25 Sayings on Vol and Risk…Part 5 of 5

[00:00:00] Hello, this is Dean Kurnut, and welcome to the Alpha Exchange, where we explore topics

[00:00:07] and financial markets associated with managing risk, generating return, and the deployment

[00:00:12] of capital in the alternative investment industry.

[00:00:20] My friends like a duo on Naked and Afraid on the 21st day, who hear the roar of spinning

[00:00:25] helicopter blades you too can be comfortable that in less than half an hour you will have

[00:00:30] finished our 25 sayings on ball and risk.

[00:00:34] Overconfidence is the death knell for some investors, but I promise you we will be done

[00:00:38] in under 30.

[00:00:40] Our final segment is upon us and with it fresh, pithy principles that I often

[00:00:45] turn to in trying to make sense of this chaotic sport we call markets.

[00:00:50] Along the way in typing out these more than 20,000 words over the series, I'm probably

[00:00:55] out more than $50 in Espresso-inspired drinks from Starbucks led by the Dirty Chai Latte

[00:01:01] and the Carmel macchiato. As is our won't, we start again by looking backwards, not 50, 40, 30 or 20 years, but

[00:01:10] just a decade ago to 2014.

[00:01:13] What can we say about the state of the world?

[00:01:15] Let's start with music.

[00:01:17] I'll throw out three songs there, but the more recent stuff is certainly not my forte.

[00:01:22] I'll start with Happy from Pharrell Williams.

[00:01:25] Can't ask for a better song name.

[00:01:27] Let's see here.

[00:01:29] Shake it off, someone named Taylor Swift.

[00:01:32] I'll throw in a sky full of stars by Coldplay.

[00:01:35] Boy, I see no rhyme or reason in those three picks.

[00:01:39] How about world events?

[00:01:41] MH370 would disappear from the sky almost exactly a decade ago in March of 2014.

[00:01:48] It remains a great mystery,

[00:01:49] chock full of theories, but nothing truly conclusive.

[00:01:53] In pop culture, Kanye and Kim wed an unshakable bond,

[00:01:57] a union that would stand the test of time,

[00:01:59] an enduring relationship grounded in compromise,

[00:02:02] respect, and mutual understanding.

[00:02:05] And that's why this marriage lasted eight years, twice as long as their first one and

[00:02:10] 40 times as long as the 72-dayer with NBA player Chris Humphreys.

[00:02:16] More on 2014, two important movies were released.

[00:02:20] First, the Lego movie.

[00:02:22] Everything is awesome, or is it if we remain under the heavy thumb

[00:02:26] of President Business? And I got to admit, I was shocked and disappointed when 22 Jump

[00:02:33] Street got dinged at the Oscars. Me does love a good bromance film.

[00:02:38] In global events, 2014 brought its share. In May, the controversial Narendra Modi was sworn in as India's 14th

[00:02:47] Prime Minister with the landslide victory. Also sworn in, Janet Yellen is the first female

[00:02:52] head of the Federal Reserve. She'd continue the post-GFC commitment to low rates that

[00:02:57] was the signature of Bernanke. The degree of forward guidance embedded in the yield curve back then was significant.

[00:03:05] The one-year bill rate was 13 basis points.

[00:03:10] 2014 saw only small wobbles in risk assets, one of which occurred in March when Russia

[00:03:15] annexed Crimea.

[00:03:17] In September, Scotland would hold a referendum on whether or not it was to remain part of

[00:03:22] the United Kingdom.

[00:03:23] The vote to leave would fail,

[00:03:25] but the uncertainty leading into it absolutely made its way into the British pound ball surface.

[00:03:30] This macro-certain date on the calendar of events has become a thing in markets.

[00:03:36] What are you doing, by the way, on November 5th of this year? In sports, Derek Jeter would have

[00:03:41] his last Major League at bat, a walk off single to win

[00:03:45] the game.

[00:03:46] What a way to go out.

