So as I mentioned earlier, I think this is rather interesting and nuanced point. Personally, I am 100% on board with the X & Y strategy you describe in your other post. In the world of rates, for example, unless you do outright macro, it's imperative that you find some ways to be long some tail risk to protect the core strategies you're making money on. However, protecting your core strategies with a tail hedge and explicitly betting on an event that's perceived unlikely are very different. Again, I am suggesting that, based on his very own admissions, Kyle Bass's Japan trade belongs to the latter category.
So, if you don't mind, I would like to ask about the strategy that explicitly bets on a "crash". I think it's a very interesting discussion that I am hoping will benefit me and further my understanding. However, first we need to establish some common ground. "Bubble", "crash" and "shorting a bubble" are, generally, very vague terms that need to be defined. Shall we try to narrow down in a specific context what these things actually mean? I propose to reuse the old short JGB trade, unless you want to use something else, such as Treasuries or smth.
