Jul
18
Tail-Risk Hedges Sought in Another Dimension
ByHow to take market risk and protect against liquidity crashes.
With the S&P 500 index close to record highs and U.S. Treasury yields near record lows, world markets increasingly resemble the ball-on-top-of-a-hill diagram used to illustrate an unstable state in popular science books. Roll to the left for a cataclysmic stock market collapse; roll right for resurgent global growth, soaring equity prices and a crash in bonds.
The view down the hill is shaped by two alarming facts:
One: Investment-grade companies mostly go under when interest rates are on the floor…
