This Time Is Different. Really?!

“Don’t panic, buy the dip, who cares?” or “These are rumblings of an earthquake, people will be hurt like in 1929” – which one is it? I would call it a wake-up call. Let me explain:



In recent years, markets had appeared eerily “safe”. Central banks promised to do “whatever it takes”, provided “forward guidance” to keep rates low, even printed money to buy government debt, calling it “quantitative easing.” Sure enough, volatility has been low, valuations have risen. Now, just as the fellow from the cartoon above, many might have thought something isn’t quite right. As a result, many investors have been looking to buy some insurance, protection, just in case this goldilocks environment doesn’t last forever. For those who have looked for ways to protect against a decline, they likely noticed that it had been rather expensive. Indeed, we had come to the conclusion some time ago that it may be more prudent for many investors to hold more cash rather than…

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