[00:03:47] The final career tally, 3465 hits, nearly 2000 runs scored, five gold gloves, five world

[00:03:55] series.

[00:03:56] He Jeter also owns MLB playoff records for games played, runs scored, hits, total bases,

[00:04:03] singles and doubles.

[00:04:05] Take 60 seconds and YouTube, Derek Jeter the Flip from 2001.

[00:04:11] So good.

[00:04:12] Back to markets.

[00:04:13] There was both an up and down crash in late 2014.

[00:04:17] In October, the Treasury Upcrash would occur.

[00:04:20] Here the 10-year note would rally ferociously on an intraday basis, leaving market participants

[00:04:27] concerned about liquidity dynamics.

[00:04:29] And in November, on the day after Thanksgiving, when nothing at all was supposed to happen,

[00:04:34] OPEC shocked markets announcing that market share and not price was a priority.

[00:04:40] Front-month crude would fall by 10%.

[00:04:42] The same supply glut that created such price stability and low vol months before was now

[00:04:48] the main driver of a dramatic drawdown that would continue for months.

[00:04:53] OK, a short review of what happened a decade ago is behind us.

[00:04:57] Shall we move now to sayings 21-25?

[00:05:01] I like these next five, but to be fair, I always say that.

[00:05:04] 21 through 25. I like these next five, but to be fair, I always say that.

[00:05:11] Our first is rather topical and comes to us by George Soros, who said, quote, when I see a bubble forming, I rush in to buy. Okay, prices may ultimately be governed by

[00:05:17] fundamentals, but for periods of time, sometimes lasting longer than we'd expect. Speculative capital can overwhelm fair value.

[00:05:26] Better to jump in on the long side than to take a stand that something is overpriced.

[00:05:31] Bitcoin anyone? As the book suggested, number go up. Price spirals are a fascinating concept

[00:05:39] in compelling to watch in real time. At some point, the momentum to the upside is so strong, the assets

[00:05:45] simply cannot be shorted. Soros's comment seems pretty applicable.

[00:05:50] The correlation between implied vol on B.I.T.O. and the spot level has been positive 50%

[00:05:57] over the last month. We have seen this quote spot up vol up movie a number of times before NASDAQ in 2000 crude in 2008 GLD in 2011 Tesla

[00:06:09] in 2019 Bitcoin in 2019 vol itself in 2020 GME in 2021 nickel in 2022 are just a few examples

[00:06:21] the common characteristic of all these the price action intensifies on

[00:06:26] the way up, forcing extreme crowding in a sharp rally that gives way to an equally sharp

[00:06:31] unwind. Gold has recently exhibited a small amount of price up volup. I think, and I'll

[00:06:38] come back to this later, but I think out of the money calls on gold are a compelling

[00:06:43] thing to own at this price as part of the defensive

[00:06:46] hedging portfolio. I'm thinking about this idea of adding fuel to the fire. And I wanted to share

[00:06:53] something I wrote for the Bloomberg terminal at the end of 2017. A year when Bitcoin had a nearly

[00:06:59] 1400% return and finished with consecutive monthly returns of 53, 51, and 45 percent monthly.

[00:07:09] I know, I know, you're right to complain that these returns are getting smaller each month.

[00:07:14] Sarkasm aside, the implied vol of Bitcoin absolutely soared in the process of these remarkable

[00:07:20] late 2017 returns.

[00:07:23] In very sharp contrast, as you'll surely recall 2017 ended with some of the most muted daily

[00:07:30] swings in the S&P on record, delivering a realized vol in December below six.

[00:07:36] In framing these vol haves and have-nots, here's what I wrote for Bloomberg, quote,

[00:07:41] "'What makes cryptocurrency different?

