The concept of “Risk Velocity” is an interesting one. Momentum is measured in terms of velocity. You also have acceleration, which means the returns themselves are increasing generally due to feedback, option hedging, insurance strategies, algorithmic trading, etc. Such acceleration can be unsustainable and thusly leads to a crash. This has been shown to be […]
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The myth of unpredictable crashes, corrections, and rallies
Can you predict “hard-to-predict” and rare events? The Black Swan strategy for hedging against such an event is a combination of a long-put option and insurance. That is fine but it may take you a while to achieve a successful outcome and you may have some difficulty surviving as a fund manager in the interim. […]
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