The first time, I made the mistake of not thinking hard enough early enough, or taking enough action. I also didn’t think through the implications, and didn’t do things like buying put options, even though it was obvious. This time, I want to not make those same mistakes. Let’s figure out what actually happens, then act upon it.
I acted in March, and I want to act again. As a former money manager, I know exactly how I would hedge this risk. My current issue is that I am not fully convinced that this issue will lead to weakness in capital markets.
Let’s say we use the US stock market as the hedging tool (an S&P 500 ETF like SPY or VOO). What would need to happen for it to fall a considerable amount (10%+)?
Additional restrictions across the board for a considerable amount of time without appropriate stimulus.
I don’t have the confidence to believe that the statement above will happen. We are about to enter an era of a democratic president, democratic majority in the house of representatives, and a potential tied senate. I am confident that more stimulus will pass if needed.
I am not sure how politically viable it is to enact additional restrictions in Europe / North America. I am sure some majors, governors, heads of state will enact additional restrictions, but I doubt it will be a coordinated effort. Furthermore, I am also not confident the populace will follow said restrictions.
So at the moment, I am convinced that this is serious, that it will probably cause significantly more loss of life in the next 6 months, but it won’t affect capital markets they way COVID-19 did back in March.
On a personal level, we are increasing our protections towards our elders. Here’s to hoping they get vaccinated by the end of February.
I acted in March, and I want to act again. As a former money manager, I know exactly how I would hedge this risk. My current issue is that I am not fully convinced that this issue will lead to weakness in capital markets.
Let’s say we use the US stock market as the hedging tool (an S&P 500 ETF like SPY or VOO). What would need to happen for it to fall a considerable amount (10%+)?
Additional restrictions across the board for a considerable amount of time without appropriate stimulus.
I don’t have the confidence to believe that the statement above will happen. We are about to enter an era of a democratic president, democratic majority in the house of representatives, and a potential tied senate. I am confident that more stimulus will pass if needed.
I am not sure how politically viable it is to enact additional restrictions in Europe / North America. I am sure some majors, governors, heads of state will enact additional restrictions, but I doubt it will be a coordinated effort. Furthermore, I am also not confident the populace will follow said restrictions.
So at the moment, I am convinced that this is serious, that it will probably cause significantly more loss of life in the next 6 months, but it won’t affect capital markets they way COVID-19 did back in March.
On a personal level, we are increasing our protections towards our elders. Here’s to hoping they get vaccinated by the end of February.