upload_2024-8-2_14-29-9.png

Julie Biel's top 2023 stock picks: CAST ...
 

Attachments

  • upload_2024-8-2_14-29-9.jpeg
    upload_2024-8-2_14-29-9.jpeg
    11.8 KB · Views: 2
  • upload_2024-8-2_14-29-9.png
    upload_2024-8-2_14-29-9.png
    560 bytes · Views: 3

Volatility-linked funds dump US stocks, exacerbating selloff

In absolutely every market meltdown there is the dumb ass greedy man -made problem and this one is no different.-

A sharp drop in U.S. stocks is provoking selling from volatility-sensitive funds, exacerbating a selloff that has already brought the Nasdaq Composite into correction territory.

Volatility control funds - systematic investment strategies that typically buy equities when markets are calm and sell when they grow turbulent - have gorged on stocks as indexes soared to record highs in 2024.

More recently, they have begun selling, as worries over the economy and tech earnings rattle investors: volatility control funds have dumped about $83.6 billion of U.S. equity futures over the last two weeks, according to Charlie McElligott, managing director Cross-Asset Strategy at Nomura.

It's "extremely rare" for the funds to sell in that size, McElligott said, noting that they have only recorded a sharper pullback in their equity allocations 3.2% of the time in the last 10 years.

The moves come on the backdrop of a selloff in U.S. stocks that deepened on Friday, after weaker than expected U.S. employment data spurred recession fears. The S&P 500 has slipped about 5% from its July 16 record high, while the tech-heavy Nasdaq Composite Index, has slipped about 10% from a record high reached last month, putting it on pace to confirm a correction.

The funds’ behavior going forward depends on how volatile markets are in the next few weeks, McElligott said.

A 1% daily change in the S&P 500 over the next two weeks could spur another $15 billion of selling in that period, while daily 0.5% changes would stop the bleeding and see these funds turn buyers to the tune of about $14 billion, McElligott said.

Certain other slower-reacting volatility-sensitive strategies could also join the selling if the market selloff worsens.

Equities trend-following commodity trading advisers (CTAs) sold only about $12.5 billion over the last two weeks. But these systematic, rule-based investment strategies could ramp up selling to about $36.0 billion if the S&P 500 were to sell off another 4% over the next two weeks, McElligott said.
 
You must log in or register to reply here.
Back
Top