How the Fed and the rise of passive investing and volatility strategies have combined to make market movements faster and more severe.
Corey Hoffstein is the founder and Chief Investment Officer of Newfound Research LLC, a quantitative research and investment fund. He is also the host of the “Flirting with Models” podcast.
In it, he examines three popular narratives about what is driving radical swings in markets, including:
He finds that, individually, none could explain the radical market shifts we’ve seen. However, when combined, they create a market incentive loop that is causing markets to move and react to exogenous shocks more quickly and aggressively than ever before.