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Investors Who Bet On Calm Markets Were Picking Up Nickels in Front of a Steamroller

So-called “short volatility” products were wiped out when the stock market tanked.

The biggest losers in the stock market rout are people who made bets that would pay off only if the stock market remained calm—and then lost most of what they put in when stocks went kerflooey. On Reddit, it’s easy to find comments such as, “Didn't think this would blow up like it has.” One post, which can’t be verified, said, “Ive lost 4million USD, 3 years worth of work, and other people's money .”

This was, alas, perfectly predictable. Last summer I wrote an article for Bloomberg Businessweek titled “Why Investors Shouldn’t Trust Low Volatility: Don’t let the long run of market calm lull you into complacency.” Plenty of other people issued similar warnings.