Equity Skeptics That Missed Stock Rally May Miss Even More
- Rule-based traders diving in as shares rally, volatility falls
- That helps fuel gains that skeptics are reluctant to embrace
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Equity skeptics obsessed with everything from inflation to pie-in-the-sky earnings estimates have managed to miss a $5 trillion rally being amplified by trends in investor positioning. More pain may be in store for bears should certain signals keep flashing in quant-land.
The issue is the giant pool of systematic funds that moves in and out of the market based on how turbulent prices are. With peace at hand of late amid a four-week rally, so-called volatility-target funds and similar strategies such as risk parity are buying between $2 billion to $4 billion of stocks per day, according to an estimate by JPMorgan Chase & Co.’s Kate Gandolfo.