Nomura’s McElligott: This Is ‘The BIG Thing We Need To Watch For’

Nomura’s McElligott: This Is ‘The BIG Thing We Need To Watch For’

Investors are increasingly prone to grabbing for upside index exposure. It was cheap (previously, folks were narrowly focused on upside in reflation-linked trades or else downside hedges), and then got cheaper during the GameStop saga, which roiled markets for a few ridiculous sessions before fading away and joining GameStop's business model in relative obscurity. Now, though, "we're seeing investors grab for 'crash-up' in index too," Nomura's Charlie McElligott wrote, in a Thursday note. Foll
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3 thoughts on “Nomura’s McElligott: This Is ‘The BIG Thing We Need To Watch For’

  1. In the not too distant past the investing world made a turn and headed into a territory where spooz seems to have more influence than corporate financial statements. I feel like a flee on an elephant that’s along for the ride but has no idea where I’m going.

  2. Interesting comment about lack of hedges provided by bonds. I recently recognized the lower inverse correlation between long UST bonds and equities. I sold all my UST bond ETFs for clients, mostly 20-30 years but a few 3-7. My risk models say the portfolio risk went up when I bought spread product CEFs and sold the UST bonds so I sold some stocks as well. Right now there are precious few hedges for a stock portfolio- the best hedge seems to be spreading the risk out by style and geography and investing in higher yielding shorter duration bonds. Sprinkle in a little gold stocks and cash too.

    We’ll see how things work out. UST bonds look like very expensive insurance which may not pay off when you need it.

    1. Remember when H suggested one should be able to withstand a 40% crash? Scared me to death when I read that!!
      I was already in the process of downsizing and reducing fixed living costs, but I moved a bunch of stuff around and ended up with a lot of SPY/IVV with “bookends” of SPYD and solid dividend payers at one end and tech/growth at the other end.
      Fingers crossed we never have to withstand a 40% crash that stays down.

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