Vineer Bhansali - “The Market is Severely Underpricing the Probability of a Sharp, Catastrophic Loss to the Downside" | #82
In this episode, Meb Faber chats with Vineer Bhansali, founder of Long Tail Alpha, about his career and his firm's focus on tail risk management. They discuss tail risk strategies in asset allocation, the use of options, and common investor biases against portfolio insurance. With today's low volatility, they explore global yield-seeking behaviors and option strategies. The episode also touches on pricing risks, bonds as hedges, and the influence of big data and AI on investing. Vineer shares memorable trades, his investment philosophies, and personal hobbies, and tells listeners where to follow his work.
Key Points
- Tail risk strategies can provide significant portfolio protection during rare and extreme market events, ensuring investors can weather severe downturns without liquidating their positions.
- The current low volatility environment is largely driven by a widespread hunt for yield, leading to increased selling of options and other volatility-based instruments, which can create systemic risks.
- Traditional asset allocation models may need to be revisited, as bonds at current yields offer limited diversification benefits and may not provide the same level of protection or returns as historically expected.
Follow Vineer: Website
Resources: Vineer Bhansali Books collection Why The Quants Might Be Winning On Wall Street Behavioral Perspectives on Tail-Risk Hedging “Portfolio Selection” Is The ‘Shadow Insurance’ Business As Dangerous As The ‘Shadow Bank’ Of The Financial Crisis? Sell Duration to Hedge Equities How to Beat the Machines Before They Beat You Meb’s Tweet on surprising market development over last 20 years Here Comes the Melt Up! Spot Up, Vol Up Carry and Trend in Lots of Places
Chapters
| 0:00 | |
| 1:26 | |
| 11:12 | |
| 18:43 | |
| 24:21 | |
| 30:58 | |
| 37:01 | |
| 43:24 | |
| 51:06 | |
| 55:33 | |
| 1:00:38 | |
| 1:05:41 |
Transcript
Loading transcript...