Category Archives: Dow Jones

By betting on calm, did investors worsen the stock market fall? | Nils Pratley

XIV – a way to bet on low stock index volatility – was a beautiful investment until it really wasn’t

Back in 2008, the non-financial world had to digest a lot of jargon in a hurry – collateralised debt obligations (CDOs), asset-backed securities (ABSs) and the rest of the alphabet soup of derivative products that contributed to the great banking crash.

This week’s diet has felt similar. As the Dow Jones industrial average twice fell 1,000 points in a day, we have had to swallow tales about the VIX, the inverse VIX, the XIV, and ETPs. Did this overdose of three-letter acronyms really cause the stock markets to swoon? Have those geniuses in the back offices of investment banks really baffled themselves – and a lot of investors – with complexity again?

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Source: gad

Making millions from chaos: the fund cashing in on the stock market collapse

Texas hedge fund Artemis plucks millions from investments designed to benefit from turmoil and volatility

Stock markets gyrated wildly this week, and a lot of people lost a lot of money. But Chris Cole, a 38-year-old hedge fund manager from Texas, wasn’t one of them. He made millions from his fund’s bet on a financial apocalypse.

From his office overlooking the Colorado river in Austin, Texas, Cole runs Artemis Capital, a hedge fund that, since 2012, has been betting on a repeat of the 1987 Black Monday stock market crash.

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Source: gad

UK stocks tumble as concerns grow over febrile global markets

FTSE 100 slumps 2.6% to 7,141 to wipe all gains on year’s trading but New York recovers late on

Shares in London plunged for a sixth day and by the largest amount since the Brexit vote as concerns grew that febrile global stock markets, which have lost $4tn (£2.9tn) in value since Friday, were in the grip of panic-selling.

The FTSE 100 slumped 2.6% to 7,141 to wipe out all the gains from this year’s trading and set the index of Britain’s most valuable companies on course for a second week of losses. Investors took fright elsewhere in Europe, with markets in Germany, France and Spain all closing down by more than 2%.

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Source: gad

Groupthink about Monday’s ‘correction’ is slightly alarming | Nils Pratley

Analysts and pundits have been too quick to agree that recent sell-offs are nothing more than a reset

A storm in a teacup? A healthy correction? Have investors, or at least those fooled by two years of unnatural calm in stock markets, merely been handed an overdue lesson that share prices can fall suddenly as well as rise smoothly? Will we be sleeping soundly again by the end of the week?

The not-much-to-worry-about school has history on its side. Most stock market wobbles do not develop into something worse. There have been only three serious stock market plunges in the last 30 years or so (1987, the 2000-01 bursting of the dotcom bubble and the banking crash of 2008) but many more corrections along the way that appear as minor deviations on today’s charts.

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Source: gad

Janet Yellen sets interest rates one last time. How will history rate her?

The Fed chair has set the bar high for her successor, a tenure defined by five major achievements

Janet Yellen, the Federal Reserve chair, begins her final rate-setting meeting at the helm of the US central bank on Tuesday, before she is replaced by Donald Trump’s chosen successor, Jerome Powell.

The first woman to lead the Fed arrived in February 2014 at a time when the money-printing machine of quantitative easing was whirring at full-tilt under her predecessor, Ben Bernanke. QE, which involved the Fed buying bonds from financial institutions, pumped billions of dollars into the US economy to keep it afloat after the financial crisis.

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Source: gad