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It's worth noting that these funds blowing up causes large sell-offs of their other holdings, which can in turn cause prices of those assets to fall. Falling pr
by jermeh 6y ago
It's worth noting that these funds blowing up causes large sell-offs of their other holdings, which can in turn cause prices of those assets to fall. Falling prices can cause more sell-offs, and can spiral. Nobody really knows what's going to happen as a result of this since it's pretty unprecedented. IIRC the SPX is down ~3% and VIX is up 60% today.
- majormajor 6y ago"A few firms losing a bet can spiral into huge effects," if true, sounds like a really, really, really good argument for eliminating higher-risk instruments. "We don't know how bad things we could get if we are wrong" means you're doing something you shouldn't be.