[00:07:44] There are no earnings and there

[00:07:46] is no consensus valuation framework. Instead, there's rampant enthusiasm and the powerful fear of

[00:07:52] missing out. Captivating tales of substantial wealth generated over a very short time inspire

[00:07:58] fresh capital into the market. The rush to buy pushes prices higher. The result is a frenetic and positive

[00:08:06] spiral of price and volatility. In this context, Bitcoin has become the poster child for self-reinforcing

[00:08:13] price momentum and speculation. Untethered by the constraint evaluation, price action drives

[00:08:20] demand, which further drives the price. Soros also purportedly suggested that at some point, uncertainty could become infinite.

[00:08:30] Now price is responsible for two distinctly powerful outcomes.

[00:08:34] First, understand that price is uniquely determinative in wealth.

[00:08:39] The wealth, perhaps even in the potentially fleeting mark-to-market sense of wealth through financial

[00:08:45] products, wealth serves as the ammo to make the same bet already made and, in the process,

[00:08:53] reinforces the bet already made.

[00:08:57] And price uniquely impacts how we think and what our expectations look like.

[00:09:02] With Bitcoin at 65 and running on a recent realize-voll of 45,

[00:09:07] I asked a group of folks whether Bitcoin would hit 100,000 first or 60,000 first.

[00:09:13] The quote, let me think about this one. Pause is all you need to know about the reinforcing power

[00:09:20] of price. Does price lie? Sure. But her movements are intoxicating anyway and she's

[00:09:26] no less convincing. And that's a great lead in to our next saying, number 22, which is

[00:09:32] that vol is the only anti fragile asset.

[00:09:37] Tileb's brilliant concept of anti fragility describes the rare characteristic of not merely

[00:09:43] being durable to a shock but becoming stronger

[00:09:46] as a result of one. In markets, long volatility is the singular asset in this category. Let's

[00:09:52] unpack that statement a little bit. First, it in no way argues that being long

[00:09:57] vol is some panacea, just ask owners of the VXX. What I am saying is that some assets do in fact rally consistently in a

[00:10:06] risk off. The 2022 joint stock and bond sell-off, a notable exception, duration exposure is pretty

[00:10:14] consistently countercyclical. When COVID hit, the S&P lost 15% from February to March 9th,

[00:10:22] and the TLT rallied almost 18% over that period.

[00:10:27] Pretty extreme and traditional risk on and risk off behavior.

[00:10:31] From March 9th to March 18th, however, the S&P fell 13% and the TLT also plunged by 16%.

[00:10:41] Here we see that even the nominally safest asset in the world has buckled under

[00:10:46] what I refer to as the liquidation phase of risk off. It's a rare, horrible scenario.

[00:10:52] Vol itself becomes the only anti-fragile asset, actually thriving from the chaos. From March

[00:10:59] 9th to March 18th, by the way, the VIX traveled from 54 to as high as 83.

[00:11:06] Assets that were quote, price involved, so to speak, saw spectacular gains.

[00:11:12] This idea of anti-fragile is a really great way of framing how powerful long vol can be

[00:11:18] when acquired at the right price.

[00:11:21] What's the right price?

[00:11:22] It's never easy to say. But the wrong price, I think,

[00:11:26] must be tied back to appreciating policymakers' incentives and their willingness to use overwhelming

[00:11:32] force. When the Fed's statement on March 23rd of 2020 used the words, quote, in the

[00:11:39] amounts as needed to quantify the Fed's willing purchases of Treasuries and MBS, better to have your finger

[00:11:47] closer to the sell vol than buy vol button. Paradoxically, what brought the Fed to the table was a level

[00:11:54] of market dislocation and volatility that it and the broader system could no longer tolerate.

[00:12:00] VIX near 80 and the Fed realizes it's got no choice but to seek to overwhelm the system

[00:12:06] by providing unwind capital to every trade in every size from every seller in the government

[00:12:12] bond market.

[00:12:14] From its peak, the VIX was down by more than 50% a month later.

[00:12:18] Speaking of the VIX, it's time to move to our next saying.

