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Sometimes, The Entire Edifice Simply Implodes
"Which investors drove this selloff?", JPMorgan's Nikolaos Panigirtzoglou asks, following one of the most memorable routs for global equities in recent history.
While the impetus - the proximate cause, if you will - for the market's consternation was the worsening of headlines around the COVID-19 outbreak, systematic selling likely magnified the losses. Regular readers are fully apprised of that reality.
For example, Panigirtzoglou's colleague Marko Kolanovic estimated the total amount of sell
Your articles well document the net sellers, but I wonder who the net buyers were. Even on a sharply down week there are as many buyers as sellers. Excuse my ignorance, but I’m curious who the net buyers were. Knowing who they were (and their possible resilience) would help me understand the dynamics better .
Great question!
I am only guessing on net buyers but I would guess asset allocators -re-balancing, insurance cos, corps buying back stocks, shorts covering, really fast money, hedging of puts or selling/monetizing them causing the other side to reduce their hedge, possibly wealth mgmt, those underweight equities to get closer to benchmarks and probably foreign investment firms and sovereign wealth funds that have longer time horizons and lack high quality and growth and see them possibly on sale.
Very few in most professional firms are willing to stick their neck out in any size until the bounce is well established (too much career risk and a big problem in money mgmt) so I am guessing the above.
Always a great question. Wish I had a good solid answer but I think the above might be thought provoking to some degree.
Be smart and use your advantages to outperform. Good luck.
H-Man, timely written piece as the virus continues to expand. That dead cat bounce everyone was looking for on Monday might just be a dead cat.
Brings to mind fond literary memories of GFC. Remember “We are all subprime now”? and “We have achieved containment (in low-earth orbit)”.
Perhaps you’ve nailed the meme for this round: “we are all dead cats now”.