A 'Black Swan' fund posted a massive 4,000% return after the coronavirus blew up markets https://markets.businessinsider.com...-return-hedging-coronavirus-2020-4-1029076165
Many active traders in smaller than NASDAQ 100 stocks are down 10%-20% in the past few days. There seems to be a flight to perceived quality/stability/safety. The markets are not monolithic.
This is just wrong. What I see is permabears on here saying that markets are "overvalued" or in a "bubble" pretty much all the time. They were doing so throughout 2019. There was nothing super expensive about US indexes January 2020 we were higher end normal on market P/E. And then Covid hit and some people pretended markets were going to drop anyways. BS. I called this out in March 2020 shortly before the bottom. I forecast a stock market recovery not quite as dramatic as what occurred but far more then most on here would believe in at the time. Claiming Covid wasn't a Black Swan is irrational.
The way I see it, we are getting situations where the mkt craters (pullbacks which at the time appear serious) but they are all turning out to be false signals, time and again. One day another will pop up and it will be the real thing. Determining which one is genuinely serious is difficult. Therin lays the danger as it creates complacency with repeated false signals.
Note it's the journalist, i.e. probably not a high-alpha trader, who used the term "Black Swan". The irony here kind of lies in the fact that they were betting on a fat tail event because they EXPECTED it. Am I right? haha. OK all jokes aside, Spitznagel is an awesome trader, if only for the fact that he realized options had been pushed way too cheap due to the massive "premium selling" by newbie quants who thought it was free money.
Why is that concept so hard to accept? There are known unknowns and there are unknown unknowns. In case of COVID, it was an unexpected event that had nothing to do with market fundamentals or the economy - the very definition of the black swan. Same goes for Fukushima, 9/11 and many more things. Yeah, my hindsight book is up a million percent too
I appreciate your passion and conviction for your personal interpretation of mentioned events. Let's just agree to disagree? It doesn't benefit me to explain my perspective, train of thought since it could make you guys better traders, i.e. more competition for my trades.