[00:12:22] It comes to us by none other than Harley-Bassman, who

[00:12:25] said, quote, when financial markets implode, convexity can be found lurking near the scene

[00:12:31] of the crime. First of all, kudos to making this fun. I love the use of the word lurking.

[00:12:37] One can envision this somewhat evil being, convexity, perhaps a shadow only, but definitely lurking,

[00:12:44] maybe celebrating near the scene of the

[00:12:46] crime. When short, vol positions are on the books of mark-to-market sensitive investors,

[00:12:51] portfolio damage control can exacerbate the original move, often leading to a negative feedback

[00:12:57] loop between asset prices and volatility. Of course, we've got plenty of examples of the option market being the tail that wags

[00:13:05] the dog.

[00:13:06] You know the rule of 11.

[00:13:08] Start with 1987, the biggest one day move down in the S&P of all time.

[00:13:14] 11 more years and we get to LTCM's dramatic implosion in 1998.

[00:13:19] 11 more and we are in 2009 when the S&P hits peak drawdown.

[00:13:25] In 11 more, we have 2020.

[00:13:28] So good news, you can stay long the market

[00:13:30] for six more years into 2030.

[00:13:33] Just be ready to sell around that time.

[00:13:35] I joke only, of course.

[00:13:37] But through these episodes,

[00:13:39] we learn about how hedging can feed back into market prices.

[00:13:43] Harley being a fixed income and mortgage expert

[00:13:46] of long market tenure probably had in mind

[00:13:48] not just the blowups of AIMCO and Allianz in 2020,

[00:13:52] but also bond market blood baths like Orange County,

[00:13:56] Gibson Greetings, Procter & Gamble,

[00:13:58] and Askin Capital from the mid-1990s.

[00:14:01] By the way, there's no story linking the oracle of Omaha

[00:14:04] to selling

[00:14:05] ratefall, but Buffett did get his mitts on quite a bit of premium in writing long-dated

[00:14:11] puts on global indices. One estimate is his put sales in the pre-crisis period generated

[00:14:18] up to $5 billion in front-month premium, as he sold 10-year expiry puts on the S&P

[00:14:24] Euro stocks and other global indices,

[00:14:27] he certainly wasn't dealt to hedging this exposure. In addition, he surely was not exposed to mark

[00:14:33] the market risk on that vol. There's a good academic paper out there that backs into the

[00:14:37] implied vols that Berkshire used to mark their short puts. Spoiler alert, they didn't pay much

[00:14:44] attention at all to actual

[00:14:45] vol levels that were clearing the market at a given time. They seem to like their own

[00:14:50] numbers better. The main point for those not lucky enough, like Berkshire, to mark to model,

[00:14:56] is that because derivatives have gamma and potential leverage, the unwind of bad positions

[00:15:01] can further reinforce the price action. Alright, let's move on to saying number 24.

[00:15:07] Oh man, this is exciting. We are getting close to the end.

[00:15:10] The saying here is that, quote,

[00:15:12] the correlation of vol and the vol of correlation are not your friend.

[00:15:18] Hmm, that is a mouthful. Let's just take the first part.

[00:15:21] The correlation of vol is not your friend.

[00:15:24] What do I mean?

[00:15:26] If we look at all the common carry trades, shorting vol across the asset classes, buying

[00:15:31] credit, owning EMFX or a few examples, we'll see that they tend to often falter at the

[00:15:37] same time. Nothing earth-shattering and saying that risky securities do poorly in risk-off

[00:15:43] events. Of course, there are some times when a market suffers a risk event in almost isolation,

[00:15:50] with no bleed-through to other assets.

[00:15:53] One example would be the FEDB 2018 XIV event.

[00:15:57] Gold vol during that period went from 10 to 13.

[00:16:01] A measure of one month FX vol went from 7.5 to 9.5.

[00:16:06] This was a very specific and acute product unwind in one specific component of the market.

