Loading ...THIS AIN’T EVEN CLOSE TO 1999 YET
Be careful with comparisons to DotCom bubble
I will admit it, I was cautious for the better part of January. Although I understood the whole “Fed is on hold and will let the economy run hot” argument, I felt sentiment was stretched and we would experience a correction to cleanse out the exuberance (I will leave it to you to decide if it was irrational).
My stance seemed wise when the Iraq situation developed, and although I was wrong for the reason of the stock market decline, the market sold off nonetheless.
However, that decline was quickly extinguished with the lessening of tensions between America and Iran. Next thing I knew, we were once again screaming higher.
“All right, last gasp due to new-year-money being put to work”, I thought to myself.
Once again, I leaned into the rise – mostly through buying equity volatility as they pushed VIX lower. I was looking for a repeat of the 2018 XIV volamegeddon when the quick rise in equity index volatility caused a self-reinforcing negative feedback loop. Although I would never wished for a flu pandemic to skate my position onside, I felt the market was looking for a reason to sell off and it was simply a question about the trigger. Once the VIX starting rising, the vanna selling would cascade on itself and we would enter a risk-off environment.
Well, I was wrong.