So the point I’d make to refute : @Post_Market may weigh in or disagree
1) long/short pod models were running near peak leverage and max long going into this
2) as shorts run up they need to take leverage down which reduces whatever prior position was (so sell Longs)
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
This Tweet is unavailable.
-
Why not? A gap down in price destroys value expeditiously, especially if flows are moving overwhelmingly in one direction
My point is that if you are degrossing but maintaining the same net exposure, then the net flows are balanced and not overwhelmingly in one direction, so you don’t expect the overall market to go up or down (though can be large moves in individual name).
-
-
A really great example is the “quant quake” in Aug 2007 where many quant market neutral funds were caught in a cycle of deleveraging and huge losses resulted *for those funds* but the overall market didn’t even notice.
-
Hence focus on equity long/short where NAV reductions do eventually lead to net selling pressure.
- Show replies
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.