[00:16:14] But more generally, carry strategies benefit from the same thing, stability.

[00:16:19] When that gives way to uncertainty, these carry strategies tend to suffer at the same

[00:16:23] time.

[00:16:24] Because there is correlation involved from a portfolio construction standpoint, it means

[00:16:29] you have to factor in that conditional co-movement in your sizing.

[00:16:34] When one vol strategy blows up, another is likely to be hurting at the same time.

[00:16:39] To be sure, there is some idiosyncrasy in carry strategies.

[00:16:43] For example, vol on the soft eggs is going to be less correlated to that on the S&P,

[00:16:48] but in the world of risk premium,

[00:16:50] arising tight generally does lift all boats.

[00:16:54] The second part of this saying is that the vol of correlation is not your

[00:16:58] friend. Here,

[00:16:59] what I mean is that we can observe the historical correlation in two assets or

[00:17:04] among those in a portfolio. Even as we do so, we should accept that there can be large moves in these correlations.

[00:17:11] Correlations are volatile. Regimes change. One example I find useful in this context

[00:17:17] is running the correlation of the euro to the S&P. Let's start with that relationship

[00:17:21] today. We know that the S&P and USD have been negatively correlated.

[00:17:27] The dollar strengthens, the S&P falls.

[00:17:29] S&P rises, the dollar generally weakens.

[00:17:33] The Euro and S&P are in turn positively correlated.

[00:17:37] But for a long stretch post the Eurozone crisis, this correlation was opposite.

[00:17:42] In fact, you could buy puts on the Eurostocks that were contingent on the Euro falling

[00:17:47] for really cheap prices.

[00:17:49] The reason was that priced into this contingent option

[00:17:52] was an assumption that the Euro and Eurostocks

[00:17:55] would be negatively correlated.

[00:17:57] That is, that a falling Euro and Eurostocks

[00:18:00] were unlikely to occur together.

[00:18:02] At least for a short time, that was the case

[00:18:06] during the Brexit outcome.

[00:18:08] Now, before a draggy's anything it takes assertion

[00:18:11] and the ECB's actions to back it up,

[00:18:14] the Euro acted as a risk asset,

[00:18:15] losing value on days the VIX popped.

[00:18:18] This hit a real peak in late 2011 as summit by summit,

[00:18:23] the monetary policy types tried to tape this project back

[00:18:26] together. There was more than one really close call during this period, to be sure.

[00:18:32] So with the Euro, it acted like a risk asset from 2008 to 2013. That is, it was positively

[00:18:38] correlated to the VIX and Euro stocks. Conversely, like a risk-off asset, it rallied on days when markets fell

[00:18:47] from 2014 to 2017, and as mentioned more recently as a risk asset post-pandemic.

[00:18:55] So, correlation relationships definitely change over time. There's just a lot of noise in them,

[00:19:01] but also there is the impact of regime change. The conviction put forth by Draghi that, quote, believe me, it will be enough.

[00:19:09] Set the stage for stability.

[00:19:12] In U.S. markets, of course, the regime change from zero rates to a 5-plus percent policy

[00:19:17] rate brought about dramatic changes in the interaction between stock and bond prices.

[00:19:24] For some thoughts on how that went, let's check in with UK life insurers.

[00:19:28] There was nothing in the model that suggested that guilt yields could rise by more than

[00:19:32] 130 basis points in less than 10 days, all the while the footsy fell by 6%.

[00:19:38] Were anyone who's capital counted on the diversifying result of the negative correlation

[00:19:43] between the S&P and government

[00:19:45] bond market.

[00:19:46] What a struggle to watch your base asset and its nominal hedge sell-off at the same

[00:19:50] time.

[00:19:51] The rolling two-month realized correlation between the S&P and TLT ended 2021 at negative

[00:19:57] 45%.

[00:19:59] By mid-year 2022, it reached positive 25%.

[00:20:03] It's generally stayed there since.

