Fundamentals are dead

Flows are the only thing that matters today

Policymakers sought to stop a credit cycle with liquidity so people mistake liquidity for reality

Financial gravity suspended, but not indefinitely, "flow guru" trading wins big in short term, but not long run
Clarification: I did not mean to degrade the work of analysts that track market or option flows, which is extremely important to alpha generation. My only point is that this science/art has taken on outsized importance due to liquidity injection as a cure-all
Flow analysis should be an alpha accelerator to fundamentals analysis in a low latency portfolio... instead, it has replaced fundamentals entirely

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More from @vol_christopher

4 Jun
Structural Causes of Social Revolutions (Goldstone):
1) Demographics, older people don't riot
2) Wide Income Disparity
3) Discrimination, racially, religiously, economically
4) Shifts in international relations
5) Corrupt demagogue/personalist regime
What is rather dangerous is that the US embodies many of these attributes, which starts with the widest income disparity in the US history

The key differentiator is that our demographics are older at an average age of ~39.
US demographics are deceiving. A barbell.

Boomers (23%; 56-74yrs ) are wealthy + support policies for stability and bail-out asset markets. Millennials (26%; 24-39 yrs), the first generation worse off economically than their parents likely support radical change (Artemis 2020)
Read 5 tweets
5 Mar
@billvb_py @MikeOfGaia I do not recommend trading instruments like VXX without detailed knowledge of VIX futures and options markets. The retail investor faces difficult choices on long vol without an ability to invest in hedge funds
@billvb_py @MikeOfGaia For those so inclined, one option is to learn the basics of option theory (see McMillian for a good intro) and execute simple rules-based rolling put and call strategies as a hedge to equity exposure (perhaps with UST bonds or TIPs as collateral).
@billvb_py @MikeOfGaia The only solid ETF long vol product I trust is Nancy Davis's IVOL product, but this buys rate vol, not equity, and is largely a hedge against inflationary spikes.
Read 4 tweets

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