Gandalf, quant of Middle-Earth, dispensing sage advice. [PT]
For the big financial outfits, optimizing systematic – preprogrammed – delta hedges is an essential aptitude of the 21st century. Our guess is that many of today's high-fliers will crash and burn during the next bear market. But what do we know?
As far as we can tell, the stock market, circa November 2019, is an absolute fantasy. The Dow Jones Industrial Average (DJIA), S&P 500, and Nasdaq have little connection to the underlying economy. Rain or shine, they go up.
Market watchers, eager to explain the fantasy, employ creative nomenclature as they attempt to classify the state of the stock market with discerning acumen. Is it a bubble? Is it a melt up? If it is a melt up, what type and gradation is it?
For example, Brian Sozzi, with Yahoo Finance, says the stock market is not in a bubble; we are merely experiencing a mini market melt up ahead of the holidays. Savita Subramanian, chief equity strategist with Bank of America, has a slightly different take. She thinks we are facing a beta-driven melt up to close out the year.