[00:20:05] I think this positive correlation between stock and bond prices, a powerful force over

[00:20:10] the past two years, is set to change, perhaps in substantial fashion.

[00:20:14] The medicine of higher rates and the impact of an inverted yield curve ultimately matter.

[00:20:20] Growth flags.

[00:20:21] The Fed cut cycle gets further impounded in the curve. Rates began falling in late October of last year, and this really empowered the equity rally.

[00:20:29] One scenario is that the immaculate disinflation continues, and the Fed follows the welcome lead

[00:20:35] of the improving data. There need not be a risk off here, as there has not been. But if the data

[00:20:41] turns and the market is forced to continue to price out eases this year at some point, the idea that restrictive policy is going to be here until further notice becomes a topic of conversation.

[00:20:52] That doesn't feel good. And second, I will put myself down is worried that both the level of uncertainty and possibility of bad outcomes on the geopolitical front feels negative both for the world and specific to

[00:21:06] U.S. events.

[00:21:07] I'd like to reread from Ian Bremers' Eurasia Group's top 10 risks this year.

[00:21:13] Quote, While America's military and economy remain exceptionally strong, its political

[00:21:17] system is more dysfunctional than that of any other advanced industrialized democracy.

[00:21:24] And in 2024 faces further weakening. The

[00:21:27] U.S. presidential election will worsen the country's political division, testing American

[00:21:32] democracy to a degree the nation hasn't experienced in 150 years and undermining U.S. credibility

[00:21:38] on the global stage.

[00:21:40] Okay, these are just scenarios, of course. It's easy to consume the political bear porn, but we should respect what experts like Ian

[00:21:48] Bremmer say.

[00:21:49] I see no bias and read it as a wake-up call.

[00:21:53] Are there any options out there that do well in a risk appetite shock that comes from geopolitical

[00:21:58] uncertainty?

[00:21:59] I think gold fits this really well, and I'm here to tell you that out of the money call

[00:22:03] vol is at a level that puts it among the cheapest in the last decade.

[00:22:08] We talked before about spot up vol up in gold.

[00:22:11] I would expect that to happen in my scenario.

[00:22:14] The last of our 25 sayings is that quote, Val has memory.

[00:22:18] Val mean reverse.

[00:22:20] You told me last episode that Val was an instrument of truth.

[00:22:23] You're telling me now he's got memory?

[00:22:25] Oh, and he mean reverse too. Tell me more about this. Well, you got to ask me nicely,

[00:22:31] as Colonel Jessup said stridently, a braiding young Charlie Caffee.

[00:22:36] Let's start with the idea that Val mean reverse. Market disruption events don't last forever,

[00:22:41] as cheap asset prices and central bank firefighting ultimately

[00:22:45] provide runway for capital to be redeployed and for vol to mean revert. I've said this a few time,

[00:22:52] but there's a certain paradox in that markets become most investable when the shortage of capital

[00:22:57] that got prices to a dislocated point prevents the opportunity from being exploited. Some part of the mean reversion of all is that the most protracted risk episodes demand

[00:23:08] central bank and public backstop capital.

[00:23:11] At some point, price impairment and the large margin of safety it creates, along with entities

[00:23:17] like the Fed, sweeping it to action, the stage is set for a rally in risk and reversal of

[00:23:24] high levels of vol.

[00:23:25] The second assertion is that vol has memory. What does this mean?

[00:23:30] Vol's memory means that the best predictor of vol tomorrow is vol today.

[00:23:34] Periods of low vol tend to lead to a self-reinforcing psychology of stability.

[00:23:40] Conversely, de-risking episodes, as discussed, can damage sentiment that serves as an accelerant

[00:23:45] to vol, which in turn causes forced selling and more volatility.

[00:23:51] What we see in looking at vol data is that it clusters into low, high, and middle levels.

[00:23:56] In the period after the unwind of the tech bubble, but before the GFC, vol measures were

[00:24:01] extremely low.

[00:24:03] The stability of the financial system was empowered

[00:24:05] by the consistency with which carry trades worked. There was low risk across almost all

[00:24:10] asset classes. Of course, the GFC brought with a tremendous vol levels that lasted for

[00:24:15] an extended period of time. Most VIX curve inversions last for days to weeks. In the

[00:24:22] GFC, the front VIX future was above the second future for almost

[00:24:26] the entirety of seven months. Only until April of 2009 did Contango and the VIX curve arrive with

[00:24:32] consistency. All the while the Fed and Treasury were nursing the patient back to life with quite

[00:24:38] an array of programs. One can envision Paulson and Bernanke sharing oatmeal at their weekly check-in in April

[00:24:46] 09.

[00:24:47] Setting a series of goals Bernanke shares discussions with the New York Fed open market

[00:24:52] desk around the impact of the new QE program.

[00:24:56] After going into great detail on theory and practice and the promise of the portfolio balance

[00:25:02] theory, Paulson impatiently interrupts.

[00:25:05] Blurting out, I talk to Lloyd,

[00:25:07] he said, get the Vix back to 30.

[00:25:09] Okay, to be clear, that's not in too big to fail the movie,

[00:25:13] nor did it ever happen.

[00:25:14] All right, so, Val has memory.

[00:25:17] It remembers where it was yesterday

[00:25:19] in thinking about today.

[00:25:20] And then tomorrow, it looks back on today.

[00:25:23] When Val is high, it is a reflection of a compromise

[00:25:26] degree of precision in mapping potential outcomes. Macro uncertainty does not get resolved overnight.

[00:25:33] Rather, Val is, as said earlier, an instrument of truth that reflects the struggle with this

[00:25:38] uncertainty. High Val periods are clustered and Val remembers the Val from the day before.

[00:25:45] vol periods are clustered and vol remembers the vol from the day before. What can we say about today's pricing of equity vol? In the S&P, vol wants to quote

[00:25:49] rest. A few vols over realized. I mean, the insurance salesperson got to eat. No, that's

[00:25:56] the premium necessary to entice capital to bear convexity risk. Currently, you've got

[00:26:01] two month S&P vol in theth percentile looking back the last three years.

[00:26:05] You also have a pretty favorable, i.e. small, spread of implied to realize. That setup doesn't look bad at all to me.

[00:26:13] Having some long vol exposure today is the equivalent of getting to the airport early.

[00:26:18] It's not without cost, but it's the only way to guarantee the insurance.

[00:26:23] Buying vol today is probably early, but should be considered anyway.

[00:26:28] I mentioned in episode 4 of this 5 part series that polling was reflexive.

[00:26:34] You see the polls and you react to them, furthering the price that is reacted to.

[00:26:38] Well, in this series, the feedback for me is the 4000 word count, which is fast now

[00:26:43] approaching. I stay less than 4000 words and I can almost guarantee I've used up less than 30 minutes

[00:26:50] of your time.

[00:26:51] Friends, we do appear to be at that point.

[00:26:55] This means goodbye for now.

[00:26:56] I've really enjoyed doing this five part series and I think there's some value in these discussions.

[00:27:02] I've been working to queue up some new and exciting guests for the Alpha Exchange and I look forward to bringing those

[00:27:07] discussions your way. Until next time, I wish you a wonderful week. Be well.

[00:27:12] You've been listening to the Alpha Exchange. If you've enjoyed the show,

[00:27:16] please do tell a friend. And before we leave, I wanted to invite you to drop us

[00:27:21] some feedback. As we aim to utilize these conversations to contribute to the investment community's

[00:27:26] understanding of risk, your input is valuable

[00:27:29] and provides direction on where we should focus.

[00:27:32] Please email us at feedback.

[00:27:34] at alphaexchangepodcast.com.

[00:27:36] Thanks again and catch you next time.